The basic idea behind segmentation is simple: If there are significant differences between customer groups that affects the decision process or make your solution more relevant, those groups should be handled differently. And if such differences don’t exist or are minot, you should avoid segmentation.
There are always differences between different groups of potential customers. The specific need might differ between industries. The buying process and motivating factors differs from country to country. Decisions are handled different in small vs big companies. And so on. The critical decision is to evaluate if the benefits and potentially added revenue outweighs the additional cost of working with different segments. Your communication needs to be tailored for each segment, which requires resources, adds complexity, and reduces economies of scale, since your marketing efforts will then reach a smaller audience.
One type of segmentation that is quite obvious for most companies is customers vs non-customer. Your customers need to be taken care of and there are certain things you only can sell to a customer like service (if you don’t service competitor’s products too). Still, never forget to include you customers in your general communication. You want to assure them that they have selected the right partner, and there is always an opportunity for up/more-sales and cross-sales .
Sometimes it’s easy to be blind and look at differences and forget the commonalities, like the core of the problem. Some years ago we should help a company launch a new pump with a high-efficiency motor saving 50% energy. At the starting point, we discussed how to address different industries and that the communication needed to be developed locally since each market was very specific in its decision process. In the end of the workshop though, we raised the question if not all groups that are evaluating a pump are interested in saving 50% energy. By focusing on the main benefit, energy-savings, we could treat the market as one segment and use the budget for more impact instead.
But the world is more complex than that. We were working with an express company who’s service was very quick transport of smaller packages needed for time-critical shipments of everything from spare parts to blood samples. Shipments from all industries was transported in the same system with the same delivery promise. Still we choosed to segment by industry with the main purpose to create relevance. A person responsible for logistics in a hospital does not like to be compared to a mine…
So, if you choose to segment, and see a clear and relevant difference between groups, also ensure that the segments are robust and doesn’t change over time and that they are actionable so you can develop tailored offerings and communication.
If you want to discuss your potential with segmentation, just reach out to ulf@sfinxconsulting.se.
