The time taken to identify ideal target customers in B2B markets is rarely wasted. It can be all too easy for a sales department to lack focus and to chase the easy target, the ones the competitors chase, or those always open for a visit. It is important to focus resources by thinking through which customers are likely to generate the best long term returns.

The result of trying to please/relate to as many customers as possible is an undifferentiated offering that actually fails to please anyone. The key is to focus on the business strengths and use this as a basis to identify the most appropriate customer groups. The objective must always be to avoid competing on price wherever possible.

Segmentation offers an alternative to organising marketing effort around products. Instead, activity should be focussed on each market segment, their specific needs and how the business may satisfy those needs. Research shows that most markets can be broken down into between 5 and 8 segments

Market and customer segmentation can be a complex (and time consuming) subject so it is often best to not to start unless willing AND able to allocate the appropriate resources and act upon the outcome. Buy in and inclusion is essential as is an appropriate risk assessment. The result of getting the segmentation process wrong is ultimately lost customers and business.

There are many ways to identify true customer needs. Purchase history is a starting point. The differing needs of members of the customer decision making team should be considered and the market surveyed. 

With a set of needs identified it is possible to profile those who have each distinct set of needs, to profile them, give them an identity and make them real. Only when this is in place is it possible to fit the business (and competitor) products into each group of needs and arrive at a set of defined market segments. The segments may then be evaluated against a set of basic rules.

  • Members of the segment must react in the same way when delivered with the same offer.
  • Each segment must be unique and able to be serviced by a unique marketing strategy.
  • The segment must be of sufficient potential size to justify a unique marketing strategy.
  • The segment must be reachable.

It is therefore important not to define too broad or too narrow a definition for a segment.

With segments identified it is important to examine each in detail and either modify or discard those that are not a perfect fit. A failure to identify segments correctly can be a costly mistake.

When a final list of market segments are available then it is possible to devise a marketing strategy for each and to identify ideal target customers in each segment to attack. Sales resources can then be allocated to ideal customers with the most potential long term value to the business.

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