Think back to your childhood – ever play a game of marbles? Little did you know, you were already using market segmentation. You probably remember that different marble types have different values. For example, let’s say a swirled marble is worth 25 cents, a striped marble, 50 cents, and a coveted agate marble, is worth $1.
Now, let’s compare a game of marbles to a database marketing campaign. While few kids would agree to a game without knowing the exact value of the marbles they’re playing for, this is exactly how many business executives conduct their database marketing campaigns today.
The bottom line is that not all names in your prospect database are created equally. Like marbles, some names are worth more to you, some less. For many reasons, certain prospects are more likely sales candidates than others, and it’s likely only a fraction of the names you consider for your database marketing campaigns actually warrant investment.
The trick is figuring out which of the names are most likely to be ready buyers and focusing your database marketing campaigns on them. By pre-qualifying prospects from your database marketing campaign and applying market segmentation to identify and target only the highest return segments, it’s possible to increase sales performance while actually decreasing marketing costs.
Market segmentation– breaking a universe of prospects down into smaller groups based on similar characteristics or demographics – at its simplest level can be based on easily visible attributes such as geography, company revenue, and SIC codes. But if you have the business intelligence available, market segmentation can also factor in things such as customers’ specific pain points, their technology environments, and plans for short- or mid-term purchases.
By testing the market segments you’ve created, it’s possible to pre-determine which of your prospects are likely to be of the most value to you from a selling perspective – which candidates are the most likely to buy.
In contrast, traditional database marketing campaigns tend to focus on simply cleaning up the names on the list. They make sure names and contact information are correct, but they fail to involve market segmentation or prioritization of candidates in any way. This means your budget and resources are being wasted reaching a lot of prospects who probably aren’t ready to purchase, regardless of how good the offer or the sales pitch is.
A clean database is still important, but it’s only the first step in the process.
Today, organizations are being forced to do more, with smaller budgets. This is why it makes sense to stop reaching out to every name on your database and start doing market segmentation.
You can avoid the waste of blanket database marketing campaigns by identifying and focusing on the higher-value names in your database with market segmentation. This will not only lower your marketing costs, but by enabling you to focus efforts on the most ready buyers, it will improve your selling results too – often by 50% or more.
Next time, consider that maybe it’s not effective to simply “play for all the marbles.” Instead, concentrate on finding those lovely agates in the bunch – you’ll have a greater ROI to show for it.
Dan McDade is president of PointClear, a Norcross, GA-based provider of business prospect outsourcing services for companies with complex sales processes.