Account Segmentation can arguably be viewed as the single most important practice your organization can execute to unify the team around your growth strategy. Your customers are the heart of your business. And how you segment them impacts every part of the customer journey, from marketing to prospecting, sales, customer success, and beyond. Many commercial leaders claim to understand and execute account segmentation. Still, those account seg strategies tend to be “good enough” and not performed on a regular, consistent basis. For leaders to drive growth, a consistent refresh of account segmentation and incorporation of three critical elements will take that strategy from good to great and improve sales productivity.
Aligning the top talent in your sales organization to your top accounts is the fastest way to produce growth. Having a deep understanding of your customer's ability to spend (and over what time frame) gives you a competitive advantage when making allocation decisions against market opportunities.
A best-in-class Account Segmentation strategy and practice requires extensive collaboration and greater discipline comprised of three elements: classification, qualification, and prioritization.
Account classification involves categorizing your accounts and thinking about the appropriate resources to cover them. The first step is to classify your customers and prospects into different segments based on their attributes. Companies tend to use industry vertical, company size, revenue, or purchasing history. Once customer segments are identified, you can begin to create a targeted sales or marketing approach for each section. if you have several classifications of accounts that are covered by different roles, with skill profiles that align with the segment that they're covering, you're on the right track. A common example of this is having strategic or key accounts that are covered by your best sellers. You want to match the right seller to the right account and ensure your sales team is enabled to cater to the needs and pain points of each segment, increasing the likelihood of success.
Performing some type of classification applied consistently, and avoiding mixing and matching categories, is the best practice for account segmentation. SBI recommends an annual review, at a minimum, to ensure alignment with your org structure and corporate goals. Too often, we see outdated or misaligned account segmentation as the root of multiple problems.
Oftentimes, we see an organization stop at account classification and call it good. But classification is just not enough on its own. Understanding customer behavior can often be complex, which is why industry segmentation is a helpful starting point. However, it's important to remember that while segmenting by industry provides quick insights into purchasing decisions across varied industries – simply relying on such a broad classification isn't enough. An additional layer of analysis must be considered in order to make more informed strategic and mid-marketing account assessments based on predetermined thresholds.
The second element is quantification, which is how you measure the value of the account to your organization and where we attach a dollar value to each account. Qualifying customers involves analyzing their purchasing behavior, their position in the buying cycle, or any other relevant criteria. Qualifying prospects involves analyzing their potential purchasing power and their fit with your company's product or service offering. Qualifying both customers and prospects will help you prioritize your resources, ultimately leading to better customer relationships, more significant sales, and higher customer retention.
Quantification is so important because when you're making decisions down the road, you want to know exactly how your different options are going to impact your bottom line. The recommended metric to use in qualification is a measurement of spend potential (propensity to buy) or how much we think an account could spend with your company over a given time period. This metric is a predictive or frontier measure, differing from actual bookings or revenue. Whatever metric is used to qualify customers and prospects or to quantify account value, it must be applied consistently to be an effective measure.
Once you have classified and qualified your customers, you can prioritize them based on their potential value to your company. Prioritization involves creating a hierarchy or rank order of the segments, with the most essential customers and prospects at the top. The way this is done is by looking at your ideal customer profile and scoring your customers and prospects based on attributes that impact how they might interact with your business. Common attributes are company size, location, industry, growth rate, and other factors that are specifically related to your products or business models. What you end up with is a ranking of your customers and prospects, which you then circle back to and help inform your categorization.
Prioritization helps identify where your sales teams should focus their time, where to deploy resources and to inform account planning. Prioritization also enables your organization to ensure that key customers and prospects receive the attention they warrant to maintain their loyalty. Ultimately, you want your sellers to be aligned to the right accounts and prioritize accounts and customers with the highest propensity to buy.
When uncertainty arises, it’s often best to go back to the basics. Account segmentation is not only crucial but necessary for any growth strategy. It ensures you are using your resources wisely and prescriptively targeting the right prospects and customers, shifting focus to those who can buy now. By incorporating all three elements - classification, qualification, prioritization - into your account segmentation strategy and remaining diligent and consistent, your organization will reap the benefits of a focused and targeted sales and marketing approach that is aligned with your growth goals.