customer segmentation

Free ebook: Finding Your Best Customer: A Guide to Best Current B2B Customer Segmentation

One of the keys to scaling effectively at the expansion stage is using customer segmentation to identify your best current customer segments so that you can sell to them more often and more efficiently. Of the many challenges that startup B2B technology companies face, replicating prior success in a scalable and predictable manner can be especially troublesome. That’s because many of these companies tend to generate a disproportionate amount of their sales from a relatively small number of customers. Through customer segmentation, however, companies can identify other prospects who are most similar to their best current customers, paving the way for additional sales growth. “Finding Your Best Customer: A Guide to Best Current B2B Customer Segmentation” outlines a research process that expansion-stage technology companies can use to find their best current customer segment, identifying and verifying hypotheses about the characteristics of a company’s best customers using a variety of data. Those verified hypotheses can then be synthesized into specific customer segments based on those characteristics, allowing the best customer segments to be identified and detailed. While this customer segmentation eBook provides a step-by-step process for identifying, prioritizing, and targeting your best current customer segments, simply following the customer segmentation process it lays out does not guarantee success. To be effective, companies must prepare and plan for the various challenges and hurdles that each step may present, always making sure to adapt their process to any new information or feedback that might change its output. Importantly, companies cannot force-feed this process. If the key stakeholders who will be impacted by the best current customer segmentation process do not fully buy into it, then the outputs produced from it will be relatively meaningless. If you properly manage the best current customer segmentation process, however, the impact it can have on every part of your organization — sales, marketing, product development, customer service, etc. — is immense. Your business will possess stronger customer focus and market clarity, allowing it to scale in a far more predictable and efficient manner. Ultimately, that means no longer needing to take on every customer that is willing to pay for your product or service, which will allow you to instead hone in on a specific subset of customers that present the most profitable opportunities and efficient use of resources. That is critical for every business, of course, but at the expansion stage, it can often be the difference between incredible success and certain failure.

Table Of Contents

Pg 2 - Chapter 1: What is Customer Segmentation and Why is It Important Pg 4 - Why Establishing Segmentation Hypotheses and Variables is Important Pg 5 - Exploring Typical Customer Segmentation Schemes for B2B Software Companies Pg 6 - The Business Bene ts of Current Customer Segmentation Pg 8 - Chapter 2: The Best Current Customer Segmentation Process Pg 9 - Step 1: Setting up the Project Pg 10 - Creating a Work Plan Pg 11 - Getting Buy-in from the Executive Team Pg 11 - Additional Best Current Customer Segmentation Prerequisites Pg 15 - Step 2: Analyzing Customer Data Pg 15 - Identifying Segmentation Hypotheses: What Characteristics Make a Company a Good Customer? Pg 17 - Identifying the Data Fields and Internal or External Sources Required to Test and Prioritize the Hypotheses Pg 19 - Step 3: Data Collection Pg 19 - Managing the Data Collection Process Pg 20 - Step 4: Analysis & Prioritization Pg 21 - Executing Data Analysis to Identify Relevant Variables and Validate Your Hypotheses Pg 24 - Evaluating Composite Segmentation Pg 26 - Synthesizing Validated Segmentation Hypotheses to Form Distinct, Homogeneous Segments of High-value Customers Pg 27 - Evaluating Segment Value, Targetability, and Size to Prioritize Your Best Segment(s) Pg 28 - Step 5: Presenting and Incorporating Feedback Pg 28 - Building Your Final Presentation Pg 31 - Gathering Feedback Pg 31 - Translating Information into Action Pg 32 - End Note Pg 33 - Appendix Pg 33 - Typical Segmentation Variables and Sources Pg 35 - Additional Resources

First 3 Pages

Finding Your Best Customer: A Guide to Best Current B2B Customer Segmentation Table of Contents Pg 2 - Chapter 1: What is Customer Segmentation and Why is It Important Pg 4 - Why Establishing Segmentation Hypotheses and Variables is Important Pg 5 - Exploring Typical Customer Segmentation Schemes for B2B Software Companies Pg 6 - The Business Bene ts of Current Customer Segmentation Pg 8 - Chapter 2: The Best Current Customer Segmentation Process Pg 9 - Step 1: Setting up the Project Pg 10 - Creating a Work Plan Pg 11 - Getting Buy-in from the Executive Team Pg 11 - Additional Best Current Customer Segmentation Prerequisites Pg 15 - Step 2: Analyzing Customer Data Pg 15 - Identifying Segmentation Hypotheses: What Characteristics Make a Company a Good Customer? Pg 17 - Identifying the Data Fields and Internal or External Sources Required to Test and Prioritize the Hypotheses Pg 19 - Step 3: Data Collection Pg 19 - Managing the Data Collection Process Pg 20 - Step 4: Analysis & Prioritization Pg 21 - Executing Data Analysis to Identify Relevant Variables and Validate Your Hypotheses Pg 24 - Evaluating Composite Segmentation Pg 26 - Synthesizing Validated Segmentation Hypotheses to Form Distinct, Homogeneous Segments of High-value Customers Pg 27 - Evaluating Segment Value, Targetability, and Size to Prioritize Your Best Segment(s) Pg 28 - Step 5: Presenting and Incorporating Feedback Pg 28 - Building Your Final Presentation Pg 31 - Gathering Feedback Pg 31 - Translating Information into Action Pg 32 - End Note Pg 33 - Appendix Pg 33 - Typical Segmentation Variables and Sources Pg 35 - Additional Resources Startup B2B technology companies face a variety of significant challenges. They have to gain traction and establish a reasonable market presence among a sea of more established players. They have to do more with less, as founders and early employees are often expected to be jacks-of-all-trades, managing everything from sales and marketing initiatives, to product development and customer onboarding. Furthermore, they have to do all of that under an allegorical cloud of uncertainty. Will their business ever really establish roots and begin to grow? Or is all of this work being done in vain? As those companies transition into the expansion stage, those challenges and questions unfortunately do not dissipate. They simply become more acute. One challenge in particular — replicating prior success in a scalable and predictable manner — can be especially troublesome. The reason is simple: Startup and expansion-stage companies tend to generate a disproportionate amount of their sales and/or profits from a relatively small number of customers. That creates a scalability problem that can be difficult to overcome. Thankfully, it is not impossible. As OpenView’s newest eBook, “Finding Your Best Customer: ” shows, scaling efficiently and effectively at the expansion stage has a lot to do with identifying your best current customer segments and selling to them more often and more efficiently. To do that, however, your company needs to focus its efforts not on a broad universe of potential customers (a mentality that is particularly common among early stage businesses), but rather on a specific subset of customers who are most similar to your best current customers. That can be done through customer segmentation. The following pages will outline a research process that expan-sion-stage technology companies can use to find their best current customer segment, identifying and verifying hypoth-eses about the characteristics of your company’s best cus-tomers using a variety of data. Those verified hypotheses can then be synthesized into specific customer segments based on those characteristics, and the best customer segments are then identified and detailed. After reading this eBook, your business should be better prepared to take on the myriad challenges that it will con-tinue to face as it scales. Of course, that does not mean that building a great big business will all of a sudden be an easy task. It does mean that you can move forward with increased confidence that your entire operation will be more focused on the customers and prospects that are most valuable to your business. Ultimately, that will make the sometimes-uncertain process of growing a business a bit more of an exact science. Chris Herbert Founder/CMO, Mi6