Operationalizing Your Segmentation Strategy at the Business Unit Level

This is the second article in a two-part series on implementing business segmentation strategies.

In my first article in this series, I talked about company-wide initiatives that can be taken to implement an effective segmentation strategy. This article will explore initiatives that can be taken at the business unit level, with a focus on strategies for executing segmentation in marketing, sales, product, and customer services departments.

Intronis, one of our portfolio companies and an online backup service provider, is a great example of a company that boosted both its sales and status with a successful segmentation strategy. In early 2009, the company was selling its online backup service directly to consumers, small businesses, resellers, system integrators, and consultants. The company then made a strategic choice to shift to a segment focus on IT managed service providers (MSPs), who resell to customers.

Intronis began executing its segmentation strategy by hiring a segment-focused lead qualification team. Its time-strapped sales team had been focusing primarily on leads generated from inbound sources like the company’s website. By hiring a new business development team that OpenView incubated, Intronis was able to deliver highly qualified MSP leads to its sales team.

Soon, Intronis began creating content and implementing marketing campaigns, including an update of its website, a targeted MSP public relations campaign, and winning multiple MSP awards. No long after that, Intronis’ focused its next product release on MSP features, emphasizing those features that differentiate it from a consumer-oriented product.

By implementing this segmentation strategy across departments, Intronis was able to double its sales to MSPs in 2009, and grow them by 150 percent in 2010. Today, the company is considered a leader in the MSP-based online backup space and has received numerous industry awards.

One of the keys to Intronis’ success was the company’s ability to call upon each of its business units to help execute its sales and marketing plan. The company’s experience provides some good lessons.

Then operationalizing your segmentation strategy, it’s important to focus on what parts each of the business units will play in meeting your goals and achieving success in your target market. There are specific initiatives that you can take in your marketing, sales, product, and customer services business units that will help focus each on doing their part towards segment-specific success. These include the following:

Marketing Initiatives

• Task the marketing team with research. Develop the segment buyer and user personas, value proposition, and the company’s competitive advantage.

• Update marketing content. Turn research data into marketing collateral, including blogs, case studies, testimonials, and landing pages, etc. Website content should be updated to match the target segment.

• Execute campaigns and incorporate feedback from the marketing and sales teams. The marketing team should be responsible for generating a specific number of leads in the target segment and coordinating closely with the sales team to ensure that sales has the tools they need. The team should also understand how prospects are reacting to new messaging and value propositions.

Sales Initiatives

• Establish a segment-specific sales team and sales process. Optimize your CRM for managing relationships with your target segment and work closely with the marketing team to maximize segment-specific collateral, sales tools, and marketing content that will give the sales team the tools they need to appeal to the target. Look at your most successful sales rep’s profiles and use them as a model for further expanding the team.

• Measure accordingly. Look at traditional metrics such as leads converted to opportunities, number of wins in a competitive situation, etc. As you measure results, review conversion rates regularly.

• Benchmark against pre-segmentation data. Benchmark the metrics you’re reviewing against what your sales team was doing prior to segmentation. The conversion rate should increase with your segment focus. If it’s not increasing, check to see if there is an operational issue, or whether you have targeted the segment closely enough.

Product Initiatives

• Identify and prioritize the features that prospects most commonly request within the target segment. With input from the sales and marketing team, prioritize these features against the existing product backlog.

• Focus the product team. Examine the hours the team is putting into the product and reduce the number of them that are unrelated to solving the needs of the target audience.

• Release a new version of your product. Tailor your product release and updates with new features that match your target segment’s needs.

Professional & Customer Services Initiatives

• Establish a professional services team. When targeting larger and more sophisticated customers, a professional services team can be a differentiating factor in the sale. Not only do they serve the customer, but they also provide you with valuable feedback that can help you more finely tune your offerings to the customer.

• Identify the most common professional services needs of customers and prospects in your target segment. Develop the in-house capability to support those needs or find third-party service providers to provide support.

• Identify the most common support tickets requested by customers within your segment. Either incorporate a fix into the product backlog or develop expertise within the customer services team to rapidly resolve those tickets.

• Adjust your measurement and metrics. Ensure that you are awarding or measuring your customer service’s team’s performance by customers’ satisfaction in the target segment.

To succeed in segmentation, ensure that each of your business units is operating in ways that are complementary and move the company in the right direction as a whole. Providing them with a solid plan of attack for targeting your chosen market(s) and handing them the tools to meet their goals are essential to executing an effective segmentation initiative.

Interested in learning more? Check out our case study Narrowing the Focus: A Marketing Segmentation Workshop.

Photo by: Tim Caynes