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Market segmentation: Building a customer development methodology

Discover how to optimize market segmentation and create value propositions with effective customer development strategies.
customer development: segments and personas

A Customer Development methodology will create insights the whole business can use to inform marketing, sales and product roadmaps. Discover how to optimize market segmentation.

This post is a bit dense. I’m sorry. It’s full of jargon like Personas and Buying Journeys. Marketing is a bit like that, so I’ve tried to break it down and use them as infrequently as possible.

Here’s how we approach market segmentation.

Start with commercial plans

Μarket segmentation follows commercial planning: we need to know how many widgets we need to sell to whom by when and why? 

We often pause the 4 week Unfair Advantage Sprint process to go back to commercial planning. 

It’s also often the case that our target Segments are unclear. So we do the research to work out who values your product the most, who can’t live without the product or service you offer and other ways to understand your customers. 

Recently we helped a SAAS business survey customers to find out a) if they had product-market fit, and b) which customers loved them the most and why. This data is gold dust and leads to smarter segmentation. The steps are to take your best customers and overlay them on the market opportunity they represent. Then ‘value match’ them against your product’s strengths.

Keep it simple. 

The simplest approach is to understand who values you the most and why, then work backwards. Too often larger businesses suffer from analysis paralysis. This burns money and reduces your ability to test. Come up with a hunch, run a campaign to that segment and see what happens. Often we like to run campaigns while doing market segmentation, as it provides more data to inform the market segmentation process.

Understand buying journeys for optimal market segmentation

All B2B products take too long to sell. Long purchasing cycles occur when the business hasn’t made their product or service simple enough to buy. Obviously many things are out of the hands of the vendor, but if you know the barriers to purchase (from the insight you collect studying the buying journey) then you’ll know the questions to answer upfront in marketing, making sales quicker and simpler.

We often work with clients to help sales people describe all the scenarios and challenges the prospect may encounter internally, then create sales assets that mitigate them quickly. A classic direct marketing letter-writing tactic is to list all the concerns a prospect might have and answer them systematically. Assuming you do this with some charm and wit, the interested prospect will keep reading. Brevity can be the enemy. Long copy sells.

It’s amazing how many avoidable barriers to making a sale businesses can inadvertently put up. Creating Buying Journeys for each Persona provides the insights that help smooth the selling process. 

Buying Journeys lead to funnels that have all the information a buyer needs. Creating a Value Proposition for each target Persona is essential to creating a funnel with everything the buyer might ask.

Create Personas

To get to Personas, we start with the Buying Cohort: the buying influencers.

We know there will be Lions and Crocodiles in that pack. Lions are loud and proud and make their voices heard. They may be the Business buyer who knows exactly what they want but needs to show their negotiating strength. Or they may be the Economic buyer who’s looking for a deal. Either way you’ll know where you stand because they’ll tell you. 

The buyers to look out for will be the Crocodiles. They lurk beneath the surface of the water watching, only to strike at the final hour and scupper the deal. They could well be an IT leader who feels threatened, a financial controller who decides the budget isn’t there after all, or even the User who worries their team (and therefore their status) will be reduced. 

Each Persona plays their part in influencing, so messaging has to be consistent and complementary. Yet each Persona needs their own value proposition because they are motivated by their own Jobs to be done, Pains and Gains. The research process uncovers all of these insights. 

Customer development & market segmentation: Use Jobs to be done, Pains and Gains

We use a Customer Development methodology for the purposes of marketing. This provides practical and usable insights the whole business can benefit from. 

Too many marketing strategy initiatives deliver wishy-washy insights that can’t be used outside of making brand ads. This is a monumental waste of money and insulting to the rest of the business. It frankly gives marketing the bad reputation it deserves in the B2B space. Our insight process is rigorous and informs product roadmaps as much as marketing messaging so the whole business will benefit.

There’s so much more to share about the insight process!

I recommend you watch some of the webinar series – especially Webinar 3 on creating Value Propositions. 

Or give us a call and I’ll take you through the methodology. Maybe when you can’t sleep one night 😉

Contact us here

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