Deliver more targeted products and services – Dr. Muneer Muhamed explains

A recent study on B2B and corporates revealed that only 41 percent use sophisticated tools for customer segmentation. Most organisations find this to be a major barrier to driving innovation.

Segmentation helps deliver relevant and important benefits to customer groups in a consistent manner, and also provides a competitive advantage. Imagine marketing a one-size-fits-all product to your customers in today’s world when customisation is vital.

The choices and alternatives available to customers are plenty. Because of the availability of features, substitute products, price points and so on, it’s difficult to command customer loyalty even in a B2B situation.

If we know the detailed needs of key customers, we’ll be in a position to develop and deliver products and services that appeal to them, and earn their loyalty.

Most marketing manuals teach us that segmentation is what marketing is all about. Yet, many of our B2B clients struggle with building great customer experiences and loyalty because they lack the ability to do proper customer segmentation. The traditional vertical-based segments are common even today.

Many clients in the B2B category have taken the easy route – viz. to play the status quo of basic segmentation that groups customers on the basis of turnover, industry vertical, number of years in business, geographical location etc.

Such demographic segmentation is common for the consumer category too. However, it’s fast becoming irrelevant with new media and consumption patterns. Not that there’s anything wrong with such segmentation because the dimensions are easily understandable, and important for sales and marketing plans.

The issue is that this basic method won’t take into account the current and future needs of customers. It’s better to have segmentation that also considers the needs, attitudes and behaviour of customers, in driving specific product portfolio matrixes and better results with long-term partnerships.

B2B customer needs should be a basis for segmentation. You can become a market oriented organisation from a product oriented entity this way. You may even become a service oriented outfit.

Businesses should constantly analyse their customers’ needs, and provide products and services that fulfil those needs in order to sustain growth. If you can group customers based on their needs, they could be targeted with appropriate communications and offerings.

In our work with The AIM Institute and its founder Dan Adams on new product blueprinting, we typically helped companies identify the preferences of customers by using various techniques.

The framework is applied on multiple levels – viz. unstructured interviews, one-on-one sessions with different customer stakeholders, focus groups and so on. These steps helped us identify the current and anticipated future needs in detail.

If needs-based segmentation looks difficult, one can implement intermediate behaviour-based segmentation. This can unearth unspecified requirements – for instance, you may have noticed that in your business, some of your clients are very loyal to
you for supplies while others keep switching back and forth, between various competitors and you.

Clearly, some of the loyal customers prefer long-term partnerships and are investing in it for a reason. Those who switch are constantly looking at price benefits. So it will help you to segment such customer behaviour when formulating marketing plans.

Here’s another example. Some companies will call for tender with clearly defined specs while others are open to discussion and suggestions in order to meet their needs. Those who call for tender are probably looking to benefit from the lowest prices and are fine with basic product specs; the others are open to recommendations and willing to pay a higher price for the benefits they can derive in terms of quality, service and value.

What’s next after completing the segmentation based on needs or behaviour?

Identifying the customer value proposition for each segment is critical. This must be done with recognisable differentiators and be unique to each segment. The value proposition must be defendable and demonstrable for sure.

Once this is completed, the next step is planning the value chain and method of delivery. You may need a tool such as a balanced scorecard to drive this and align all the different stakeholders from sales, supply chain, services and others.

Salespeople must be trained to ask the right questions from customers to determine the segments they belong to and also understand the benefits of doing this. At the start of the new strategy implementation, the process must be monitored and improved upon, to ensure alignment and successful execution.

By serving your customer needs through such sophisticated segmentation, you will command their loyalty and enjoy sustained growth even in a mature industry.