Category Archives for "Marketing Research"

Market Segmentation: A Critical Ingredient of B2B Marketing

Market Segmentation
Market Segmentation

When it comes to factors that accelerate growth in a B2B business, one of the most powerful is having well-defined market segmentation.

Big consumer brands have known this for decades and have the process down to a science. They know their target audiences inside and out, and how to position their products for optimal success in any given market. By combining precise geographic, demographic, behavioral, and psychographic data, they understand who will buy their products, where, how, and why. With some focus and energy, you can too!

Many B2B companies don’t pay enough attention to this critical aspect of marketing. Some rely on intuition or "gut feel," which leads to missed opportunities and inefficiency.

Everything in sales and marketing revolves around increasing the probability of closing more deals in less time. Accurate segmentation has a dramatic impact because the more relevant you are to prospects – the better your chances of engaging with them.

What is Market Segmentation?

Investopia defines market segmentation as “the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of prospects who perceive the value of your products and services differently from one another.

Generally, three criteria can be used to identify different market segments: 1) Homogeneity – common needs within a segment; 2) Distinction – unique from other groups; and 3) Reaction – similar responses to your marketing.”

It’s all about clearly defining your target audiences and then communicating in ways that will persuade them to consider your products or services.

Why is Market Segmentation Critical?

You may have heard the adage that people like to buy, but they hate being sold to. This is slightly paraphrased, but the idea is one we can all relate to. We become bitterly annoyed with marketing when what’s being pushed is not relevant.

Market segmentation is crucial because it helps make sure the people you contact can actually benefit from what you’re selling. Put another way – market segmentation ensures you are talking to the right people about the right things.

The Basic Building Blocks

When doing the research to build your segmentation strategy, the following essential ingredients should be included in your framework. Answering as many of these questions as possible will get you off to a great start.

  • The “Sandbox”
    What markets do you want to serve geographically? This can be local only, specific cities, provinces/states, regions, or countries. You need to make sure that if you plan to expand rapidly, you can provide the levels of sales coverage, delivery, and support required.
  • Addressable Market
    Often one of the toughest questions to answer is, "what is your overall market size by segment?" Fortunately, online government data and other industry research (free or paid) are often available online. Ultimately, you want to know if there is enough potential business accessible to support your sales goals.
  • Account Characteristics
    What industries are they in, and what clients do they serve? What type of organization aligns best with your offering – SMB, Enterprise, Government, Not-For-Profit?  What do these companies look like in terms of annual revenues, employee counts, etc.? How do they operate? 
  • Market Adjacencies
    Are there sub-segments within your target markets? How do you define them? Are there closely related industries in their ecosystems worth pursuing? Are there partners you work with that have access to customers you want to pursue?
  • Buyer Profiles
    Who are the buyers and influencers in the companies you are trying to sell to? What are their roles and titles? What problems could you solve for them? Where do they connect with peers? Where do they get sources of information related to your offerings? More sophisticated marketers will build “personas” as a way of describing the people in target audiences. Always remember - you may be trying to break into new accounts, but you are still selling to human beings!
  • Buying Behaviours
    What processes do they typically use to buy – formal procurement, informal? When do they buy – is it seasonal, based on specific events, or random? This will not be the same for every company you approach, but often there are discernable patterns in specific industries. Government procurement is an excellent example because it's typically rigid and based on a Request-for-Proposal (RFP) purchasing process.

Precise marketing segmentation helps build the foundation needed to develop your market positioning, messaging, and most everything else that follows. It’s also important to think about market segmentation in the context of your product capabilities and the competitive landscape.

Conclusion

Virtually everything in B2B marketing revolves around precisely defining your target audience and their sub-segments. Taking a shotgun approach to the market simply won’t work in the long-run. Investing in market segmentation upfront is guaranteed to improve results, save time, and reduce costs! Like most things, how you define your target market will evolve over time. It's a good idea to review and refresh your segmentation definitions during your strategic marketing planning cycles.

Please share any ideas or thoughts you may have on this topic and contact us if we can assist in any way. To get notified when new articles are published, please hit the button!

Randy Fougere, President, Think2Grow Marketing
With a passion for building brand awareness and lead generation, I started Think2Grow for B2B clients looking to accelerate growth through better marketing strategy and execution - something I have been doing for more than 30 years now.

Competitive Analysis – The 3 Essential Building Blocks

Competitive Analysis
Competitive Analysis

An area of sales and marketing that often gets overlooked and underserved is developing a comprehensive competitive analysis.

Most times we know who we compete against on a regular basis, but it’s typically high level. The fact is that most companies don’t invest nearly enough time and energy understanding their competition deeply enough. They also neglect to create a process for feedback needed to keep the information current. In a study by the CMO Council, only 9% of companies surveyed had extensively analyzed their competitors. To make things worse, a surprising number of businesses don’t make it a priority to understand how they won or lost deals by doing formal reviews after the fact.

“Know your enemy and know yourself and you can fight a hundred battles without disaster.”  ~ Sun Tzu, The Art of War

Knowing your competition inside and out will help you: learn what others in your industry are doing; what prospects want; and how to position and differentiate your company with more impact. All of which eventually leads to more sales! If this makes so much sense, why don’t companies do enough of it? Why can’t they sustain it once they have started? Great questions and a few simple answers come immediately to mind:

Competitive Profiles

​ 1. They have glossed through the exercise 5 years ago and feel they still have it covered
 2. They don’t make it a priority and it sits on a long to-do list somewhere
 3. There is no ownership or process to keep the information current
 4. They don’t know how to do it well or don’t have a disciplined process to manage it

#1 Competitive Profiles

The starting point for doing a competitive analysis is something I call competitive profiling. This process is the research conducted to get a complete view of who your competitors are, what they do, and their strengths and weaknesses. Think of this as your “pre-game preparation.” The output of this effort is a “Competitive Profile” – which is a detailed summary of each key competitor you face on a regular basis (usually a 2-page document, or small slide deck).

#2 Product Face-Offs

These usually involve creating tools such as feature-benefit checklists or side-by-side comparisons. Be sure to think about them from the buyer’s point of view since having product attributes that are not relevant from their perspective is a waste of time. It’s a good practice to think about your product comparisons in terms of:

  • Table-Stakes: The features that are minimum requirements. and
  • Differentiators: The features that add more value than competitive offerings

Other critical aspects of Product Face-Offs are quality, pricing, packaging and service and support levels. Going through this exercise will help you understand two important things:

  • The direction your product development needs to take, and
  • How to position more successfully against others with what you have today

#3 Win-Loss Analysis

Thoughtful forensic work on past sales opportunities will help you understand the reasons a buyer selected you, or your competitor. It provides key insights into the perceptions buyers have about your products, pricing, and approach. Even though we call it Win-Loss Analysis, people tend to focus much more on lost opportunities and often ignore the “win side” of the equation. Although it may have been a well run sales campaign (at least in the salesperson’s mind), there is still a great deal that can be learned when you ask people why they bought from you. For more information about the power of analyzing your “wins”, see Win Analysis: A Neglected Hero of Analytics.

How Much Detail is Enough?

Competitive Analysis can be as deep and detailed as you want. There is, of course, a rational balance between what you need to know versus the merely interesting. The level of depth you need for a Competitive Analysis and the types of information you gather, will be determined in large part by your industry and offering. For example, if you sell high-ticket products or services in multi-year contracts, or your products require a high degree of aftermarket support – then prospects will have more interest in factors such as the vendor’s stability, reputation, and service structure. In this scenario, your Competitive Profile will focus more heavily on those things. If the product is a one-time purchase with little post-sale interaction – an increased focus may be placed on factors such as the product specifications, pricing, return policies, etc. Before building a Competitive Profile template, you must decide what things will be most significant in your market.

Who Owns the Competitive Analysis Process?

Competitive Analysis is always a team effort, but typically Marketing drives the process and creates the frameworks and artifacts needed. If your organization is large enough to have a dedicated Product Marketing function, that group would normally be responsible. Sales will play the strongest supporting role in gathering the intelligence. After all, they are in the trenches day in and day out. Also, executives, customer support, service staff and anyone else who interacts with clients and prospects on a regular basis will be good sources of feedback. It’s important to make the process clearly understood and as simple as possible for those who contribute. A good practice it to use standardized templates and forms and make sure they get stored in a place that is easy to access – a folder on your company Intranet, or CRM as examples.

Using Competitive Analysis

Now that you have all this great information, how can it will it be used to help close more business? Marketing will use it for market positioning, messaging, and targeted competitive campaigns. Salespeople will rely on it to help them “position” and focus the prospect on the right factors in competitive sales cycles. The knowledge will also help your salespeople build credibility by showing they know their industry. It’s best to share Competitive Analysis through formal training sessions as new profiles are created. It’s also a good idea to make sharing competitive strategy and best-practices a formal and ongoing part of your sales meetings. There is some subtlety in leveraging competitive information. Sales must always be honest and tactful when contrasting with competitors, and they should never put a company, it’s product or people down! Those who blatantly “slam” competitors will seldom leave a good impression and at times it’s disastrous. Instead, sales should focus more on what’s most important to the prospect, how you positively differ from others, and how your offering will best satisfy the need.

Conclusion

Leads and opportunities are not easy or inexpensive to develop. The vast majority of sales cycles are tough battles fought against one or more adversaries. Competitive analysis will help you win more business if you invest the right amount of time, thought and energy into it. If you don’t have the bandwidth, resources or know-how, you may want to consider outsourcing. For a higher level view of industry analysis and competition, you may be interested in this good overview of Porter’s Five Forces Analysis.

I hope you have enjoyed this article and would love to hear your thoughts about Competitive Analysis or any experiences you can share. Please follow us on your favorite social feed and Contact us if we can help in any way.

Selecting Vendors: Buyers and the Internet

Selecting Vendors
Selecting Vendors

We recently conducted research to understand how the buying process has changed and how decision-makers rely on technology to find potential solutions to their problems; narrow down potential vendors; and select the short-list of those lucky enough to participate.

We surveyed 500 business people across industries to find out how they use the Internet when selecting vendors. The context of the research and this report applies to consumer behaviour on many levels, but has particular relevance to the B2B buying process. This research is not about eCommerce, but rather how technology has changed the dynamics between buyers and vendors.

Here are some of the key highlights from our study about buyer habits and preferences:

  • 92% of buyers prefer to do research online before talking with a salesperson
  • 73% rely on organic search to guide them to potential vendors
  • 74% ignore pay-per-click (PPC) advertising
  • 71% already have a vendor in mind before they start searching
  • 85% use the Internet for comparison shopping when they are about to buy
  • 32% connect with others through social media when looking for a vendor

In the earlier days of marketing, most of the energy and budgets went into advertising and brand building. Awareness is still critically important, but today people can easily get to know a company and their offerings on the Internet in less time than it takes to drink a cup of coffee. This has presented amazing opportunities for marketers to reach more people, in more meaningful ways, for a fraction of traditional advertising costs.

What are the Implications?

The results from our research help reinforce what most marketers already know, or are starting to quickly realize. The key implications are as we view them are:

  • Early awareness is critical. Studies show that 65-90% of the buying process has already been completed before a buyer even talks with a salesperson.
  • Most marketing activities today try to drive a target audience to the company website. This means the site better be the best your company can afford. It must be relevant to your prospects, easy to use, engaging, crisp and clear.
  • You need to understand the inter-relationships between your organic search, pay-per-click and social media and make sure they are a significant part of your marketing program.
  • ure, they are challenging to manage and take time – but, when done well, you will attract the right people to your brand and close more business.
  • Although most people have a vendor in mind when they are ready to buy, comparison shopping is easier than ever and if people only find you as they start to short-list, doing a good job on point #2 becomes even more important.