Segmentation to increase your commercial effectiveness and efficiency


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Segmentation to increase your commercial effectiveness and efficiency

  1. 1. Segmentation to increase your commercial effectiveness & efficiency B2B Segmentation Seminar 11 th of March, 2010
  2. 2. YMS 2010 indicates that segmentation is on the rise again Segmentation is the foundation to commercial efficiency and effectiveness Build customer loyalty & trust Differentiate from competition Build strong brand Target through better segmentation Sustain revenue growth Highlight value of benefits of products Protect market share Communicate via online media Gain better understanding of customer Measure return on marketing efforts Innovate, product development & R&D Protect margins 36% 32% 32% 31% 29% 27% 26% 25% 24% 24% 24% 23% N= 621 In 2009 Top 5 Not in 2009 Top 5 % of respondents What will be your major marketing challenges for 2010? Source: THoM Yearly Marketing Survey 2010
  3. 3. However, most companies still use the most basic segmentation method, being firmographics in B2B Net Adjusted Index (%)
  4. 4. There are four main types of segmentation methods that can be used in parallel Firmographic segmentation Value-based segmentation Needs-based segmentation Usage-based segmentation 1 2 3 4 <ul><ul><li>Segments based on behaviors, needs and drivers, indicating how customer thinks about the features of a product/service, what he prefers and for which reasons </li></ul></ul>In B2B: segments based on sector, number of employees, turnover, geographic location… <ul><ul><li>Segment based on past and current customer’s usage of channels and products/services </li></ul></ul><ul><ul><li>Segment based on current/potential value generated by the customer </li></ul></ul>Customer What does the customer need and want? How much value does the customer deliver? How can we describe our customers? What, where and how does the customer purchase? 1 2 3 4
  5. 5. The appropriate segmentation method has to be selected in function of the specific business objective Segmentation methods Management areas Business objectives Firmo-graphic Needs & drivers Product & channel usage Value Sales Acquisition √ √ Up- & Cross-selling √ √ √ Loyalty √ √ Sales and after-sales channel √ √ √ √ Marketing Product/service portfolio & innovation √ √ Positioning/Value proposition √ √ Communication content √ √ Finance Marcom budget allocation √ √ Pricing √ √ √ √ Profitability √ Organization Organization structure √ √
  6. 6. Macro and Micro segments can be combined in an integrated approach, for specific business goals Step I – Macro Segments (Static value) Step II – Micro Segments (Behavior, Need, Dynamic value) Step III – Integrated Segments (All dimensions) Defines the basis of: Ownership within organization and profit objectives Defines the basis of: Segment strategy, Value proposition, Go-to-market and Targeted promotions High Low Medium Corp SME SOHO Dynamic value Needs Product usage Cluster: “Partnership seeker” Needs Dynamic value Static value Product usage ... ... ...
  7. 7. Benefits of using a (integrated) segmentation approach lie in efficiency and effectiveness Segment dashboard Benefits of segmentation <ul><li>Size (# companies in market) </li></ul><ul><li>Penetration (# of customers) </li></ul><ul><li>Potential revenues </li></ul><ul><li>Market share </li></ul><ul><li>Satisfaction, loyalty and churn risk </li></ul><ul><li>Current and evolution of performance: </li></ul><ul><ul><li>Lead generation </li></ul></ul><ul><ul><li>Lead conversion </li></ul></ul><ul><ul><li>Product penetration </li></ul></ul><ul><ul><li>Sales revenues </li></ul></ul><ul><ul><li>Gross margin </li></ul></ul><ul><ul><li>… </li></ul></ul><ul><li>EFFICIENCY </li></ul><ul><li>Higher efficiency of Get/ Keep/ Increase initiatives </li></ul><ul><li>Higher sales efficiency </li></ul><ul><li>EFFECTIVENESS </li></ul><ul><li>Enhanced focus in marketing efforts </li></ul><ul><li>Optimal budget allocation </li></ul><ul><li>Increased marketing ROI </li></ul>
  8. 8. For more information on segmentation, contact: Pieter Lievyns [email_address] +32 (0)495 29 31 14 The House of Marketing