Segmentation offers a range of benefits for Marketing and Sales organizations, but there are a lot of ways segmentation can fail. Here are a few, along with MLC’s insights on avoiding these pitfalls:
Failing to get the segments right. The most effective segmentation schemes go beyond topical similarities, like industry, company size/revenue, and geographic footprint. Instead, best-in-class segmentation processes split customers and prospects out according to deeper needs, desired outcomes, and priorities. Getting your segments wrong will lead to ineffective messaging, surface-level insights, and potential irrelevance.
Want to read more about building a world-class segmentation scheme? Check out these resources:
- MLC’s overview of common segmentation methods
- How Dow Chemical segments customers according to needs and priorities
- How Lafarge uses customer behavior to gain insight into segments
- How Square D groups customers into opportunity tiers
- How FedEx dives deep into the needs of industry segments
Focusing on the wrong segments. Once you’ve broken customers up into segments that reflect the way they buy, the challenge is to figure out which segments to prioritize over others. Key to this is understanding which customers are most valuable, then matching those opportunities to the organization’s long-term goals and capabilities.
Want to read more about segment prioritization? Check out these resources:
- Segment prioritization topic center
- How MCFA separates low-value buyers from the rest of the pack
- How Iron Mountain identifies and motivates advocates inside organizations
Not activating segments in the field. It’s one thing for Marketing to identify and prioritize segments correctly and in ways that bring value to customers and the business; if frontline staff are unable to leverage segmentation schemes to drive sales, the segmentation exercise will necessarily be of limited value. Keeping segmentation schemes simple, but pervasive in sales materials and training, is key to driving resonance with the sales force.
Want to read more about activating segments in the field? Check out these resources:
- How Sienna taught frontline staff to recognize target segments
- How FedEx designed sales collateral around segment insights
- How Johnson Controls uses segmentation to help reps diagnose customer needs
- How Lexmark created “segment experts” within the sales staff
Ineffective use of segments in innovation and NPD. Segment knowledge can produce incremental boosts in message resonance and revenue, but the long-term value of a good segmentation scheme can be found in how companies leverage those insights to create new products for high-value audiences.
Want to read more about using segment insights in innovation/NPD? Check out these resources:
- How Phillips invests in future high-return segment needs
- How Cardinal Health focuses innovation at a segment level
- How Reynolds and Reynolds surfaces unmet needs of segments
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