To effectively cultivate a market, detailed customer segmentation is vital. However, it only plays a minor role in many B2B companies and is not executed uniformly across national borders. The result: customer wishes can only be catered to with limited effectiveness and sales potential is left untapped.
An M-DAX listed industrial company also found itself in this situation when it contacted Homburg & Partner: It was noting a declining market share in the high-margin, after-sales service business. The reasons for this were reactive, poorly differentiated market cultivation and distributed service capacities that were less than optimal. The company’s goal was to improve the quality of its market development by means of a new approach to segmentation. The new launch of a company-wide segmentation logic triggered a measurable increase of revenue and the manual effort was largely reduced.
“Thanks to the intelligent customer segmentation that Homburg & Partner has developed for us, we can better manage our market development and allocate our resources internationally in a more targeted manner.”
“Market cultivation without customer segmentation is like cooking without a recipe: Once in a while the results might be good but large sales companies with different levels of maturity and professionalization, in particular, need clear segmentation guidelines. Our approach increases the intelligence of the segmentation and thereby demonstrably also the success on the market.”
“Segmentations that take customer behavior into account are superior because they provide decisive indications to differentiating market cultivation. In the course of our projects, we achieve this by means of an approach that is based on data, is automated, objective and supplies consistently reliable results. Our algorithm segments your clients better than the gut-feeling of your most experienced sales employee!”
At the start of the project, the focus was on developing key points for the new segmentation logic. Together with relevant stakeholders in global management and the regional companies, three relevant dimensions for differentiating market development were determined: the sales potential based on the installed machine base, the share of wallet as well as a client’s purchasing behavior. Drawing from this combination, five customer segments were formed (key accounts as well as A to D customers). This way, a differentiating cultivating approach could be developed for each customer segment along seven topic areas.
In addition, customers were assigned to one of four profiles based on their behavior. This classification was done using an algorithm that identified behavioral patterns from past customer transactions and automatically merged with the profile that bore the greatest resemblance. In the course of project, the developed segmentation logic was applied to customer data in all subsidiaries. The segmentation results were then transferred to our client’s CRM system, so that differentiated account support approaches could also be implemented in practice at the segment level.
In the course of implementing the project results, the new segmentation logic was applied to the global customer landscape. This way, ten thousand customers were re-segmented. The automated procedure ensured minimal manual effort throughout. In many regional companies, this step marked the first time that a data-based customer segmentation with a focus on after-sales service business was achieved. This way, an effective foundation for differentiating approaches to market development was produced, as it had not existed before.
Differentiated cultivating approaches were defined for each customer segment and developed in the form of concrete strategy plans. Factors such as sales intensity, offer and communication channels were used to assign strategic plans to individual customers. The improvements were thus made visible and measurable on top of that: Thanks to the targeted identification and focused processing of potential customers (high sales potential, low existing sales), our client managed to increase sales by 4%, while keeping his sales expenses constant.
The new segmentation logic makes it possible to focus sales resources in a targeted fashion on potential, key account and A-customers. In parallel, small customers were identified and more efficient (remote) support for these was introduced. As a result, the sales efficiency was increased significantly: travel times and expenses were decreased and plans for customer visits were optimized. At the planning level, the new segmentation logic also generated more efficiency. The new transparency regarding in which regions potential customers and A-customers are located made it possible to optimize the regional allocation of resources to new and future company sites in order to increase customer proximity. This is a criterion that is a key factor for success in the after-sales service business, in particular.
If you would like to find out more about our services in the area of algorithm-driven customer segmentation or discuss similar approaches for your company, do not hesitate to leave an inquiry via our contact form. Our partner Markus Pfeifer will personally contact you promptly after that. Alternatively, you are welcome to contact us by emailing or calling us!