You want to improve your marketing strategy, but you’re staring down the abyss of options to take. For proven success, develop a laser focus on where you direct your marketing efforts. Pour energy into how you’re growing revenue, how you retain customers and how you can remain profitable in an uncertain and challenging environment.
The best way to do this is by investing in the technology needed to become an analytics-driven distributor.
Looking at your real-time data, patterns will start to emerge. Customer behavior will make more sense. You’ll be able to sort customers based on what they care about, what they’re shopping for and how (and when) they shop. Armed with these insights, your sales teams can work smarter—not harder—to meet customer needs, remove tension from the relationship, close deals faster and pick up new customers along the way.
The Problem with How We Segment Customers Now
Back in the day, customer segmentation was all about Standard Industrial Classification (SIC) and North American Industry Classification System (NAICS) codes. Although this information is undoubtedly useful for- economists, it’s no longer useful for distributors by itself.
The original concept of segmentation and marketing strategy used these codes and applied them to territory zones. It looked at the customer size, type and other basic firmographics.
For example, when a small company usually has employees wearing more than one hat, you might have one or two on a field sales team. Looking only at territories, you were left operating in patch geography. It’s an inefficient way to do business.
Given that same logic, the only way you could segment was to grow. Getting larger as a company, operating in more territories meant you could specialize. You could have inside sales, technical sales and other niche roles, which also meant you could target customers more efficiently.
Despite this awareness and the availability of technology, some distributors are still scrambling to find high-profit clients and please their existing customers. They’re operating in the dark.
-Then there are the innovators. These companies are focused and pick up share simply because they’re smart about the best way to make money. They’re using behavioral segmentation. The innovative distributors are looking at what their customers truly value—because there’s a difference between what you think you sell and what customers are actually buying.
How to Segment B2B Customers with Analytics
To unearth where your profitability lies, it’s necessary to clearly understand your customer segments. What kind of customer occupies each spot? What do they want, and what do they need? How can you fulfill those desires?
Once you’ve analyzed all the data, you can home in on the segment in your sweet spot—that’s where the money is.
- Sort customers based on what they care about.
- Apply NAICS codes.
- Incorporate industry demographics into the equation.
It’s critical to have a scale for meaningful segmentation. The old criteria was geography. You base resource allocation on size; treat the big customers well, and earn a large profit margin off the small ones.
But when you scale and grow, you begin to see patterns. You’re accumulating more information and, therefore, more data to analyze. Instead of self-directed sales teams going out into the great unknown of their region, all of a sudden, the data is revealing choices and opportunities.
The original concepts of segmentation and market strategy are still important because they serve as a baseline. However, you need to build on that foundation. Most distributors know their top 10 customers well, but they don’t know the 10 largest users of products in their markets. Those analytics matter.
Addressing buying habits, such as how much customers buy digitally or how often they interact online but finalize their order through sales reps is key.
Strive for efficiency to remain competitive. Weigh in the elements of cost to serve. There are plenty of distributors that have lower prices and lower expenses.
Another phase is the customer lifecycle management, where you analyze -retention strategies. Where do customers drop off in terms of their size and purchases?
Real-time data analytics enables your organization to group people based on their behavior. Use your resources. Whether it’s an email, website pop-up or a discount shared through your field sales reps to your largest customers, use the data to be proactive.
Consider this: according to a recent study published by Gartner in early 2022 only 17% of a buyer’s time is spent talking to salespeople, and all distributors in your industry are competing with each other for that precious time. How are you handling that remaining 83%?
If you use the data right, you’ll never wake up too late to keep a customer who had all the red flags. There’s a reason they stopped their orders. Behavioral analytics can help you stay on top of these critical changes. Talk to the customer directly—and keep them as a customer.
Why Distributors Struggle with Behavioral Analytics
Many distributors have a hard time adopting behavioral analytics due to one (or more) of three things:
- Their field salespeople don’t enjoy their autonomy and freedom -seemingly taken away. They don’t like to be held accountable. There will always be pushback to change. It’s human nature. Distributors fail when they don’t know how to handle the change management .
- They begin the process thinking analytics can be managed via spreadsheet. It can’t. Applying data to customer segmentation, really diving into data analytics, is a project. It requires planning, infrastructure and design. Treat it like another big company initiative. When you don’t, you get stuck, and the project stops.
- They don’t know where to start, so they chat with some friends, buy some random software and think that’ll be the solution.
Every distributor can adapt and utilize behavioral analytics. The difference between the innovators and those who struggle lie somewhere in these three areas. If you’re willing, you must follow through and have a foundation to succeed.
How Can Distributors Facilitate Customer Segmentation Using Analytics?
Map out the journey of your buyers.
This somewhat simple exercise is always an eye-opening experience for distributors. Companies are usually shocked by what they thought their customer journey was versus what it actually is. In some cases, this exercise also reveals areas of friction for customers. And if a customer is used to an annoying process, 1) it’s no wonder you experience churn, but 2) using the data and changing how you interact will be all the more enjoyable for the customer.
Once the journey map is complete, you can start adjusting your sales process to align with that customer segment’s journey. When you can see that path from browsing to purchasing, you can begin to remove the friction from the relationship.