Dealing with the Big Dogs: The Importance of Segmentation

The Importance of Segmentation

As those of you with our 2015 Calendar will have noticed, this month we’re talking about segmentation. All good marketing starts with segmentation, and therefore the success of your marketing strategy will ultimately depend on the effectiveness of your segmentation strategy.

Effective segmentation is recognising that not all customers are equal. Some are big dogs and need treating as such. The Pareto Law states that in most companies 80% of sales are accounted for by 20% of customers. It is surprising how true this is with slight variations around the percentages.

Increasingly b2b companies are embracing segmentation and with it a potential problem – what to do with the big dogs? The answer is pretty clear. Large customers require a totally different approach to smaller customers. Here are 6 key things to keep in mind:

  1. In-depth customer knowledge is required. Large customers are almost always complex and so it is absolutely vital to understand the decision making personalities and their different requirements.

  2. Each large company requires its own marketing plan. Big dogs should not be treated like small dogs. When a key customer represents a significant proportion of a company’s sales, it makes sense to create a mini marketing plan.

  3. Control systems should be applied. If a large customer has a significant change in its requirement, the reverberations throughout the supplying company could be huge. Therefore there is a requirement for control systems which will warn if things are moving badly or equally if there is an upturn in business that must be accommodated.

  4. The organisational structure of the supplier needs to manage the large accounts. Small accounts may well be managed on a geographical basis. However the very large accounts require specialist attention and this might mean super salespeople who can fly huge distances and manage the sensitive and complex business of super-sized accounts.

  5. Team selling is required. Bearing in mind the complicated decision-making personalities in the big dog customer, it is quite likely that a team of people will be required to address their different needs. This will mean matching job functions and personalities. CEOs speak to CEOs and technical people speak to technical people. Not only is this important to ensure that the customer’s needs are met, it is also important to ensure that the supplying company doesn’t become dependent on a super salesman who, in a power crazed moment, could leave the company and take the customer with him.

  6. Learn negotiating skills. Doing business with big dogs is never quick and never easy. There is much to discuss and almost always negotiations are required. Sales teams need to be taught the skills of negotiation and not just persuasion.

Such is the appeal of large customers, some b2b companies have eschewed their smaller ones. This highlights the importance of understanding the profitability of different sizes of companies. Just because a company is large doesn’t mean to say that it is profitable. There is usually money to be made out of small accounts so they too must be managed and not neglected. Furthermore, as any road builder will tell you, a good road requires a mix of different sized stones, some big, some medium and some small so that they all fit neatly together. So it is in business. Alongside the big dogs you do require a mixture of medium and smaller customers. Achieving that mix and keeping everybody happy is the ultimate aim of every good b2b marketer.

To learn more about segmentation, please read this month’s article on the subject by following the link below.

 
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