How to Create a Customer Segmentation Model

How to Create a
Customer Segmentation Model

Sales Focus
2
• Does your sales team call on virtually any
customer using a shotgun approach?
• You may have thousands of potential
customers to serve
• However, you have limited time and
resources to sell and deliver your services
• Critical to identify target customers where
you have the greatest chance for success
Is your sales team focused on the right customers?
© 2017 Tiger Sales and Marketing, LLC
dba Tiger Consulting. All rights reserved.

Benefits
3
• Sales:
 Focus resources and effort on the best target customers
 Prioritize opportunities in the sales funnel
 Acquire and retain customers more effectively because they are a better fit with
your value proposition, they are more likely to buy and close faster, they produce
bigger deals, remain more loyal and they are more profitable
• Marketing:
 Clarify marketing strategies and tactics
 Develop Account Based Marketing communications that resonate
 Establish pricing strategy based on overall value proposition
 Focus product development on target customer needs
 Diminish competition who can not compete
• Operations & Supply Chain:
 Improve margins, prioritize order fulfillment
 Provide aftermarket services
What are the benefits of defining target customers?

Process
4
1
2
3
4
5
Define ideal
customer profile
Build customer
segmentation model
Define service
focus by segment
Assign resources
to key accounts
Communicate
segmentation plan
Customer
Segmentation
Process

5
• Ideal Customer Profile is a tool to help
us identify our target customers
• It can be used to score, rank and
prioritize our customers and to identify
the most strategic accounts to focus on
• The closer customers fit our Ideal
Customer Profile, the more likely we
are to enjoy a successful relationship
• Customer purchasing preferences
should align with our value proposition
Criteria 2
Criteria 3
Criteria 4
Criteria 5
Criteria 1
Ideal
Customer
Profile
Define Ideal
Customer Profile

6
• Geographic: Where are their headquarters
and where do they operate?
• Demographic: What do they do? Measurable,
statistical data about the company and its
business units.
• Psychographic: Who are they? Values,
attitudes and beliefs held by the company, its
business units and employees.
• Behavioral: How does the company, business
units or employees act?
Define Ideal
Customer Profile
Geographic
Psychographic
Behavioral Demographic
Ideal
Customer
Profile

7
• Headquarters location
• Operational locations and reach
• Regions & continents
• Countries & basins
• Business unit structure
• Centralized vs decentralized
Geographic Characteristics
Define Ideal
Customer Profile

8
• Company size (revenue,
employees, growth projections)
• Industry segment(s)
• Activity level (Rigs)
• Capital or operating budget
• Our historic sales revenues by product/service
• Our future revenue growth potential by product/service
• Pay on time (Days Sales Outstanding/DSO)
• Financial stability (Debt, cash flow)
Demographic Characteristics
Define Ideal
Customer Profile

9
• Cultural fit (Core values)
• Level of integrity & business ethics
• Loyal / honor their commitments to suppliers
• Buyer-seller relationship (Partner vs supplier)
• Communication style (Open vs closed)
• Price sensitivity (Value-based purchasing vs price-based)
• Commercial terms
• Safety culture
• Delivery & quality sensitivity
• Technical expertise & knowledge
• High performance standards and reward performance
Define Ideal
Customer Profile
Psychographic Characteristics

10
• How are purchasing decisions made?
• Centralized vs decentralized procurement
• Purchasing urgency or readiness
• Product & service features, needs & preferences
• Technology fit (Innovative /
Early adopters of technology)
• Risk adversity
Define Ideal
Customer Profile
Behavioral Characteristics

Build Customer
Segmentation Model
11
1. Select 5-8 criteria for your Ideal Customer Profile
2. Score each customer against each criteria
3. Develop composite score and rank customers
4. Group potential customers into tier 1, tier 2 & tier 3 accounts
Customer Criteria1
Criteria2
Criteria3
Criteria4
Criteria5
Composite
Rank
Segment
Customer 1 95 90 95 85 95 92 1 Tier 1
Customer 2 95 85 90 90 90 90 2 Tier 1
Customer 3 90 85 85 90 85 87 3 Tier 1
Customer 4 85 90 85 85 80 85 4 Tier 2
Customer 5 90 85 80 85 75 83 5 Tier 2
Customer 6 85 80 80 85 80 82 6 Tier 2
Customer 7 80 80 75 70 75 76 7 Tier 3

12
Silver Accounts
Gold Accounts
Platinum
Accounts
Prioritize accounts & develop summary
Segment Tier Account Type Quantity Revenue
Platinum Tier 1 Key Accounts 15 ~55%
Gold Tier 2 Key Accounts 45 ~35%
Silver Tier 3 Non-Key Accounts >600 ~10%
Build Customer
Segmentation Model
•Defend & expand relationship
•Receive the most resources
•Develop, strengthen relationship
•Receive limited resources
•Selectively defend or replace
•Receive minimal resources
Silver
Non-Key Account
Selectively Defend
or Replace
Gold
Key Account
Develop into Tier 1
Strengthen
Relationship
Gold
Key Account
Develop into Tier 1
Strengthen
Relationship
Platinum
Key Account
Develop, Defend
Expand Relationship
Value to Supplier
ValuetoCustomer
Low
Low High
High

Define Service
Focus by Segment
13
Determine level of focus & effort for each segment
Coverage by Segment Platinum Gold Silver
Field Sales / Technical Sales Yes Yes Maybe
Regional Account Managers Yes Yes Maybe
Global Account Manager Yes Maybe No
Account Profile Yes Maybe No
Account Strategies Yes Maybe No
Opportunity Action Plans Yes Maybe No
Call Plans Yes Maybe No
Account Team Meetings Yes No No
Executive Sponsor Yes No No
Customer Review of KPIs Maybe No No
Dedicated Operations Personnel Maybe No No

Assign Resources
to Key Accounts
14
Customer
Criteria1
Criteria2
Criteria3
Criteria4
Criteria5
Composite
Rank
Segment Account Manager
Customer 1 95 90 95 85 95 92 1 Platinum Joe Hunter
Customer 2 95 85 90 90 90 90 2 Platinum Sara Closer
Customer 3 90 85 85 90 85 87 3 Platinum Tom Challenger
Customer 4 85 90 85 85 80 85 4 Gold Sara Closer
Customer 5 90 85 80 85 75 83 5 Gold Tom Challenger
Customer 6 85 80 80 85 80 82 6 Gold Joe Hunter
Customer 7 80 80 75 70 75 76 7 Silver

Communicate
Segmentation Plan
15
• First communicate to sales team:
 Why you need the sales team to focus on the highest value customers
 The benefits of customer segmentation & identifying key accounts
 Ideal customer criteria & profile
 Customer segmentation model & summary
 Account assignments
 Service focus by segment
• Then communicate to rest of
internal company stakeholders

What We Do
16
Sales Performance
Tiger Consulting enhances sales performance by
performing a comprehensive gap analysis and
implementing best practices in the following areas:
• Sales Operations
• Customer Engagement
• Opportunity Management
• Sales Talent Management
Strategic Marketing
Tiger Consulting develops and implements strategic
marketing plans to maximize company performance
and growth in the following areas:
• Strategic Planning
• Pricing and Financial Performance
• Product and Service Portfolio Strategy
• Branding Strategy
Schedule a consultation.
Tiger Consulting 713-249-4604
www.tiger-llc.com mhaubert@tiger-llc.com
Do you need to segment your customer base and
focus your sales team on the right customers?
We have grown key account revenue by 240% and overall company revenue by 85%
in 2 years through strategic account management and sales and marketing transformation.

How to Create a Customer Segmentation Model

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