Building a successful contracting business requires constant mindfulness of each project’s profitability. But have you considered how customer segmentation can affect your bottom line? In today’s environment of lean profit margins, the tried-and-true marketing principle of customer segmentation can reap big results for client retention and company productivity. A guest blog post by Kimberly Kayler, CPSM, President of Constructive Communication, Inc. – the leading marketing communications firm specializing in the concrete industry.
Customer segmentation is simply a process by which you organize your customers regarding their needs and your services. The process allows a company to select, prioritize, define, and deliver tailored value propositions for customer segments, and develop and manage effective channels for serving these customers.
While we know that all clients are not created equal, often we provide the same level of service to our top clients that we provide to our least desirable ones.
For example, while it is appropriate to work overtime and move other deadlines around to meet the needs of an “A” client – one that refers other profitable work to you, understands your value, pays your invoices on time – it’s not smart to take that same approach for a one-time client that will never refer you to others and is slow to pay.
Make a list
The first step in segmenting your customer base is to identify what you view as important in a client. Make a list of the things you deem important. With this list of desirable attributes complete, go through and weigh your clients on a scale of one to 10 in how they perform. Many find it simple to group the tallied numbers at the end in three categories – A, B, and C clients. You’ll be surprised when you realize that you cater to many of the less desirable.
Now, with the criteria established and a basis for where each client falls, determine what level of service is a fit for each category. For example, today many retailers move C customers to web and phone orders only, ensuring that expensive time with a salesperson falls in the A or B range. Companies will also break down ongoing service into customer segments.
Using these scenarios as an example, discern different offering levels for the products and services you provide. For example, an A client may garner same-day service, while a C client should be handled within 48 hours. Be sure that the definition of service offerings goes beyond actual tangible deliverables but also includes things such as communication. The key is to be fair, not equal.
Finally, develop a written customer action plan for each client based on the results. While organizing customers in this manner may seem out of character at first, you’ll realize the benefits of spending energy and time in the most profitable and promising sectors of your business. Your communication and other efforts will be narrowly focused, boosting your bottom line where it matters most.
With a background in technical editing as well as marketing for engineering firms working in North, Central and South America, Kayler started Constructive Communication, Inc. (CCI) in 2001 to serve the needs of professional service and business-to-business technical firms. Key services include marketing strategy, public relations, crisis communications and social media. In her role as president of CCI, Kimberly helps clients define strategy and develop marketing action plans. An expert in strategic planning, she has helped several industry associations develop their strategy as well as marketing action plans. She serves as the account lead for many of CCI’s clients and also works with team members to ensure quality control and ROI processes are continually refined to meet the needs of today’s dynamic business world.
A well-known industry speaker and industry advocate, Kimberly is the author of more than 2,500 articles. She has extensive expertise in developing technical articles, speeches and media campaigns. Her experience also extends to developing and implementing numerous crises communications plans. Further, Kimberly is co-author of Leading with Marketing, a handbook for marketing and business development professionals. Visit www.leadingwithmarketing.com for more information.
Her experience in the concrete industry is deep, having served more than 15 concrete and related industry associations. She is currently a member of the Board of Direction for the American Concrete Institute and serves on a variety of industry committees as a volunteer.
Contact Kayler at firstname.lastname@example.org or 614.873.6706 or visit www.constructivecommunication.com for more information and marketing tips. If you are interested in a guest blog post with A.H. Harris, please contact us. Happy segmenting!