"I cannot give you a formula for success, but I can give you a formula for failure, which is: Try to please everybody.“ With this quote Mark Twain touches upon one of the most important rules for building a strong sales process: acknowledging that not every customer is the same and identifying what customers types are most relevant to target.
For a project developer working on retrofitting university campus buildings, the customer’s needs and objectives can be very different than, for example, when working on retrofitting commercial office buildings that are managed by a commercial real estate firm. Indeed, any two customer segments can have different needs and different objectives, and it is one of the project developers’ first priorities to understand these differences and consider them when developing their Sales Offering.
Customer segmentation and targeting activity, is the foundation of successful sales strategy development. Healthy pipeline, high success rate and deal closure help businesses grow, while remaining financially strong.
Why this is important for small and medium-sized companies
Segmentation and targeting can be extremely powerful tools for small and medium-sized companies. These tools highlight the most relevant potential customers and help businesses to direct their resources efficiently and effectively when building out their project pipelines.
Moreover, professional marketing material and advertisement costs are often difficult to support for smaller companies. When choosing where to direct resources, marketing is often under-prioritized and considered a “superfluous activity”. One of the objectives of the LAUNCH project is to develop meaningful and relevant marketing material that small and medium-sized Service Providers can test and use free of charge.
Employing smart segmentation and targeting can help companies streamline their marketing and sales approach. It helps focus efforts and supports strong project pipeline growth.
Segmentation helps deliver more focused and efficient services
Market segmentation is the activity of dividing a broad business market consisting of existing and potential customers, into sub-groups of customers (known as segments) based on shared characteristics. Segmentation creates customer groups:
with similar preferences
that are distinct from other groups
that are big enough to matter
that are small enough to be cohesive
that are identifiable and accessible.
The result of segmentation is establishing the relevant parameters to identify meaningful groups of customers that are different in needs and behavior.
Various parameters (or combinations thereof) might be considered, such as:
1) Parameters that make it easier to identify specific customers. For example; one can look at customer size or geographic location to preview concentrated potential or how your local network may be helpful in approaching them.
2) Parameters that make it easier to identify their needs and behaviour. For example, you can look at the customers’ experience with performance contracting, its strategic positioning in the marketplace, energy cost criticality in their industry, or relationship with the building (owner vs tenant). These parameters are sometimes more insightful, but also more difficult to observe without talking with the customer.
These different groups have different needs, and typically have different procurement and decision-making processes. Segmentation is not only a powerful tool to strengthen your approach to the market and build your sales pipeline, but will also allow you to:
1)Think differently. For example, an industrial service provider decided to switch from customer size segmentation to one based on the attitude of its customers towards outsourcing. Upon closer analysis, seventy percent of its client base was interested in full outsourcing of maintenance, while only thirty percent clung to a strict buying mentality. The new approach enabled this service company to get deeper into the value chain of its customers, creating customer lock-in and generating higher profitability.
2) Discover a “forgotten” or “new” segment. For example, a furniture manufacturer decided to switch from a traditional segmentation approach based on consumer age (kids, youngsters, families, elderly) and room in the house (living and sleeping room), towards a segmentation based on space size (focusing on small spaces) and industry (focusing on hospitals and other care organizations). The new approach opened a totally new segment characterized by higher volume and limited competition which boosted profitability and sales.
Targeting helps you prioritize sales and marketing efforts among different customer groups
Targeting means you select the segment(s) where you think your odds for winning business are highest. You typically focus your marketing and sales expenditures on those target segment(s). Some developers have a very dedicated focus. For example, White Energy Group states “our customers are companies in the manufacturing, agribusiness or service sectors who want to maximize the efficiency, performance and savings of their plants or production process”. Differently, Calortech addresses its services to a wider range of customers communicating that “We drive energy savings across a range of industries. Our clients represent Manufacturing and Industrial, Commercial and Institutional (public bodies, schools and universities) sectors”.
In Belgium, established sub-sectors of the market are:
1) Public buildings, Schools and Educational sites; 2) commercial buildings, offices; 3) industrial sites, processes. As a project developer SME, are you comfortable with and do you have credibility in targeting all these types of customers at once? Do you have the appropriate personal network to target relevant decision-makers in all these different sub-sectors? Is your offering appropriate for each of those segments? When you have limited sales and marketing resources to spend, you always need to use them where the odds are highest.
Share, listen, get inspired.
Another fundamental way to improve your business is by learning from other practitioners’ experiences: listening, sharing, debating and networking are activities that help you get inspired and discover new ideas.
A great opportunity to do that will be our Sales Workshop in Q1 2021.
Key topics covered will be:
1) Assess the maturity of your existing Sales Process;
2 ) Learn and apply a powerful customer perspective to any specific situation;
3) Identify and engage the decisions that drive growth strategies in your markets and supply chains;
4) Obtain an accurate decision-based picture of your key markets and customers;
5) Target the leads with the highest chance of success and exit high risk / low return projects early.
If you are interested in joining this workshop, we invite you to express your interest here. Due to the current COVID-19 situation, further details on the date and format of the event will be shared in the coming weeks.
Learn more on Segmentation and Targeting
To know more about this topic, check out the recording of the LAUNCH webinar: “Building a Strong Sales Process: The relevance of Targeting the Right Customers” where project partners New Energy Group, Joule Assets, and TNO covered the topic from both a researchers’ and practitioners’ viewpoint, and shared some practical, real-life experiences.
