Sharpening Market Segmentation To Achieve Customer Centricity

by Chris Horn

In our previous post, we kicked off a series around our digital go-to-market transformation roadmap, starting with the first important step — securing executive sponsorship and educating the business. In today’s post, I’ll highlight step two which is about tightening your market segmentation to deliver scaled relevance. 

Reorganising the business around the customer is a long, complex and unique journey for every organisation, so understanding the sequencing and dependencies can very helpful. The first stage on our transformation roadmap ‘Operationally Pivot to Customer’ is all about setting foundations for future change initiatives, and coming to the realisation that customer-centricity can no longer be just a good intention – but an operational imperative.

STAGE ONE ON THE DIGITAL GO-TO-MARKET ROADMAP

In the first step, we covered why securing executive sponsorship and gaining buy-in from the wider business is so impactful, and in today’s post I’ll explore the second step:

Step 2 – Sharpen Market Segmentation

A significant realisation on the pathway to genuine customer-centricity is that you cannot be relevant to everyone, all the time. If your targeting is broad, you are far less likely to deliver the quality and relevance that today’s customer expects. Too many broad market segments will quickly evolve into too many customer types, personas, value propositions and too much content being required to generate scale. Instead, define those customer segments where the optimum market opportunity and your core differentiation intersect (sweet spot) and align the business behind them.

The following are three practical steps to help you do this:

1. Define Your Market ‘Sweet Spots’

Many organisations pursue too many market segments, resulting in solution offerings, and marketing and sales efforts which are moderately relevant to most, but not dramatically relevant to any. A useful way to identify your market ‘sweet spots’ is to map out your solutions against potential market arenas and then select the segments where the following three 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’

Once you have reduced the number of segments to target, you will need to align product, marketing and sales behind them. This is frequently difficult as plans for product roadmaps, marketing campaigns and accounts will typically already be in motion. The key to aligning the business behind your highest potential segments is this — product, marketing and sales must realise that it is economically unviable to be relevant to everyone. Once this realisation has set in, conscious prioritisation of audiences across the businesses is possible — a critical prerequisite to setting up for more relevant execution.

3. Drive and Measure On-Strategy Execution

By this stage you will have absolute clarity around which customers you are going after. You now need to focus all marketing and sales 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. Once clear on these priority segments, the next step is to align product, marketing and sales behind them. 

What's Next?
Our next post in this series will focus on Step Three: Key Tips for Mapping Buyer Personas and Journeys. We'll discuss how to develop your ideal customer profile by delving deeper into their behaviour, preferences and values, to enable you to deploy resources towards your most profitable opportunities.