Back2Basics – Mark Eardley

B2B Customer Centricity: Why it’s vital for needs-based segmentation

by Mark Eardley (@mdeardley) In this third Q&A with Laura Ramos, Forrester’s VP and principal analyst serving B2B marketing professionals, we’re looking at centricity in the context of market segmentation and the role it plays, first, in identifying everyone who influences buying decisions and, secondly, in understanding the reasons that motivate those decisions.

Needs-based segmentation is key to producing sales-creating marcoms that are regarded as relevant and credible by the right people in the right places at the right time. Get the segmentation wrong and none of that will happen — your marcoms won’t trigger sales.

Back2Basics: “It is the customer who determines what a business is, what it produces, and whether it will prosper.” Peter Drucker’s emphatic words from his 1954 book, The Practice of Management, highlight the hard-nosed importance of understanding customers — of being knowledgeably customer-centric. In B2B, the big buying decisions that create big sales are influenced and made by many different people from both inside and outside the business. How does centricity help marketers identify all these people and why is that important?
Laura Ramos: It’s astounding how correct and prescient Drucker was when he called out the customer as the lynchpin of business success. In B2B, marketers and sellers focus a lot of attention on using technology, data, and analytics to identify key influencers involved in the decision-making process.

Account-based marketing, for example, is enjoying tremendous new (or should I say renewed?) popularity because it uses technology and process to help solve the ideal customer-identification problem.

The data marketplace has exploded with solutions and services aimed at addressing the origin and governance of business-buyer data — and the desire to put this data into practical use. Predictive analytics, just as one example, is demonstrating its power to raise the bar on identifying the accounts, to forecast which will be more likely to close, and reshape B2B marketing outcomes.

The issue isn’t with identification as much as it is with knowledge. Sure, you can pick out the “top 10” people who are most likely to influence the purchase decision in a major account, but what are you going to say to capture their attention?

Marketers must move beyond basic demographic, firmographic, and BANT criteria to uncover the issues, concerns, and motivations buyers share. And use this understanding to foster relevant business conversations and interactions outside of the offer-response communication paradigm at the heart of traditional mass-marketing and media mix approaches.

Customer centricity lets marketing and sales understand who is important in making the decision, what they care about, and — most importantly — how to position your company’s offerings in a way that can help them. If you can’t make the conversation all about them, they won’t listen.

B2B: “People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.” Theodore Levitt, circa 1960. Rather than segmenting based on, say, firmographics within target markets, it’s surely far more effective to segment according to what is valued by decision-influencers — ie to understand and describe how products and services will fulfil each influencer’s specific needs. For needs-based segmentation, how does centricity enable marketers to define and address the prevailing reasons that motivate influencers to unanimously support a buying decision?
LR: I completely agree that segmenting by the value — or outcomes — decision-makers desire is a far more effective approach. Judging by what’s happening in the market, I would say this is an aspirational goal for most marketers. We’ve been so steeped in product-centric segmentation — if we do any segmentation at all — that it is like trying to cure an addiction to get marketers to segment differently.

Traditional product-centric segmentation focuses on what we want buyers to know about us. Today, buyers can figure that out long before they talk to sales, fill out an online form, or otherwise make themselves known to us. Instead, they want to know that you understand them, their business, the problems they need to solve, and the market conditions they face.

Marketers need a much-broader understanding, a richer set of data, to develop customer-centric segmentation and to detect the lookalikes belonging to each segment. It’s easy to group prospective accounts by size, industry, or geographic location; it’s difficult to group them by their marketing technology maturity, their philosophy on outsourcing, their financial risk-taking profiles, or a score of other, more revealing characterisations.

Customer-centric firms invest in the processes, technology, talent, metrics, and organisational structures that put winning, serving, and retaining customers foremost in their strategy setting, budgeting, and execution. These firms prioritise investment here above meeting typical operational goals. Even more, this obsession with customers creates a culture devoted to understanding and solving buyer problems. When a company operates in a customer-obsessed manner, knowing buyer motivations and how to address their needs directly — without a lot of technical gobbledygook or long-winded, flowery explanations — comes naturally.

Following this overview of centricity’s central role in guiding needs-based segmentation, in the next Q&A we’re going to look at how a centric approach enables B2B companies to produce the right messages across the buying decision cycle. This series of Q&As will end with an exploration of how to measure the outcomes produced by centricity. Next up: B2B Customer Centricity — how it empowers marketers to create content that creates sales.