Segmentation Strategy Success: A Four-Step Guide for GTM Leaders
Segmentation is at the very foundation of all activities that aim to reach a niche target market at the right time. With the right segmentation in place, you can target your audience with absolute precision.
The power of segmentation
There is a wealth of data surrounding the impact of segmentation. Most notably, emails leveraging segmentation typically yield 60% open rates compared to generic email blasts, which average 12% and, marketers who use segmented campaigns see up to a 760% rise in revenue. These statistics may seem huge but when you consider the different ways that individuals are likely to react between a personalized, targeted, timely and relevant email that acknowledges a recent event, and the same email, received 6 months later, the data doesn’t seem so surprising. One of those emails could elicit a response; the other is likely to go straight to trash.
1. Create the right segmentation strategy
Market research forms the bedrock of market segmentation strategies, which when done correctly, have the potential to significantly boost your sales success. One of the biggest problems in getting results from segmentation is the lack of strategy applied during the segmentation process. RevOps teams may choose vectors for customer segmentation either arbitrarily, or in a way that is relevant or practical at the time. For example, it is not uncommon for startups to segment alphabetically in the early days; something that is in no way tied to their customers’ buying journey. The fact is that it doesn’t matter if you are a startup or an established organization; if you don’t see your segmentation strategy as an ever changing entity that needs to be reviewed in order for you to know where your customer is and what they need, it will fail to help you to deliver the results that you need.
When creating a market segmentation strategy it is essential that you don’t consider how you want to sell, but how your customers prefer to buy. This will depend on a range of factors based around your product or services and the vertical(s) that you are targeting. For example, if you are selling to an industry, such as healthcare, that has a fairly cohesive buying process, it may be wise to establish a vertical segmentation strategy. If, however, you are targeting enterprise organizations, who tend to have more extensive buying processes, it may be more beneficial to segment by company size.
2. Recognize that it’s not a one size fits all for your GTM team
One danger of investing in precise demographic segmentation is that there can be a tendency to want to make the most of the strategy by using the same process throughout the customer journey. It pays for segmentation to be accurate and up to date; but different departments may choose to focus on different customer segments when creating their segmentation strategy. Marketing, sales and customer services teams may all have behavioral segmentation by using different criteria based on their needs. By seeing your segmentation strategy as a ‘one size fits all’ for every part of the journey, you are at risk of developing tunnel vision which means that departments could miss the opportunity to identify what really resonates with their customers at each stage of their customer journey. For example, persona based messaging & segmentation tends to yield great results when creating demand and awareness, whereas vertical based sales segmentation might work best during the sales cycle, and then segmenting by LTV within the Customer Success function might make the most sense later on.
Whether teams work together to create a broader segmentation strategy that allows each team to reach their ideal persona, or the various Go-to-Market teams recognize their needs are different and create their own unique strategies with different segmentation processes built into them, the important factor – and the most critical vector for success when it comes to segmentation, is that the strategy is tailored to meet each department’s needs, rather than becoming an amalgamation of all of their needs. This is because, in meeting some of every department’s criteria, a generic strategy will fail to exactly meet anyone’s and, as such, fail to deliver what it needs to.
By understanding the limitations of your segments, assessing their volatility at different datapoints, and recognizing the different needs of your departments, RevenueBase can deliver precise, accurate and updated segments that will allow you to gain an edge over your competitors.
3. Leverage all the data at your disposal
There is a huge amount of information on your buyers out there, yet many GTM leaders aren’t currently leveraging it to get results. The basic premise of your market segmentation strategy is that it should help customers resonate with your product or service during their journey with you. Given how competitive the market is today, you need to meet your customers where they are at and leverage your sales segmentation strategy to best support them through their purchasing decisions. When approaching different market segments from fresh it is a good idea to take a look at the commonalities within how your target customers will buy and use them as the foundation of your segmentation strategy. Your segmentation strategy will also be dictated by your Industry and offering, however, three of the most common segmentation strategies are based on:
1. Geography
2. Vertical
3. Size
As with any strategic build, it is important that, rather than trusting blindly in the process, you are aware of the limitations. One of the biggest mistakes that RevOps teams make when building their segmentation strategy is failing to leverage all of the data at their disposal.
Geography
Geography has traditionally been one of the quickest and easiest types of market segmentation. In the good old days of field sales teams, geography was key to segmentation. Segmentation by geography was comparatively easy as it allowed for the creation of clear lines for the sales teams. Pre-COVID, segmentation by geography was often intuitive and productive.
In a post-COVID world, segmentation by geography still makes sense to an extent, however, you should be asking yourself – does geography matter from your potential customers’ perspective? With the rise of hybrid working, employees can be dispersed across the country so even the assumption that your sales rep is in the same timezone based on the organization’s location is often outdated. If geography is still an important factor to you and, most importantly, your customer, then it can still be a relatively quick and easy part of your segmentation strategy.
For field sales teams, online meetings and an omnichannel approach have simultaneously made the market significantly bigger while opening your local opportunities up to competitors from a much bigger radius. Teams that are still using geography as a main focus of segmentation based on accessibility and locality will feel this two-fold:
1. they may be missing opportunities beyond their traditional geographical boundaries, particularly globally;
2. they may be prioritizing the wrong target accounts and as a result, misaligning internal resources, simply because they need to identify enough accounts within a certain geography for their existing sales team to target
Vertical
Segmentation by industry can create a great buying experience for your customers, but is not without complications. One of the main reasons for this is that many organizations are still reliant on legacy industry classification – such as LinkedIn industries or NAICS and SIC codes. As a professional, how many times have you been unsure which industry filter to select or sort by? Sometimes nothing exists that represent your company’s industry or your target markets or industries, and other times there are several that ‘might’ work.
Another issue is that organizations are categorized by more binary classifications such as healthcare, finance, technology, insurance. This seems pretty straightforward. But what happens when you are targeting healthcare insurance; is that one for your healthcare team or your insurance team? The same goes for healthcare tech, fintech; any service or product that could reasonably fit across two segments immediately compromises the accuracy and therefore efficiency of your segmentation.
This blurred line around verticals is one of the key things that RevenueBase’s database overcomes. Our geographic segmentation process is malleable, allowing you to create your industries based on how you see the world, rather than relying on standard industry filters, such as LinkedIn or NAICS codes.
Size
Vertical may be slightly more complex than it seems but thinking that size is straightforward is another gray area. Dozens of RevOps teams using today’s customer data to determine the size of an organization in terms of revenue or employee count are potentially missing out on stronger indications of size.
For example, if you are selling to sales teams, depending on the way in which their own customer base buys, the size of the sales team may be more relevant than the organization’s revenue. And if you are considering the number of employees, looking at the entire staff base will give you an entirely different impression to drilling down and identifying the size of the sales teams. Just as assuming that industry is a static, binary concept, taking size at face value could be deceptive and limiting your segmentation strategy and subsequent sales activities.
A fundamental part of your segmentation and marketing strategy when using size as a vector is to consider the size of what: segmenting by size of sales teams might actually empower your own sales team to resonate with the customer during the sales process more than a traditional way of identifying an org size.
RevenueBase utilizes generative AI to create complete, accurate revenue databases that are precisely curated to enable you to reach your ideal customer and ideal persona. Unlike many B2B data providers, we can drill down into the detail, using modern datapoints to create high-value, tailored segments that go far beyond what most can deliver.
Hyper segmentation
We often see GTM teams restricting their marketing and prospecting efforts to one particular market segment: by geography size, persona or industry, for example. With access to detailed organization data, such as what’s included with RevenueBase, you can exponentially increase the power of your segmentation strategy by utilizing a mix of insights simultaneously. For example, targeting by persona AND industry, and then going the extra mile and layering in insights around technographics, or function/hiring trends, etc. will work wonders for building messaging that resonates with your prospects. It’s certainly more work and all comes down to internal resourcing, so it’s critical to find the line where the hyper segmentation pays dividends based on getting prospects to respond/show interest – and where it doesn’t. Constantly testing to see how to stand out via segmentation can help GTM teams to gain that all important edge.
4. (re)Evaluate your strategy & target accounts often
We know that a well defined market segmentation strategy is the key to reaching your target audiences and the right people with the right message. But it’s only powerful if it is done right. One of the biggest weaknesses of segmentation – and one of the biggest mistakes that sales teams make – is the assumption that the accounts within your defined market segments won’t change often.
Once you’ve landed on your Go-to-Market segmentation strategy, you should consider the data points you’re leveraging for those segments and assess their volatility; how easy is it for organizations to move in and out of your segments?
In a time where we have seen the increasing disappearance of geographical boundaries thanks to hybrid working, mass fluctuations in company and team headcount thanks to first the Great Resignation and then the Great Layoff in the space of three years, segments have never been more volatile. It doesn’t matter how much you spent on your B2B data; if it is more than a few months old in this era, you won’t reach your target market with the right message at the right time. The value of frequently evaluating which organizations are entering your segments, on the other hand, means that your speed to market is better, allowing you to get the first bite of opportunities as they arise, instead of coming in months – or even years- after your competitors. In addition, by evaluating which organizations no longer fit your firmographic segmentation criteria, your sales and marketing teams aren’t spending precious time and money targeting those accounts.
Your segmentation strategy itself is great to review annually as part of annual planning, or during a big event/change (i.e. new product line launch, merger & acquisition, going global, etc.).
However, the organizations within your defined market segments should be evaluated/re-evaluated at a similar rate as how fluid your specific market segments are. i.e. If you only go after enterprise companies in certain geographies, you may be OK with evaluating your book of accounts each year. Whereas if you’re going after startups OR other volatile data points (i.e. size of sales teams), then you may want to evaluate more frequently (quarterly, or even monthly depending on your GTM motion).
This is why at RevenueBase, we update our clients’ database monthly. We are different from other data providers. We know that the accuracy of organization data within your target market segments can mean the difference between success and failure, and our data as a service ensures that data is continually refreshed to ensure optimal impact.
References
- https://blog.ascent360.com/email-isnt-dead-how-to-make-your-emails-stand-out
- https://www.hubspot.com/marketing-statistics
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