Following creation of your customer matrix it’s a good idea to look at customer segmentation. It is obvious that not all customers are created equal. Business Developers only have a limited amount of time and resources. These must be spent on customers that give the best return.
Therefore, priority of effort must be defined. An easy method is to segment the list into three tiers. A quick way to determine priority level is to focus on both of the following:
- Potential service spend
- Target customer’s need for your company offering.
Example Customer Segmentation
Lets take an environmental consultancy servicing the mining industry. They specialize in managing and mitigating environmentally sensitive sites, particularly involving threatened ecosystems.
A company like this might define customer segmentation using potential spend first. Next, they might use the customer’s number of environmentally sensitive projects to highlight the need they have for the company offering. This results in the three priority tiers:
- Tier 1: $100,000/yr. spend and/or many environmentally sensitive projects.
- Tier 2: $60,000/yr. spend and/or some environmentally sensitive projects.
- Tier 3: $30,000/yr. spend and/or fewer environmentally sensitive projects.
Looking through their customer list and placing them into the three tiers becomes a straight forward exercise.
Focus Your Effort
This division can help you focus your effort on those companies that give you the highest return. Of course, Tier 1 should be the given the highest priority. However, the lesser tiers also have the potential for significant revenue and must not be forgotten. Think about how much effort you will assign to each tier. How often will you contact your target companies? Will it be different for each Tier?
I recognize that this approach can be considered too simple by some. But, think of the customer segmentation as a guide to focus your business development effort. However, there will be times where customer opportunities fall outside of this framework.
In these instances sit down with the team, discuss the likely returns and the effort needed to attain them. Use your customer segmentation to help shape the conversation. Work together to determine how to proceed. Perhaps there are unique strategic reasons to elevate a customer to Tier 1?
How Do You Do It?
As always I’m interested in how you prioritize your customer base. Do you segment into tiers? What attributes do you base them on? Drop a comment below or let me know via the usual channels.