Lessons Learned Creating an Actionable Segmentation

by Sat Duggal

We recently completed a successful segmentation project with one of our major industrial B2B clients’ Chinese subsidiary, which was facing a highly complicated and quickly evolving marketplace. (Read the case study here). As we reflect on that experience, a few key lessons emerged that can be more broadly applied:

  • Put it on a page: By creating a market map - which characterizes every potential area of economic activity in a given market – we were able to visually demonstrate an understanding of an extremely dynamic market. This allowed us, in partnership with the client, to visualize all of the most important aspects quickly. Finalizing the market map took several iterations which required feedback from many functions at the client (sales, marketing, technology, supply chain). In the end, we captured the complicated distribution system, global and local dynamics, and unique needs for each group of customers. This proved to be the basis for our segmentation.
  • Don’t just listen to the customers who love you: When organizing research, it’s often easier and cheaper to speak to customers with whom you interact every day. However, some of the most breakthrough insights from this project came from “blind” interviews (where we interviewed customers who the client doesn’t pre-qualify and who don’t know the company sponsoring the research). Interviews that are pre-arranged by the client sometimes provide limited value – interviewees position their responses for their selfish interests, tell us what they think ‘we want to hear,’ or are even sometimes biased by their relationships with the salesperson. Often these issues are unintentional – but in this project in particular, there was a stark difference between the quality, depth, and candor of the ‘blind’ and ‘client arranged’ interviews.
  • Start with the end user and work backwards: In B2B, it’s common (and usually much easier) to organize your business to serve direct customers. After all, they are the ones who pay the bills and you hear from most! However, time and time again, we discover that true value is unlocked at the end user level… and this project was no different. By speaking with a variety of customers (direct, indirect, local Chinese, global, technical, commercial), we discovered that each group had a unique perspective on the market, and completely different needs. By arranging the feedback by starting with end users, the priorities became very clear.
  • In times of uncertainty, customers want expertise and responsiveness: In this project, the core technology is going through rapid changes – which have profound impact on the economics through the value chain. Both indirect and direct customers at all levels expressed this challenge in different ways, but the common thread was clear: They needed a leader to simplify the complicated, and they wanted a trusted partner to respond to their specific needs. Often sales teams are quick to prioritize pricing pressure they face on a day to day basis from new entrants. However, it was interesting to uncover that the market leaders were more interested in a trusted long term partner than the lowest cost provider.

Now, it’s your turn… what are the biggest lessons you’ve learned when completing a complicated segmentation and go-to-market strategy? Would you add anything? Or are you struggling with where to start?

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Keywords: Go-To-Market, Customer Segmentation