Customer Segmentation: Now in 3D!

When I first encountered the term “customer persona” I was elated. Yes! Finally, an update to the stale concept of “customer segmentation.” But then something terrible happened: it became popular. Now, little more than an icon resembling the lovechild of an emoji and a Pixar character, it has become like many of the hybrid cars, heart-healthy foods and fashionable flannel that came before: a trendier, more expensive version of the junk it replaced. Indeed, the concept has become so diluted (in an effort to make it more accessible) that it is as useful as the one-or-two-dimensional customer segmentation it replaced, albeit understood by fewer.

Nontraditional Customer Segmentation

So, what does make for effective customer segmentation? My original hypothesis was that a nontraditional approach, segmenting customers byproblem, rather than arbitrary metrics (such as size, geography, industry, etc.) would yield more promising results. And it did, as it set the stage for presenting products as solutions, rather than capabilities. Recognizing that two prospective customers in the same industry have different problems is great, but it is not scalable. Segmenting by problem facilitates marketing to customers experiencing the same pain points, regardless of other commonalities and differences between them. 

Still, this approach is insufficient as long as one’s B2B customers remain comprised of people – people who have their own thoughts, experiences, agendas and yes, even emotions. Whatever macro-level problems a company may be subjected to, everyone within will experience, and interpret, them differently. Even if every one of them has the same ultimate objectives (far from given!) they will not see the company’s problems in the same way. This, along with a recurring nightmare about my high school geometry class, led me down the path of three-dimensional customer segmentation.

Another Dimension

In addition to segmenting customers by problem, there is an imperative to segment both customer and problem by stakeholder. Why is this important? Simple: it offers a degree of precision and flexibility previously unattainable by product marketers. Messaging and positioning a product as a solution to a problem is great, but its accuracy is entirely dependent on the perspective of the individual(s) absorbing it.

Understanding different stakeholders, and how each relates to a problem, is critical on many levels:

• Everybody responds to different incentives. What is in any individual’s self-interest directly relates to how they experience, interpret and prioritize a given problem; find a way to relate what you’re selling to theirs.
• You will encounter many gatekeepers. On the road to your “ideal” buyer, or ultimate decision-maker, you will invariably have others to convince, too; have the right answer for each of them as to how and why you add value (to them!). 
• It may be a way in the backdoor. Just because the CMO won’t return your calls doesn’t mean you lack a direct line to the SVP of Ops; life is easier when you have a ready-made business case for the lowest-friction point of contact.
• Avoid boobytraps and landmines. Presenting a product requiring IT integration to the head of IT sounds natural; they’ll be spending the most time with it… meaning more work for them. Knowing your stakeholders ensures knowing how to position something for the benefit of each.
• Everybody has different switching costs. Most value propositions focus on the future, forgetting that there are switching costs in the present. The higher they are, the less traction you will get, and only a stakeholder-specific business case will justify them.

If you remain skeptical of the importance of separating out stakeholders as a separate dimension, consider the fundamental question on every prospective user or buyer’s mind: “What’s in it for me?” This question is neither selfish nor self-important, but pragmatic. Most of us spend our days treading water in some way or another, and if you offer us a brick of gold make sure we see it as a means to buy a raft, not a weight about to pull us further under.