Segmenting B2B Customers

Commentary

Putting Value-Based Segmentation on the Map

Segmenting B2B customers based on their perceptions of relative value will enhance profitability through better selling and pricing

By Walter Baker and Homayoun Hatami

For many B2B sales and marketing organizations, the problem boils down to this: How can they effectively quantify and communicate the value of their products and service to customers who have an increasingly sophisticated ability to compare the full range of available offerings? Most B2B organizations use classical segmentation techniques to help their sales representatives understand precisely who their customers are, but still lack information on which segments care about price and which care about premium solutions. As too many sales reps will agree, it becomes very hard to articulate why a customer should choose a particular product or service if you don’t know what the customer values. In high-tech companies, this problem is particularly widespread: A vast majority of the 120 senior high-tech executives surveyed by McKinsey & Company believe their organizations do not have adequate skills in quantifying and communicating value—and that was equally true for the survey’s top- and bottom-quartile organizations.

Creating an aggregated customer view

Clearly, having an aggregated view of how customers value a product, service or brand will help an organization develop tailored product-positioning and communication strategies, set prices, focus product development efforts and shape perceptions of value. One approach involves creating "value maps" that show how customers perceive the prices and benefits of competing products. On value maps, competitive offerings are plotted as individual points between the axes of perceived price and perceived benefits. Companies use these maps to identify weaknesses in current product positioning and, to address these gaps, define targeted sales and marketing approaches based on where they want to...