'IT Providers Should Use Advanced Customer Segmentation Methods'

How companies segment their customers for their products and services is one of their most strategic activities, but most providers are giving it scant attention, according to Gartner. For many technology providers, segmentation typically stops at demographics.

Gartner research shows technology providers how deeper dives in customer segmentation can help them:

• Improve campaign response with finely tuned messaging that is more effective at targeting the interests and emotions of target buyers
• Select indirect channel partners whose customers align more closely with their own customer base, capabilities, go-to-market strategies and market share objectives, and
• Avoid wasting sales time with prospects whose attributes make them an unlikely buyer, allocating more time to those who are likely to be easier to sell, more profitable and more loyal over the long term.

“In response to the current economic downturn, many providers are doubling their efforts on historically profitable customers,” said Richard Fouts, research director at Gartner. “However, many customer segments that were profitable last year have experienced major upheavals and are dramatically shifting their priorities, resulting in the need for an update of previous segmentation exercises.”

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Fouts said that just about every technology marketer Gartner advises segments on demographics, for example size, location and industry. But by segmenting on things like business environment, psychographics - which define how customers buy – and other demand drivers such as triggered events, providers can improve their conversion rates and qualified lead volume.

The most productive application of updated segmentation is lead management - particularly automated lead scoring. “Even those, who generate less leads resulting from a tighter, smaller market focus, report higher lead quality, which can help providers close deals faster and improve cash flow,” Fouts said. “Segmentation also helps vendors form communities around customers with common interests, which is critical if providers want to take advantage of using social media to create buzz in their target verticals.”