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B2B Market Segmentation for High Growth
somametrics.com
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Once we have chosen the specific market segment we want to go after, the next step is to segment all accounts in that market to focus our resources such that our most expensive resources are allocated to the most profitable accounts. “A simple and practical approach is to segment accounts into three categories: Tier 1, Tier 2, and Tier 3.” Tier Description Resources Tier 1 These are the crème de la crème accounts and they typically represent between 5 to 10% of all accounts, but probably would represent 50% or more of all sales potential in that segment.Winning these accounts enable the provider to say, “Our clients include Hyatt, Sheraton, and Holiday Inn”, names that most of your prospects would immediately recognize. Sales Executive LedYour top sales reps aided by highly experienced Business Development Reps (BDRs) to help them get in. Tier 2 These are less well known, perhaps local or regional players that nevertheless are significant sized customers. They consist of 20-25% of your target segment in number, but probably make up 35 to 40% of the sales potential in that market segment.Winning them brings both sales and profits, but not necessarily name-dropping benefits. BDR LedProspect with experienced Business Development Reps (BDRs) and assign to your sales reps. Tier 3 These are the rest of the market. They typically represent 65 to 75% of the market in number but probably would not exceed more than 10-15% of the sales potential in the market. Marketing LedUse Marketing to prospect and process only inbound leads.
Market segmentation, at its core, focuses a company’s sales and marketing efforts. Simply put, it is a statement of decision to pursue a singular important objective and forego other less fundamental pursuits. “Once a company identifies “XYZ” as its optimal market segment, that company commits to marketing and selling to that specific market, and only that market.” That being said, if a customer from a market other than XYZ comes to the company and indicates that they want to buy its products and services, the company will, of course, sell them what they desire.
That being said, if a customer from a market other than XYZ comes to the company and indicates that they want to buy its products and services, the company will, of course, sell them what they desire. “We are saying that a company should carefully select which market it wants to sell, and then commit to optimizing everything in its power towards that chosen market.” The purpose of market segmentation, therefore, is to enable the optimization of all resources around a chosen customer profile so that it can maximize value for the customer and profits for the company, simultaneously.