Segmentation requires an in-depth understanding of customers generated through analysis and research.   Many large organizations either buy research from consultants and analysts or commission their own research.

A relatively new source of research is the tracking of B2B buyers in their online searches (SEM).   For example, the analysis of keyword searches can provide insight on pain points.

Unfortunately research on buyer behavior is neither affordable nor feasible for many businesses.

For those interested in segmentation, yet resource or budget challenged, I would like to share an alternative approach to segmentation that focuses on analysis:

Customer List – create a list of all of your customers, both active and dormant.

Win / Loss Report – compile a list of all lost customers.

Attributes & Metrics – list the metrics that define high value customers such as revenue, volume, profitability, frequency and recency of purchase.  For example, lifetime value may be more appropriate for your business than yearly revenue.   Create a list of the attributes that best describe your customers: size of organization, industry, geography, decision-maker’s department and seniority, structured buying process (e.g. RFP), displaced competitor, organizational needs etc.

Append Firmographic Information – Many demographic criteria are widely available on rental lists such as size, industry, contact title / department.   For a modest fee, you can take your customer file and ask a list broker to append your chosen list criteria.   Typically the broker will also cleanse and correct the customer list.

Add-in Key Metrics – for each customer, attach key metrics pertaining to revenue and profitability.

Ranking & Prioritization – then rank your customers based on key metrics and group the customers into five or ten segments.

Analysis – at this point your customers – won, dormant and lost – are grouped into segments, ranked from highest to lowest in terms of attractiveness and profiled according to important criteria.    Do you see any patterns?   Do your colleagues in sales and marketing validate the ranking and the segmentation criteria?    Are these segments unique and actionable for your marketing programs?

The above process is simple and straightforward.    By starting with analysis of your company data, you are pragmatically moving forward with your in-house data first.

As time and resources allow, your goal should be to start mixing in other sources of data.   The risk of using only your data is that your company’s experience may be very different from general marketing conditions and your analysis may be skewed.

Through segmentation a marketer identifies groups of customers that are ranked by their sales potential and can be classified based on any number of criteria.      By leveraging this intelligence, marketers can profile their ideal customer and forecast outcomes for marketing programs.

Traditionally, B2B marketers have segmented based on firmographic criteria such as company size, geography and industry.    Consultants such as MarketBridge and TCG recommend digging deeper and beyond firmographics to uncover more predictive criteria.

B2B marketers face challenges in mining their databases for accurate profiling criteria so segmenting the database may be an arduous exercise.

Here are the top five reasons for marketers to segment:

Higher Conversion to Revenue

By focusing on those segments with the highest potential, marketers can generate higher conversion rates.

Lower List & Media Costs

In understanding what the best prospects look like, marketers can rent lists and purchase media in a much more targeted fashion.  There is less wastage on targeting prospects outside the ‘sweet spot’.

Lower Downstream Costs

A responder to a marketing program is not always a good thing.   It costs organizations to qualify and sell to prospects who  respond.   By only inviting those prospects with a high potential to convert, a marketer can generate higher quality leads in lower numbers, reducing the cost of sale.

Lower risk of social media flaming

Prospects are equipped with formidable firepower.   Aggravate a prospect and a marketer risks provoking a negative reaction flamed through social media and social networks.   Word travels fast and wide.

Lower risk of opt-out

Why risk losing a B2B buyer through a mis-targeted message?   With CAN-SPAM and Do-Not-Call lists, it is easier for a buyer to opt-out permanently from your marketing.       The wrong message to the right buyer could provoke an unintended opt-out.  In other instances, messaging may be relevant but frequency of delivery is too high.    Or the level of personalization is too generic and does not resonate to prospects.   Segmentation helps improve the accuracy of marketing so that the right messages are sent to the right buyers at the right time.

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Outbound marketing or lead generation is used to directly contact ‘cold’ prospects through tactics such as direct mail, email, events and teleprospecting.

Depending on the size of your target audience, the spectrum of programs could vary from either a mass direct marketing program targeting small businesses with a volume sale type of solution or a high touch, account-based marketing program targeting enterprise accounts with a complex sale solution.

Despite the noise in the marketplace, most B2B marketers are looking to develop an optimal mix of outbound and inbound marketing, where each type of marketing works together to enhance results.

Today I want to highlight (not hype) some of the key benefits uniquely associated with outbound marketing. The first benefit, marketing ROI, provides an immediate payoff on outbound marketing while the remaining benefits pave the way to success for future marketing programs.

Marketing ROI – For most B2B organizations, especially those selling complex solutions, outbound marketing can deliver a sizable return on marketing investment (ROMI).

The higher costs of outbound marketing are affordable for organizations selling complex solutions that often start at $10,000 (or much more). By focusing on well-defined, high potential segments with large deal potential, just one close will pay for the outbound marketing program many times over.

Primary Market Research – What if you could define a vertical market segment comprised of 1,000 accounts in a region and be provided with a detailed report on that market? Unfortunately most technology analysts are unable to drill down to small-sized market segments in their research efforts.

By conducting an outbound marketing effort, you can profile segments in a precise way and use criteria that are meaningful to you. This insight gained is a bonus spin off from the core goal of generating qualified leads.

Market Segmentation – An outbound marketing program can provide very actionable information for B2B marketers to segment their markets and generate higher yield programs.

This information can be leveraged for trigger marketing and solution selling.

Accounts that are not converted to leads can be used for segmentation and are often profiled using the following criteria:

The challenge with inbound marketing is that you are profiling accounts that are not within your target market (as defined by size, industry and geography) and who maybe responding to an offer, rather than to your value proposition. This skews the results of the profiling.

Robust Database – A clean, well-profiled database provides the foundation for future marketing programs. Given that 20% of a list decays over a year, marketers are well-served if data can be cleaned as a by-product of outbound marketing efforts.

Less wastage on marketing to poor data and the cumulative impact of relevant messaging creates a compelling case for frequently touching key prospects through outbound marketing.

This database provides intelligence should a prospect respond through inbound or outbound marketing efforts.

What unique benefits do you associate with outbound marketing?

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