Strategy
Market Segmentation
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Customer Segmentation: A Step By Step Guide For B2BCustomer segmentation involves dividing customers into groups based on similar needs, values, or economic value. Properly segmenting customers allows companies to focus their efforts on the most profitable segments. To identify the best customer segments, companies should analyze customer data, develop hypotheses about characteristics of good customers, collect relevant data, validate the hypotheses, and prioritize segments based on customer quality, size, and growth potential. Presenting the findings to stakeholders and acting quickly on the results is critical for companies to reap the benefits of customer segmentation such as improving products, marketing messages, and sales strategies. Effective customer segmentation requires preparation, planning, and adapting the process based on new information and feedback.
Focus & Market SegmentationDavid advises entrepreneurs to segment their market and focus on the most promising customer segment when first starting out. Known as the "low hanging fruit", this segment is most likely to buy and may be defined by their industry, size, or other characteristics. Focusing allows businesses to develop targeted messaging and prioritize features that fully satisfy one group's needs. However, management often struggles with focus because Saying No to other opportunities is difficult. The example is given of a startup that wasted resources pursuing a large bank that was not the right fit, instead of focusing on their core small and medium business market.
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