Targeting the Right Customers
Dr. Jonathan Bein, President — Real Results Marketing
• competitive strategy • market intelligence • market segmentation • marketing practices • big data
Monday, May 14, 2018—I recently sat down with Jonathan Bein, the president of Real Results Marketing, for a video interview in which we discussed the advanced marketing work that his company does for its clients. To set the stage, sales and marketing are not the same thing. Marketing has a lot to do with figuring out where you want to sell and who you want to sell to. It's not just a matter of doing ads and hoping people will show up.
The best companies are able to improve their profitability and revenue by focusing their efforts and energies on the things that actually produce the best results. Knowing what the best customer looks like and how to target them helps us obtain and keep the accounts that will make the most money for us. Here at WayPoint, we do that segmentation by looking at profits. Real Results Marketing, however, takes a significantly more detailed and granulated approach to segmentation.
"Rather than just looking at points in time for segmentation, we're big into trends," Jonathan explained. "Watching trends is a powerful way of identifying where the sweet spots are. I'll give you a great example. We once asked one of our HVAC clients where the sweet spots were in their industry. Their response? HVAC contractors and electrical contractors. Both of these were high volume segments. However, HVAC was growing at 5% a year while electrical was actually shrinking. More importantly, the client had missed another large segment that was seeing a compounded growth at 40% per year. These are the kinds of insights you gain when you rely on an analytical approach instead of an intuitive one."
This talk of trends reminds me of something that Jeanne Hurlbert once said about Wayne Gretzky being great at hockey because he skated to where the puck was going to be rather than where it was now. By looking to the future and following trends, you can be at the right place when the market arrives.
"The other key issue is to get your segmentation to the point where it's detailed enough to take action," Jonathan said. "I once talked to a guy who told me that he sold to medical service providers. Well, that's a one trillion dollar market. Was he selling to long-term care providers? Small medical clinics? Hospitals? There are all kinds of ways you could segment that market. The objective is to get to a level where the behavior of the segment is different enough that you can message and sell to it in an insightful, meaningful, and successful way."
"We have access to granular information." Jonathan explained. "Whether it's at the line item level or the customer level, we can see a lot of things which might seem counter-intuitive when taken at face value. A lot of distributors get hooked on gross profit, but our studies have shown little, if any, correlation between gross and net profit. We're also able to look into behavioral segmentation. When we look at most distributors, we find that anywhere between 15% to 30% of customers are one-time buyers. Usually about half of those one-time buyers are customers you would want to keep."
"Segmentation can also be used to improve profitability," Jonathan said. "A lot of accounts would be more profitable if they were managed correctly. I think there are two keys: One is managing the cost to serve and making sure that it's aligned with the opportunity. From a sales and marketing standpoint, the second key is sales and marketing channel alignment. Segmentation can be used for account assignment such as which belong to field sales, which belong to inside sales, and which belong to marketing."
A lot of companies that attempt their own segmentation don't do a great job of it. If your segments are too broad then you're going to find companies that are super profitable, super unprofitable, really organized, really unorganized and such, depending on their business models. For this reason, distributors need the assistance of outside groups that can help them better focus their limited resources. Both WayPoint Analytics and Real Results Marketing offer outstanding services that can help distributors in this area.
For more information about Dr. Jonathan Bein, visit: www.realresultsmarketing.com