Business Analytics for Sales and Marketing Managers: How to Compete in the Information Age

SEGMENTATION BASED ON WORKSHOPS

Consulting subject matter experts is often the quickest way to segment customers and probably an exercise that you will have to do anyway in order for you to validate your segmentation model and to create stakeholder buy-in. After all, you have to keep in mind that statistics usually provide only some signals about reality; the real world has to explain itself in order for your conclusion to be more than speculation.

A logistics provider in the business-to-business industry can construct needs-based segmentation by inviting some key account managers to a workshop where the provider asks the subject matter experts to name the different customer types with different logistical needs. Customer types do not have to be defined by industries; different customer needs also are generated as a result of their individual positions within industries. Some will compete on price, others on quality and differentiation; some might be producers while others simply trade in these commodities, and so on. In this example we will only define the different customer needs based on their industry.

The first step in this process is to have the subject matter experts name two different industries and list what makes the industries different. These two customer types could be clothing stores and factories doing machinery production. Here key account managers might agree that they differ since it is extremely important for machinery production customers to have their cargo ...