How to Operationalise Your Segmentation Strategy

by Chris Horn

Whilst far from a new business discipline, segmentation has experienced a renaissance in recent times, driven by a number of factors.

Firstly, new and increasingly user-friendly analytics platforms are enabling enhanced access and analysis of organisational data. Secondly, the “digital exhaust” generated by online buyer interactions means most organisations now have access to much more customer data, allowing them to better understand what prospects want. And thirdly, buyers now expect far more relevant and personalised interactions, requiring organisations to develop more granular classification of customer segments, as well as new and more detailed ways of defining needs and preferences (for example buyer personas).

With access to increasing volumes of data, organisations now have a plethora of options to develop their segmentation strategy. However, we’re observing that while many are able to develop more meaningful segments, they face a significant challenge – the more granular and complex your segments, the harder it is to execute against them.

So how do you achieve the goal of becoming more relevant, but also navigate the challenge of actually putting your segmentation strategy on the ground?

 

  1. Define your market “sweet spots”

    The issue of being realistically more relevant starts at the top, in particular with the broad market segments an organisation has chosen to play in and organise around. Many pursue too many market segments, resulting in solution offerings and marketing and sales efforts which are moderately relevant to most, but not particularly relevant to anyone.

    In other cases, an organisation may fail to adjust market segmentation frequently enough. When the market opportunity or customer needs shift, sometimes very quickly, resources remain deployed “as they always have been”, rather than being fine-tuned – eradicating any chance of relevance.

    To help avoid these challenges, you need to consciously select and prioritise your market ‘sweet spots’ – the key market segments offering the highest growth opportunities, which also align to your organisation’s strengths – setting up the organisation to be relevant and win. To ensure the most attractive market opportunities are always in focus, you also need to have an ongoing review cycle in place.

    A useful way to identify your market “sweet spots” is to map out your solutions against potential market arenas and select the segments where the following 3 items intersect:

    • We have a core go-to-market and service delivery capability
    • We have a differentiated value proposition
    • There is significant profit potential – ideally both high margin and high growth opportunity

     
  2. Align the business behind your market “sweet spots”

    By this stage you may have clearly identified your attractive market segments, but you will only be able to deliver relevance if everyone in your organisation is consistently aligned behind these segments.

    Aligning product, marketing and sales behind what will likely be a smaller number of segments may seem simple in theory, but in practice, it’s far more difficult. Rationalising the product portfolio or consciously not pursuing parts of the market may require contentious culture change within your organisation. In addition, plans for product roadmaps, marketing campaigns and accounts will typically already be in motion. Therefore, if there’s a need to re-direct the focus of resources, a carefully planned transition period may be required.

    The key to aligning the business behind your highest potential segments is this – product, marketing and sales must realise that it’s economically unviable to be relevant to everyone. Once this realisation has set in, conscious prioritisation of audiences across the businesses will be possible – a critical pre-requisite to setting up for more relevant execution.
     
  3. Develop your Ideal Customer Profile

    With marketing and sales now fully aligned behind your market "sweet spots", they need to know exactly who they should go after within those segments. Therefore, you need to build out a new level of specificity to define exactly what an attractive account looks like. Profiling accounts against the following criteria can help you find your ideal targets:

    • Size- are they big enough? Assessing the revenue potential and the number of potential transactions or deal size of your prospects can help answer this question.

    • Attractiveness- do we want them? This will vary dramatically amongst different organisations as it depends on what’s important to them. Consider a prospect’s risk profile, decision-making structure, budget and geography.

    • Probability- can we win them? Again, this will vary by business, but there are some general questions you can ask to help determine probability. Are they accessible? Can we tolerate the required time for the sales cycle?

     
  4. Go heavy on customer understanding

    Given today’s more complex and less linear buyer’s journey, a deeper level of customer understanding is required in order to deliver a relevant experience end-to-end. With greater specificity applied to the “top-down” segmentation efforts so far, we should have gained the capacity to understand in more detail the “bottom-up” needs and preferences of our customers.

    Talk to your customers and sales people, build out your buyer journeys and their specific needs and preferences at each stage. Assemble documented buyer personas that help bring to life the understanding across the business of what your customers want and value.
     
  5. Initially execute against the minimum number of buyer journeys and personas

    Particularly for organisations that are still in the stages of planning and building an integrated marketing and sales engine, you need to start small.

    A very common spanner in the works for well-planned marketing and sales transformation projects is the content build. If you try to take on too much too soon, what we call the “content equation” will break you here. Developing content for each persona, multiplied by each stage of the buying journey, multiplied by customisation for each channel – quickly snowballs into a build that is unachievable.

    You may have been selective enough with your market segment selection that you can get behind all key buyer personas, although in most cases you will need to start with the most important ones and gradually build from there.
     
  6. Drive and measure on-strategy marketing and sales execution

    By this stage you will have absolute clarity around which customers you are going after, what they want and how you can deliver relevance. You now need to focus all marketing and sales acquisition activity against these segmentation outputs.

    To realise results, you will need to embed your new execution focus in your organisation’s operating rhythm and dashboards. By regularly measuring and reporting the proportion of marketing and sales activity which is “on-strategy”, your organisation can quickly course-correct and ensure the focus is maintained.
     

Conclusion – You can’t be relevant to everyone

Everyone’s trying to get more granular in their segmentation efforts – and this is the key to relevance – but you need to be specific in order to actually execute your segmentation strategy. Too many broad market segments will snowball into too many customer types, personas, value propositions and too much content – resulting in the whole strategy breaking down.

For your segmentation strategy to be feasible, you first need to have that moment when you realise you can’t be relevant to everyone. Once you’ve come to terms with this hard truth, you can then find the balance point where sufficient “top-down” market specificity enables you to be detailed enough with “bottom-up” customer understanding – laying key foundations for the organisation to be consistently relevant across the buyer’s journey.