Why Should Distributors Use A Cloud CRM System For Market Segmentation?

Distributors can use cloud CRM systems to engage in market segmentation efforts that maximize their return on products and services.

Market segmentation is a way of creating a subset of a market by grouping customers with similar characteristics. Markets could be divided by a number of categories, including geography, demographics, attitude, lifestyle, actions or behaviors.

Segmentation allows companies “to break down the needs of everyone, specifically focusing on target niches,” according to an article on the SmartPoint Research website. “This makes it easier to manage and deploy the right strategy which will create the most positive response.”

When you segment your market, you want to segment it into subsets that are viable and will support your business. So, what can you do with the information you’ve collected?

For starters, the main benefit of segmentation is that the marketing messages you create can be focused to have a greater impact. This reduces marketing risk and leverages your marketing dollars because your message is tailored directly to people with similar characteristics. “When you … have a good focus, you [will] certainly gain better returns,” a post on the Money and Business Tips blog states.

Also, you’re potentially able to differentiate your products or services by making them more specific to the needs and wants of the segment. When you do that, your products and services are more desired. Plus, you can repackage or repurpose products and services in different ways that appeal to a variety of market segments. This broadens your customer base without expanding your line.

OK, so the benefits are clear. But how do you go about segmenting? Distributors can use cloud CRM systems to maintain valuable information about customers and leads. This allows you to determine the best way to segment the market. There are many ways to put CRM data to use, including:

1. Target existing customers and leads: If a cross section of your customers or leads reveals that a large percentage are in the same industry, then you can segment your marketing toward that industry. You could also track whether your contact in a given organization is a buyer or an influencer; your messages are going to be different depending on who you’re marketing to.
2. Build a profile: CRM data can help you paint of picture of your customer base. Collect and organize this data to create profiles of typical customers or customer roles.
3. Focus on prospects that are similar to existing customers: Group your customers so that you get a sense of what segments you are already focused on. If you want to continue to focus on that type of customer base, you can use the information in hand to segment prospective customers who are similar.

Of course, once you’ve started, you need to monitor your progress. You can measure the success of segmented marketing efforts using a cloud CRM system, which can help provide metrics for success.

Marketing metrics that would be appropriate to consider include conversion ratios and win-loss ratios. Margin ratios are also good metrics to help determine which segments are providing the best gross margin.

Tracking the number of qualified leads per month by segment helps to determine whether the segment is a viable market, which is critical for distributors to consider. You must determine whether the segment that you’re creating is going to have enough customers or potential customers to support your business. Otherwise, it’s not worth the effort.

In the end, distributors should engage in market segmentation, but they must have data to do so. A cloud CRM solution helps with data collection and maintenance, allowing distributors to see how well they’re doing in any given market.