To identify your most important segments you may consider looking at your most profitable clients. Prospects that have similar characteristics may reach beyond demographic segmentation, often referred to as firmographics, but may extend to psychographics. If you’re a professional services firm in the B2B space, consider this chart. This well known Boston Consulting Group matrix has some fundamental assumptions that since its development in the 1970’s have been improved with more sophisticated models. However, for the purposes of starting your segmentation it offers a valid framework for assessing the types of clients you may wish to pursue. It’s difficult to ask your lead how they think, but by observing the type of company they work for you may be able to learn a lot about how the purchasing cycle is about to go. As in B2C marketing, psychographic segmentation can be an effective tool in identifying your next big deal.
Those that are seeking quality may more than likely be coming from the high growth and high market share players. These are the clients who pursue high end professional services.
Another excellent market segment are those from high market growth industries but that have a smaller position. They have a “challenger-attitude” and the better ones are more than likely dominating within a niche.
These are demanding clients in industries that tend to have tremendous emphasis on expenses, usually have low profit margins, and these companies tend to be the leaders in those industries because of the speed on running down the cost curve. They produce their product or service at rates that their competition cannot because of their volume.
These companies tend to be smaller, they generally don’t have a leadership position within their market and they are stagnant. Management may have been in place for a great while and the ambition to take the lead may have given way to the comfortable nature of having a “lifestyle”. Decision makers are fearful of accepting any changes and the established methods are nearly written in stone. “It’s the way we’ve always done it.” Find the younger change agent that has the ear of a decision maker and work with them to make changes.
These organizations are in decline, are hyper-sensitive to price and less concerned about quality. The decision maker may be far removed from the senior manager in larger organizations, or in smaller organizations may be the owner. In either case, management is driven by fear and it’s very difficult to create a vision of the future under these circumstances.
Consider how the home improvement companies segment. There are generally three types of buyers.
This handyman is going to walk through the doors of his local home improvement chain at 630 AM on Saturday morning with or without advertising.
This is where the industry spends their money. Think about how they position themselves. Lowe’s tag line “Let’s Build Something Together” and Home Depot’s tagline is “You Can Do It. We Can Help.”
This segments wants it done right and is willing to pay for a professional to do so. They understand the value of working with a professional.
So after identifying your segments, look at the characteristics of why those clients who you have in your portfolio are “quality fanatics” and assess how you can attract more of them. Once you’ve got that down, you’ll develop your positioning.