Segmentation Strategies for Product Marketers - How to segment right

The Art of Segmentation

Gone are the days when you could send out a piece of communication or launch a campaign and hope that your target audience would notice them. Today in the age of personalization, account- based marketing and hyper targeting how you slice and dice the market, how accurately you define your audience and how targeted your messaging is makes a huge difference to the success of your campaign. The spray and pray approach which was prevalent less than a decade back has also become too expensive in today’s cluttered market. The only way out of this conundrum is to understand who your marketing programs wants to target, define them properly and create appropriate clusters or segments to ensure adequate response. To win in competitive markets, where it is becoming increasingly difficult to find product led differentiators, one should effectively define target segments and create more focused marketing programs. This article enumerates some of the steps that we can take to have a robust segmentation strategy

Getting your segmentation strategy right is easier said than done. One of the reasons tech service providers shy away from doing an exhaustive exercise is because they are concerned that going after a particular segment/segments leaves the others open to the competition thus harming growth prospects. Understanding who you sell to and what problems of your customer you are solving is as important as what you sell. In order to do this well, tech providers need to pay a lot of attention in defining not only its ideal customer profile but also requires deeper analysis and instincts.

Advantages of Segmentation for Product Marketing

It becomes easier to differentiate

Let’s face it. In today’s world of #metoo where its super easy to copy a product feature or a technical benefit, sometimes even overnight, having a well-defined segmentation strategy allows you to differentiate your products through your marketing messaging. Instead of being a product that means something for everyone, segmenting your market allows you to be everything for someone. Remember trying to please everyone will end up pleasing no one

Get more and better responses for your campaigns

The reason is almost same as above. As marketers haven’t, we all tore our hairs in frustration when we receive very poor responses to our campaigns and have no answer to why? Well, more often than not segmenting and defining your audience will help you solve this problem as messages get targeted and hence appear personalized and focused.

Improved Efficiencies

Instead of bidding for every available key word on Google SEM, wont it be more effective if we pick and chose those which are most likely to create an impact, thus saving money and providing higher ROI. Segmentation works in the same manner, allows you to funnel your budget where its most required and most likely to get you the returns that you want

Enable your sales force better, improve your credibility

You can help your salesforce identify the attributes and the problems that the market most wants to get a solution for, allowing them to deep dive into those prospects that are most likely to convert. Your sales force will love you if you get your segmentation right. Also imagine, your account manager sitting in front of a customer talking of all benefits of the products instead of just want he wants. The customer would be lost within the first few minutes itself. Now, imagine a situation where the sellers are focusing on only select market categories because of your segmentation strategies allowing them to appear as specialists in those segments. Customers without doubt will respond more favorably to the latter situation, making you the go to person for sales

So now let’s explore some best practices for segmenting your market for the products and solutions that your organization is offering

Get a firm understanding of the demand of the market that you are in

Market analysis and research allows you to understand where the demand for your products and solutions are likely to come from. This allows you to scope and size the opportunity in the market. For example, if your company is selling work from home products or solutions, you know that these products will be in bigger demand now than it was earlier. However, applying segmentation analysis will tell you that who or what kind of personas are now making the buying decisions. While earlier these solutions would have been evaluated by the admin teams, today its likely to feature within HR budgets.

?Size the market based on competitive landscape

Just knowing who your competitors are isn’t enough for a sound segmentation strategy. Product marketers would do well if they also understood the nature and intensity of the competition. For example, if competitors are well entrenched or they already have a loyal set of customers and are being served well, it won’t be easy for you to enter this segment. If you enter the mid-market space for marketing automation tools, you will face very intense competition from the Zohos of the world. However, if you chose to enter the CRM space for construction industries, the competition perhaps won’t be so brutal

?Be realistic

Another important consideration in determining the attractiveness of a target segment is your organizational capacity to reach and serve it in an economically viable fashion. If you identify an opportune market segment in Spain but have no capability to distribute or deliver your product to Spain, then this does not present a viable opportunity to you.

?Get relevant and accurate customer profile data

As product marketers you will be flooded with both relevant and irrelevant data. Creating and actioning on the right target audience and segmentation depends a lot on which customer profiles you pick and more importantly which ones you ignore.

?The Not-so-Secret Sauce of Success

Having decided on your segmentation strategy its also important to keep in mind some practices that can ensure approach meets their goals. Here are a few

?Don’t Bank on early Success

Organizations, especially early-stage startups are tempted to focus on the first segment that has given them some regular business. Sometimes these successes are a result of founders having a good network or a lucky sale due to the efforts of a particular sales leader. Such early successes can blind you to the opportunities outside and hence its imperative that such an approach does not become the foundation on which your segmentation strategy is based on

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Understand your buying team

In any buying decision, usually there are three levels of decision makers that are involved, the researcher, the champion and the final decision maker. Depending on the size of the organization these roles can be played by three different individuals or two, but rarely played by the same person. If you don’t have a good understanding who all are evaluating your product from the buying team, your segments will be erroneous

?Get your vertical strategy right

If most of your prospective clients want to engage with solution providers who have a strong verticalization strategy, you cant go the other way. The mistake that most of us do when creating segments that we want to go after is that we adopt a vertical agnostic strategy or focus on a few of them and in the process ignoring that the segment wants to work with providers who have different solutions for different verticals

?Twist and Tweak

Segmentation and targeting are not one-time effort. Markets evolve quickly — as do your capabilities — so what is true today may not be tomorrow. Marketing and sales must collaborate regularly to assess success and make minor or major adjustments. Also, look at your segmentation attributes, and determine if they are correct. Collect more data, and use that to fuel decision making and make changes if required?