Date post: | 22-Jan-2018 |
Category: |
Business |
Upload: | blue-canyon-partners-inc |
View: | 601 times |
Download: | 0 times |
© 2015 Blue Canyon Partners, Inc. All rights reserved.
September 2015
Why It May Be Time to Rethink Segmentation
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Presenters
Axel J. LeichumPRINCIPAL, BLUE CANYON PARTNERS
T (847) 967-0253
2
Axel Leichum leads numerous business-to-business focused strategy projects that help Blue Canyon’s clients improve their understanding of customer needs, identify and prioritize growth opportunities, effectively segment and target markets, and enhance their major customer relationships
12+ years as a management consultant
Expertise across a wide variety of industries: IT hardware and software, wholesale distribution, electrical equipment, healthcare, personal and commercial vehicles, HVACR equipment, alternative energy, automation, and distributed power equipment among others
Experience executing projects with a focus on both developed markets and emerging markets
Contributed to a number of articles and white papers on topics such as adjacent markets, pricing strategy, and segmentation
J. Monte RoachPRESIDENT/CEO AMERICAS, A-GAS
T (815) 575-4484
Monte spent 25+ years in the Industrial Automation and Electrical products space before moving to CEO of Maysteel, custom sheet metal fabricator, and now A-Gas as President/CEO of its Americas business. His first exposure to segmentation projects occurred with a BCG project while at Rockwell Automation in the early 1990’s. Monte has also held leadership positions with Emerson and Actuant.
A-Gas specializes in the recycling, reclaiming, distributing and destruction of high Global Warming Potential or Ozone Depleting Gases .
Has created market specific product and channel strategies in multiple industries segmented to utilize resources that create the best chance of success
Successfully turned around multiple businesses by engaging the right people, doing the right thing at the right time.
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Why segmentation matters
Is it time to rethink segmentation? Three questions to help provide an answer
An approach to developing robust segmentation
Best practices for effectively implementing segmentation
Agenda
3
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Why Segmentation Matters
4
Is the foundation of a successful growth strategy… Opportunities
Where to Target
How to Win
Delivers top line and bottom line improvements… Faster Growth
Higher Margins
Higher Return on Investment
Higher Productivity
Effective Segmentation
Companies can survive without good segmentation but they rarely thrive
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Three questions to help provide an answer…
Is it Time to Rethink Segmentation?
5
Is my Segmentation
Effective?
1
Am I Segmenting on Customer
Needs/ Purchase
Behaviors?
2
Does my Segmentation
Address Multiple
Stakeholders?
3
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Three questions to help provide an answer…
Is it Time to Rethink Segmentation?
6
Is my Segmentation
Effective?
Am I Segmenting on Customer
Needs/ Purchase
Behaviors?
Does my Segmentation
Address Multiple
Stakeholders?
1 2 3
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Is My Segmentation Effective?
7
1
Distinct
Consistent
Identifiable
Responsive
Enduring
Substantial
Effective segmentation creates segments that are…
Customers across segments behave differently
Customers within segments share same key needs/behaviors
Readily identifiable, measureable, and reachable
Respond differently to difference value propositions
Relatively stable in their purchase behaviors/needs over time
Big enough to matter now or in the future
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Some tell tale signs of ineffective segmentation…
8
Is My Segmentation Effective?1
“We know an efficiency, cost, or accuracy
customer when we see them, our sales guys can pick them out after they
get to know them.”
‘Sales of our different offerings: Low-Tier, Mid-
Tier, High-Tier, and Custom are pretty
consistent across our different customer
segments.”
Responsive Identifiable
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Questions for the room…
▫ How does your organization evaluate segmentation?
▫ Does your segmentation meet all of these criteria?
9
Is My Segmentation Effective?1
Distinct
Consistent
Identifiable
Responsive
Enduring
Substantial
Criteria for Effective Segmentation
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Three questions to help provide an answer…
Is it Time to Rethink Segmentation?
10
Is my Segmentation
Effective?
Am I Segmenting on Customer
Needs/ Purchase
Behaviors?
Does my Segmentation
Address Multiple
Stakeholders?
1 2 3
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Am I Segmenting on Customer Needs/Purchase Behaviors?
11
2
Customer Characteristics
Customer Type-Based Segmentation
Customer Needs and Behaviors
Segments defined based on…
• Performance• Price• Efficiency• Etc…
Assigned…
• Industry• Size• Operations• Etc…
• Adopter• Non-Adopters• Etc…
The traditional way of segmenting in B2B…
Example: IT Hardware Access and Control Equipment Provider Segmentation
Finance
▫ Large Data Center
▫ Medium Data Center
▫ Small Data Center
Government
▫ Large Data Center
▫ Medium Data Center
▫ Small Data Center
Retail
▫ Large Data Center
▫ Medium Data Center
▫ Small Data Center
Etc…
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Am I Segmenting on Customer Needs/Purchase Behaviors?
12
2
Moving to Needs/Purchase Behavior-Based Segmentation…
Example: IT Hardware Access and Control Equipment Provider NEW Segmentation
Needs/Purchase Behavior-Based Segmentation
Customer Needs and Behaviors
Segments defined based on…
Customer Characteristics
Identified by …
• Industry• Size• Operations• Etc…
• Performance• Price• Efficiency• Etc…
• Adopter• Non-Adopters• Etc…
New Technology Adopters
Cost & Functionality
Multi-Tool Users
Reliability & Redundancy
Alternative Product
Advocates
Simplicity
Core Product Loyalists
Compatibility & Ease of Use
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Benefits of Needs/Purchase Behavior-Based Segmentation
▫ Greater clarity on different types of customers in the market
▫ Easier to define value propositions and offerings to effectively serve different customers
▫ Easier to identify who to target given company’s capabilities and strengths
▫ Easier to develop messaging and marketing collateral
Am I Segmenting on Customer Needs/Purchase Behaviors?
13
2
“How do we win with Multi-Tool Users” provides much greater clarity to the organization than “how do we win with
Medium Sized Finance Data Centers”
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Am I Segmenting on Customer Needs/Purchase Behaviors?
14
2
Questions for the room…
▫ How many of your organizations have implemented Needs/Purchase Behavior-Based Segmentation? How has it impacted your organization?
▫ For those of who have not implementedNeeds/Purchase Behavior Segmentation, what is the greatest barrier?
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Three questions to help provide an answer…
Is it Time to Rethink Segmentation
15
Is my Segmentation
Effective?
Am I Segmenting on Customer
Needs/ Purchase
Behaviors?
Does my Segmentation
Address Multiple
Stakeholders?
1 2 3
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Does my Segmentation Address Multiple Stakeholders?
16
3
“In our proposal we should emphasize the greater quality our technology can provide, focus on features that increase accuracy of testing and reduce
human error.”
Account Manager,Healthcare Equipment Provider
“Reputation as a landmark “Reputation as a landmark hospital is what matter most to
this customer. We should concentrate on our R&D
capabilities and track record of innovation in introducing new
tests.”
National Sales Director,Healthcare Equipment Provider
Who is right?
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Does my Segmentation Address Multiple Stakeholders?
17
3
Gro
wth Fast
Growers
Effi
cien
cy
CostFighters
Rec
ogni
tion
Quality Seekers
Accuracy Speed Productivity
User Needs
Man
agem
ent N
eeds
They are both “right!”
When there are multiple key stakeholders in a market, your segmentation should reflect the diverse needs of the different parties
Intersection of stakeholders’ needs define your needs/purchase behavior-based segments
Strategy and value propositions need to be multi-faceted
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Does my Segmentation Address Multiple Stakeholders?
18
3
• Stakeholder’s and needs/purchase behaviors will vary across markets• Can be internal within organization or separate organizations
CB
A
1 2 3
END USER NEEDS
CH
AN
NEL
NEE
DS
CB
A
1 2 3
CONTRACTOR NEEDS
OEM
NEE
DS
CB
A
1 2 3
OPERATIONS NEEDS
BU
SIN
ESS
NEE
DS
CB
A1 2 3
USER NEEDS
MA
NA
GEM
ENT
NEE
DS
Examples of Multi-Dimensional Segmentation
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Does my Segmentation Address Multiple Stakeholders?
19
3
Questions for the room…
▫ How many of your markets have multiple key stakeholders driving purchase decisions?
▫ How do you incorporate multiple stakeholders in your segmentation?
▫ Do you have distinct value propositions/messaging for different stakeholders?
© 2015 Blue Canyon Partners, Inc. All rights reserved.
An Approach to Developing Robust Segmentation
20
Validate in the Market
Build New Segmentation
Listen to the Customer
Take StockInside
Outside
Outside
Inside
Internal reviewNote where segmentation is ineffective Identify potential alternatives
In-depth discussions with customersLearn needs and purchase behaviorsTest alternative approaches
Internally formulate new segmentationDefine key elements
Perform quantitative validationFinalize segmentation
• A third party perspective can often be valuable• Customers’ needs and behaviors are often not readily apparent or directly
communicated, requiring a skilled and well thought through approach to fully identify them
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Best Practices for Effectively Implementing Segmentation
21
Champion/ Ownership
Why do this? This will create work and discomfort in your organization – create the crisis of WHYWithout Organizational commitment/ change
or alignment it will not succeed
Organizational Alignment
Communicate and “own” from the top – make it important and the way you do business
Long Term Sustainability
Change Financial reporting to follow Segments Incentivize based on segments
Do the Heavy Lifting of “Change Management” or it will not work
long term
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Best Practices for Effectively Implementing Segmentation
22
Questions for the room…
▫ How does your organization develop segmentation today?
▫ What are the challenges your organization has in implementing segmentation?
© 2015 Blue Canyon Partners, Inc. All rights reserved.
Effective segmentation is a powerful business driver
Effective segmentation meets certain criteria. Is your segmentation meeting that criteria?
Are you focusing segmentation on needs/purchase behaviors?
Are you considering multiple stakeholders?
Developing a robust segmentation requires an iterative inside-outside approach
Segmentation provides little value if it is not thoroughly implemented. It is not just a one off market research project
Why It May Be Time to Rethink Segmentation
23