The importance of getting account segmentation right

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Account segmentation strategy is crucial to revenue growth because it helps you allocate sales and marketing resources more intelligently.

CROs and Sales Ops leaders group accounts based on specific criteria. These include industry, revenue size, potential, and strategic value. Now sales and marketing can work smarter. CEOs accelerate growth. The cost per dollar of revenue drops. Customer satisfaction and loyalty get a boost.

What happens without the right account segment strategy

Growth can slow, plateau, or stall when an account segmentation strategy isn’t in place. We typically see two or more of these problems when account segmentation doesn’t exist:

First, resources are allocated inefficiently. Important accounts and those with significant upside may not get enough attention. Less important ones might get too much. This wastes effort and spending.

A one-size-fits-all approach leads to a poor customer experience despite everyone’s best efforts. The unique needs and preferences of different customer groups are not met. Messaging may miss the mark. The services or products offered may not align. The risk is unhappiness and reduced loyalty.

Without account segmentation, sales teams may struggle. For instance, they can't tailor sales pitches and solutions to some accounts. This means that they may miss monetizing opportunities that a better understanding of needs and traits may reveal.

Scaling operations become harder and more costly. Account segmentation works by finding which customer groups are most profitable and poised for growth. Without this data, a company may miss out on ways to scale well. Or, they scale too broadly and dilute effort and focus.

Lastly, effective segmentation provides critical insights into market trends, customer needs, and competitive dynamics. Without it, strategic decisions may rely on incomplete or wrong information. This can lead to bad choices about product development, marketing, and more.

7 steps for creating the right account segmentation strategy

We have outlined the risks. Now, let’s cover ways you can segment accounts for accelerating growth. Here's a practical, step-by-step approach:

#1 Data Collection and Analysis

  • Gather Data. Collect data from your CRM, sales interactions, customer feedback, and market research. The data may include purchase history and transaction sizes. It should also include qualities.
  • Analyze Customer Value. Use metrics like Customer Lifetime Value (CLV), revenue, profit, and purchase frequency. They help you see the value each customer brings to your company.

#2 Identify Key Segmentation Criteria

  • Demographic Factors. Consider company size, industry, location, and annual revenue.
  • Behavioral Aspects. Look at purchase behaviors, product usage patterns, and service needs.
  • Segment by needs or challenge. Different businesses face them. Your products or services can solve them.
  • Engagement Level. Classify accounts based on their engagement with your business. This includes the regularity of orders, feedback, and responsiveness to marketing.

#3 Develop Personas

  • Create personas for each segment. Include their industry and company size. Also, their key challenges and how they make decisions. Lastly, their preferred types of engagement. Personas help tailor marketing and sales strategies effectively.

#4 Segmentation Strategy Formulation

  • Define Segment. Base your definition on your analysis. The segments should be clear. They should also be big, easy to identify, reachable, stable, and useful.
  • Prioritize Segments. Not all segments are equally valuable. Prioritize them based on their revenue, importance, and fit with your company.

#5 Customize Marketing and Sales Approaches

  • Develop tailored marketing strategies and sales pitches for each segment. This might include customized messaging, specialized product offerings, or different sales channels.
  • Utilize targeted communication and personalized interactions to increase engagement and conversion rates.

#6 Implement and Monitor

  • Roll out your segmentation strategy across your marketing and sales teams.
  • Monitor the performance of each segment closely. Track metrics such as conversion rates, customer acquisition costs, and customer retention rates.

#7 Review and Refine

  • Review the segmentation strategy annually. Make sure it stays relevant as markets, customer needs, and competition change.
  • Be ready to improve parts. Add new ones or move resources as needed. Do this based on performance and market feedback.

Wrap-Up

Creating a successful account segmentation strategy is an ongoing process. It requires continual improvement and change. The key is staying flexible. You must respond to changes in your business and customers.

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