Business-to-Business Segmentation in four easy steps…

Why worry about segmentation? You already know who your best customers are (kind of), and you’re too busy for some kind of facacta academic exercise. But that’s the very reason why segmentation (try calling it prioritization if that seems more comfortable) is a good idea. First, you are likely to be surprised by some of the clients who float to the top, and second, prioritizing your customers will save you time (and help you make more money) in the long run.

I’m suggesting four factors that can jumpstart your segmentation/prioritization project.

1) Current profitability: What are you netting from the account? Revenue is good to know, but a customer may be costing you more than you’re taking in, due to excessive customer service demands and late payments. [If you’re not already measuring net income by account, this is the place to start!]

2) Future potential: What are the opportunities for cross-selling or up-selling the customer? Are there different products or services you can sell to the department you’re dealing with? Are there other departments in the company you can sell your current product or service to?

3) How much attention they require: Sales and service calls, requests for (free) extra work like accounting reconciliations, socializing, freebies like Bengals and Reds tickets, etc.

4) Strength of relationship: Measured by consumer satisfaction scores, willingness to refer other companies to you, the longevity of the relationship, and the degree of interactivity (frequency of reviews, how often they open your e-newsletter etc.)

Data for all four factors should be available within your organization--all you have to do is
a) collect them into a single database (an Excel spreadsheet can work fine)
b) assign a value to each factor (nothing fancy--maybe two points for good, one point for
average, and zero for bad), and
c) rank your customers by their composite score.

Congratulations! You’re segmenting!

If you would like help with this process from someone who’s done it many times before (examples), or want to talk about how to create a great ROI from segmentation once its done, give me a call. You’ll like the results!