One tool to help you in the process is market segmentation (A market segment is a group of people or organizations sharing one or more characteristics that cause them to have similar product and/or service, from Wikipedia).

The following is a guide for the segmentation process

For the purpose of this guide we will assume we are marketing in the B2B environment (there are differences versus B2C but it is more in the ingredients versus the formula).

First here are some key initial steps in helping make the selection process.

1-     Is there information about the customers to be obtained?  

2-     Will these markets be accessible, i.e. can we reach them?

3-     Is the segment large enough to spend effort on them (this will lead to estimating profitability, but that is a different exercise).

4-     Does this segment “match” your enterprise goals and objectives?

Second, completely understand the Strategic Business Units (SBUs) strategies and product/service portfolios so that you have a firm reference point(s) on what segments best match up to their goals and objectives.

Third, know your competition and what are their strategy, products/services and their value proposition in these segments… it may be different for different segments.

Fourth, consider what I call the “surrounds” those aspects that can relate and impact a segment.   Two examples are: the mobile phone and how it impacted land lines vendors and suppliers. The internet and how the convergence of data and voice impacted traditional PBX vendors, tariffs and business applications.

Fifth, start with macro segmentation, which has organizational characteristics such as size, geography, and organizational structure. A helping structure is North American Industry Classification System (NAICS). For the NAICS codes 541511, a high level breakdown  looks like this; 54 is for technical services sector and 1511 is for Computer software analysis and design services.

Sixth, assuming you have the resources, dig deeper. A micro segmentation addresses areas like decision making, buying attributes, and user attitudes of the players in the segment.

In many cases of B2B it is important to know the buying habits of the end user or the buying procedures of the enterprise.  A marketer might be required to have messaging or value propositions that appeal to the purchasing organizations. An example is the buying cycle, if one can improve this cycle for its customers this could be an overall key factor.

Seventh, test your assumptions and segmentations before making any major investments.

Eighth, Now if you have done the above you are half way there. The next major step is the implementation of your strategies. Keep in mind that the strategy for B2B is NOT a short time or quick fix issue; it needs to be thought out such that it will last, at least long enough to have time for implementation and a buying cycle so you can analyze actual realistic results. An example of implementation is what type of service will be needed to support the business and marketing goals. Another example is how is the sales force organized relative to the market segmentations?

Here is just one example of an enterprise that utilizes segmentation with great success. Dell has at the macro level the Home segment (B2C) and the Business segment (B2B). Then within the B2B they have small businesses.  Within the small businesses they have solutions that range from laptops to high end servers. For each sub segment, Dell offers various packages.

Key point:  if you do not know your customer, and your competitor does, you won’t make a sale!

                        To see some examples of the implementation process, Click Here

RHL 3/30/10

When the best doesn’t come, everyone wonders why goals are not being met, why the sales force is confused and why the partners are underperforming?

I call this approach the “ready, fire, aim” method. The answer to the confusion above is that there is no well thought out, formal partner reseller program.

The following are the major activities that best-in-class partner programs have in common:

1-Strategy- If you have read any of my other blogs regarding sales or sales channels, you know the first consideration already. Any good program must have a strategy. What is the company’s strategy and how will the partners contribute to the strategy? Some of the questions you must answer are: are you developing a partner program to get new customers, new territories, or to augment your direct sales force? Whatever the reason, the program must support these strategies, if not the path will be filled with potholes!

2-A Partner Program: This may seem obvious, but you would be amazed how many companies see an opportunity, but do not plan a program and thus cause a false start and, in some cases, bad will in the reseller community.

Fundamentally a program outlines the why, the who’s and how’s of doing partner business. A partner program is like a business case, it contains items such as goals, objectives, forecasts, roles and responsibilities, partner programs, partner manuals, partner collateral, leads program, training, promotional activities, support guidelines, benefits, procedures/processes, measurements/metrics, engagement procedures, customer service an escalation policy, and much more.

3- What type of partners will you be recruiting? Will they augment your sales force, or a technology, or a skill set, or a region, or help you expand into a new market(s)? Will there be synergy with your sales force or will there be a huge overlap (and potential conflict)? Note that this decision ties back to your strategy.

4- Partner selection: Your program must have documented information on the selection criteria for partners. The criteria should cover among other things: business requirements, certification, capabilities, partner’s responsibilities, partner’s benefits from the program, and sales coverage requirements.

5-Financials: How will the partners be compensated, is there a special discount rate for the selected partners? Will the partners be measured on volume, revenues, or just new business?

6-Targeted Markets- Assuming you have targeted markets for your direct sales force, what will be the targeted market(s) for the reseller(s)? Will they be the same as for the direct sales but with different products, or different markets with the same products or different products and pricing?

7-Measurements- How will you measure success of the partnerships? This will depend on the “stage” that your company is in and the overall goals of the company. As an example if you are in a start-up mode, the measurement for the reseller might just be new business (profitability is secondary), but if you are seeking product revenue expansion, the measurement might be net new revenues.

Well these are some of the major activities that one must consider is developing partnerships. Again, like my blogs that discuss channel selection, things are never black and white and unfortunately they tend to be very gray and complex. Don’t let this scare you away; start with a very well thought out and tested strategy. If you do this step well and involve potential partners, you will be amazed how the well the other activities move ahead.

Till then happy partnering!

RHL 11/23/09