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Using Segmentation to Maximize Profit in Small Accounts

Dr. Jonathan Bein, President — Real Results Marketing

• customer demographics • market segmentation • management strategies • segmentation • customer segmentation • Randy MacLean • strategy for CEO • Real Results Marketing • Jonathan Bein • sales strategy • marketing strategy • Dr. Jonathan Bein

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Using Segmentation to Maximize Profit in Small Accounts

Your customers are not always big customers. In this video, Dr. Jonathan Bein of Real Results Marketing and Randy MacLean of Waypoint Analytics discuss how, when properly segmented, even mid-size and small customers can be profitable.

Normally, customer accounts are split into two categories: money-making and money-losing. This means small accounts can be money-making accounts. Even if a money-making small account does not move substantial volume, they make an important contribution to the bottom-line. When dealing with midmarket and small accounts, the trick, according to Randy, is that you cannot use field sales to acquire or grow those accounts.

Midmarket accounts are great candidates for inside sales. By matching sales with a low cost-to-serve to low-profit accounts, you maintain profit while limiting expense. Midmarket accounts may not need or want field sales calls and personal barcode scanners. For a midmarket or small customer, these luxuries don't provide value, and they are an expense to you. Taken in aggregate, midmarket and small accounts often have greater potential for increased walletshare over larger accounts. They may not have a primary or even consistent supplier. They buy what they need, when they need it. By supporting them and giving them attention through inside sales, you can build loyalty and grow those accounts – potentially up to 10% a year. Ideally, you are looking for a strong line of business combined with a good company. If they are buying one thing from you, they can buy more products from you.

Segmentation identifies these opportunities to inside sales. When working with small accounts, consider what elements of your service have no value to them or can be eliminated to save costs to you. Develop policies and business models for your small customers – what you do and don't do for them. For instance, don't offer delivery options or allow these customers to buy on credit. Cut down on your operations costs, and remove your need for receivables or collections.

However, as you reduce those elements and amenities, you must maintain the level of quality that you do provide. You can secure and grow sales with these smaller markets if your pick-pack-ship operation is efficient. You must be operationally excellent in order to make extraordinary profits in this customer segment.

For more information about Dr. Jonathan Bein, visit: www.realresultsmarketing.com

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