Tomicide Solutions, November 2011
How To Segment The Marketplace For Your IT Business
By Tom "Bald Dog" Varjan
Synopsis
Segmenting information technology clients in most cases is about segmenting them based on some factual bits and bobs. If the psychology is missed out, the rest can be pretty messy and inaccurate.
But real segmentation lies in psychology. If we error in the factual stuff, then oh, well. But if we error in the psychology stuff, then we can land in some pretty deep hot water.
Imagine a thoroughbred race horse that is locked up in a small stable.
The horse feels something is wrong but doesn't know what. He wants to run in the fields, but his owner denies him the privilege. The owner, who knows nothing about horses, is frustrated because the horse is acting up by kicking the door or the walls of the stable.
Then on race day, after six months of confinement and lack of training, the owner brings the horse out for a race.
Of course, the horse loses, and the owner is now thinking about turning the horse into sausages.
Now, I don't say that you should turn your bad clients into sausages or show negative feelings against inappropriate prospects. All I'm saying is that in all your dealings, favour prospects with "great client" potential and emotionlessly walk away from problematic prospects.
Note that it is your market that defines your branding, positioning, packaging, pricing and even the claims you make.
You must know your market's size, growth rate, demographics, psychographics, technographics (technical sophistication: abacus vs. computers), needs, purchasing habits, and many other factors. Different companies segment their markets differently, but this segmentation method you're about to read about applies to every industry. There are two attributes to consider...
1. Sophisticated Clients - Sophistication indicates the client's experience of using the kind of products and services you sell. If you are the marketing maestro at AA, a woman who drives a rust bucket with a burnt-out engine and calls AA as often as she changes underwear, she is a sophisticated client for AA services. Usually the more experienced clients are the more sophisticated they are too. She is a very experienced AA user.
2. Unsophisticated Clients - Another woman whose car breaks down on the motorway and calls the AA service for the first time, from AA's perspective, she's an unsophisticated client. She's never used the service and has no previous experience about the service.
3. Appropriate Clients - This is about fitting into your perfect client profile. It includes location, demographics, psychographics and technographics.
Examples: Local, are in growth mode, pay bills, respect their people, operate ethically, non-smoker, etc.
The more specifically you define your perfect clients, the easier life becomes.
4. Inappropriate Clients - Falling outside of your perfect client profile. It's up to you how much alignment you demand with your perfect client profile, but my experience is that the more alignment you demand, the better clients you get.
By alignment I mean the difference between your perfect client profile and the profile of accepted clients.
In my case, this alignment is tighter than a mouse's arsehole.
Why?
Because, based on my own character and idiosyncrasies, I find it easy to work with certain people even on very challenging issues. And we can produce pretty impressive results. So, it's a win-win.
Examples of an inappropriate clients: Outside a 200-mile radius, smokers with sedentary lifestyles, are in disaster mode, can't decide, cheap, exploit their people, late on payments, dodgy credit record, slime ball leaders and managers, etc.
This segmentation is usually done after an initial discussion with the prospect, and then based on what we see we can categorise prospects.
The four attributes form the four segments...
1. Sophisticated-Appropriate Clients - These are the perfect clients. They fall into your perfect client profile, understand your industry and know how to work with people in your field.
For instance, these clients understand scope, and don't bother It professionals with new tasks. when a client tells an IT consultant to take on some extra work because the clients' people are too busy, this reveals that the client doesn't know how to work with IT consultants. They are also shrewd negotiators, but don' haggle. They also understand and negotiate for value not price. They negotiate for the biggest bang, not for the smallest buck. These clients are loyal and, after some good work, they are willing to spread the good word about you and refer business to you.
2. Sophisticated - Inappropriate - They could make great clients... for someone else. They have the understanding of how to be good clients, but there is a character mismatch.
For instance, if I, a lifetime non-smoker, am a dentist, and a smoker comes to me with some dental problems, she may be the world's most sophisticated dental patient, but I reject her because she's a smoker, and we have a character mismatch. So, she will make a great client for another dentist.
An in a year or two I become the default dentist for non-smokers in my area. And no one will complain about my prices due to my strong market position.
The other issue with these clients is that they may have less than full, or no, respect for you and your merchandise. They want to squeeze you until you sweat blood. You can expect tiny profits, lots of arguments, unreasonable demands, delay in payments and high level of employee stress, burn-out and possibly attrition on your side.3. Unsophisticated - Appropriate - These clients need education to help them to become sophisticated clients. The good news is that they have the right character traits, and with some education, which can be done on autopilot, they can become perfect clients.
In general, these people value your advice and information. These are the typical students. They are keen to learn from you. They rely on you to provide extra value-added services and are willing to invest in those services.
We all know the dangers of wasting time on real nickel-and-dimers, but these clients have potential. It's worth investing in them and educate them about the value of your merchandise.
4. Unsophisticated - Inappropriate - These are the ultimate no-no clients. Many of them are leeches, best described by 1979 Queen song, Death on Two Legs. The people Freddie sings about in this song constantly looking for suckers for win-lose deals.
Most of these clients don't appreciate anything. These are idiots who demand you to bend over backwards and warp your life around serving them for peanuts. Personally I believe there should be a permanent hunting season declared on these people, and the government should even provide subsidised hunting equipment and free bullets to exterminate these mentally cancerous genetic errors from the face of the planet. These are the people who take your products or services, use them for a while, then take you to court to demand their money back for no apparent reason.
Having no clients is better than having shitty clients. Never let idiots drag you down and jump all over you. At least, if you have no clients, you can go to McDonald's to flip some burgers to pay your bills.
On Summary
So, now you see what's going on the client's side in his buying cycle. No matter how sophisticated your sales cycle is, if it's not in alignment with the buyers buying cycle, then there is a problem.
You may try to tweak the buyer's buying process, but that can come across as manipulation. So, tweak your sales process and align it to the buyer's buying process.
For instance, what or who is the first thin or person the buyer meets when expressing interest in your merchandise? Does the buyer meet a salesperson or a valuable piece of document, audio or video?
If your answer is "salesperson", then there is a serious conceptual misunderstanding in your sales process, because at that stage buyers do their best to avoid salespeople.
By sending out a "skilled" salesperson on an appointment, you basically violate the buyers' buying process.
It's like unleashing your combine harvesters on your wheat fields only two day after planting the seeds. Instead of harvesting, yo9u end up ruining your crops.
Sending a salesperson to meet a buyer, who only wants to read your information at this point, makes the buyer back off and avoid your company like the plague.
Start with working out your perfect client profile and make certain you accept only clients who fit your perfect profile. The whole idea of business is not just to sell your merchandise to more people, but creating an appreciative clientele with whom it is enjoyable to work.
If your business looks and feels like a morgue, then sooner or later this rubs off on your personal life too. And in order to create a cheerful workplace, you need both cheerful clients and cheerful people.
After all, like attracts like. So, what is your workplace like? Is it like a funeral home where passion and innovation go to die or like and arena of excellence where passion and innovation go to blossom?
Now, all this that we've discussed here may sound too trivial, after all, a client is a client is a client. But once you have a bad clients, other bad clients can grow on your company as if they were a colony of E Coli, and your company were a side of cheap Spanish beef at room-temperature./
And at the end of the day, your company can't be saved.
Come and let's discuss this newsletter issue on my blog...
Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.
