Why have I saved customer segmentation for last? In part, it’s because this form of segmentation is so obvious that it is usually the first type that is done. Who buys what products and in what amounts? How large are the customers? Where are they geographically clustered? All of this is good stuff usually needed for sales analysis and not marketing cam- paigns. However, there is gold in this analysis for marketers as well, since many new sales opportunities will come from current customers. This may seem to be an odd subject for marketers to think about, as salespeople are calling on the customers, and they should know about new sales opportunities—right? That may well be true for customers that are small companies, but as small companies become larger, it is nearly impossi- ble for salespeople to know all the potential areas for new sales. This is frequently a problem for marketers, as the sales department may well have told them to “stay out of the customer base.” At one point, almost 35 percent of the customers at IBM had been suppressed by the sales orga- nization, meaning that sales didn’t want the direct marketing group to communicate to specific customers—a common proprietary sales posture.
Ironically, in my role as national campaign manager, in which my main job was “demand generation,” most of our campaigns were directed at current customers and not suspects, and we were good at generating new demand. The message today is clear: salespeople cannot know everything about large customers, and marketing campaigns should be directed at this group as well as at suspects, leads, and others.
To sum up briefly, smart microsegmentation is an important element in developing the new sales coverage model. Do it well and the rewards will follow.
Summary
The importance of microsegmentation cannot be overstated. A market segmentation that is too broad will leave you with the capability to launch only general messages that will not break through the high level of clut- ter—you might as well save your money.
Here’s another payoff of microsegmentation. In writing direct mar- keting copy, you attempt to visualize the person you’re writing to and write as though you’re speaking to that person. Obviously, the better the microsegmentation, the better you can visualize that person, and therefore more relevant messages and offers can be created. The more relevant the message and offer, the higher the results—guaranteed.
Microsegmentation in B2B takes on even greater significance than in consumer marketing, as the sale can be so much higher in revenue from one segment to another. The range of sales potential from one B2B microsegment to another can be so large as to justify the amount of mar- keting investment made from one microsegment to another. All too fre- quently, I see the same amount of money being spent on each potential customer segment without regard to which ones might be the most pro- ductive. We just sort of fish for prospects, rather than targeting the best ones and going after them with force.
One of the keys to success in B2B demand generation is the number of times you contact a prospect and the sequence of the media of contact (for example, E-mail, mail, and telephone). This is called “sequence and frequency.” As each of these three media is quite different in cost, the question to ask is, how much money should we spend on generating
inquiries? With a microsegment matrix, the answer is easy—you can obvi- ously spend more on those segments that will produce the best market- ing payoff. This is just another use of microsegmentation.
In essence, by performing microsegmentation, you identify those groups or clusters of potential or current customers who will be the pri- mary source of your success—need I say more?
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Over the years, B2B marketing communications goals have split into two camps regarding promoting the “brand.” One camp defines the brand as the company—for example, IBM, Caterpillar, or HP; the other defines it as the product or service—in this example, computers, trac- tors, or printers, respectively. Experts agree that truly creating a brand and image (the personality of the brand) in the minds of the target audi- ence is not only expensive but also very difficult. In spite of that barrier, it’s not unusual for product managers to think that the name of their product is a brand, and they then direct the creation of advertising, which positions it as such.
When I was at IBM in the mid-1990s, Ogilvy & Mather was the com- pany’s ad agency, and it still is today. Clearly, O&M is an agency with a historic perspective on advertising and branding. The agency has a phrase for the impression that the brand has in the marketplace: it’s called the
“brand footprint,” defined as the collective view resulting from the tar- get audience’s perception of the company and/or its products and services.
At the time, IBM’s product group felt the company’s AS 400 midrange computer, among other products, was a brand by itself. However, while it was true that most people in the target audience knew the name AS