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B2B marketing Beginner Marketing Marketing basics Marketing definition

What is B2B Marketing ?

B2C, B2B or BtoB, B2B2B, B2B2C, just an extract from an acronyms list to leave the dummies outside of the expert’s discussion. That’s bad !
Like many other domains, the marketing and his folks have an incredible list of acronyms and expert vocabularies to protect their private backyard.
There’s nothing better than the usage of acronyms when you want to loose your non-expert audience.
I hate acronyms ! So, let’s kill them !

B2C ?

B2C stands for “Business to Consumers“. Therefore, B2C marketing is about the activities I described in a previous article, that target consumers as customers. marketing?
Basically you or me into our daily life, buying and using goods : from food to smartphone, from water to membership of fitness club…
I may write later about B2C, but the main subject of this article is B2B marketing , let’s speak about it.

Companies as customers
Photo by Rodney Minter-Brown on Unsplash

B2B?

Our key question, what is B2B marketing ?
B2B stands for “Business to Business” .
Then it’s about the marketing activities that target companies as customer.
Let’s list a few examples :
. Rolls Royce selling engines to Boeing, that’s Business to Business.
. Foxconn manufacturing iPhone for Apple, that’s Business to Business.
. SalesForce selling services and software, that’s Business to Business.

Business to Business is a huge market, covering many fields , from raw material to machinery and tools , from stand alone software to services, from energy generation to waste treatments. We speak of trillions US dollars.

Like Business to Consumers, Business to Business marketing starts and ends with customers.
It is  targeting your most relevant market segments, discovering and learning about the customers, creating and delivering values.

Who are the customers in Business to Business marketing ?

The customer is always the one who decides that the value your deliver is really a value for him or her.
The customer will buy, or will influence the decision-maker to buy.
Human beings involved in companies decision process are exactly the same who are  buying consumer goods.
If their behavior varies upon their role ( I mean as actor into an enterprise, or as a individual consumer) , their expectations are unconsciously cross-influenced by their two experiences.
The border between B2C and B2B can easily be drawn :  target is consumers on one side , target is companies on the other side. But customers are human beings and they cross this border all the time.

Market Segmentation in Business-to-Business.

What is targeting in B2B marketing ?
Photo by Simeon Jacobson on Unsplash

Business-to-Consumers market segments are usually done by  definition of social and cultural groups , impacted by level of education, age, receptivity to social media, income categories …. And you can put each and every individual in one of your defined box : the market segments.

Business-to-Business market segments are usually defined using other dimensions :
 – the category of industry type ( such as mining, electronic, automotive, chemicals ….),
 – the activity ( such as machine builder for segment/application X, building and structures for segment/application X, integrator for segment/application X, and much more).
You can always create your market segmentation by using very standards categories such those of NAICS : (one more acronyms to keep away ignorant) North American Industry Classification System.
Above all, be lazy ! No need to re-invent the wheel , use what is already available and adapt it to your own need.

The good market segmentation is the one that is useful for your organization

It’s not necessarily the academic one.
Useful for your organization, that’s common good sense : your peers understand the way you define each segment and it gives you powerful data to select the most attractive and achievable targets.
Your good segmentation is your foundation to target your winning battle-fields.

A classical mistake 

The mistake I always see : Marketer in Business-to-Business are defining their segments with industry classification.
However they always skip or disregards the social and cultural criteria.
After that, no wonder if a product that perfectly fits an industry in Europe, will never raise in the same industry in China !
I did make the mistake. I have to admit that I had to live several years in China to understand and take the cultural criteria into account
These social and cultural criteria can be strong differentiation and added values when creating new offers.

Understand who’s who.

who are the customers ?

More than in Business-to-Consumers, Business-to-Business marketing must take care of the people involved with your offers. I would say, impacted by your offer !
Marketers often tend to mix their targeted customers with a limited number of people, those they can easily interact.
You should never skip the guys who will implement , set, maintain or use daily the product.
Above all, customers-as-personas are one of the most valuable knowledge in Business-to-Business marketing,
You must always dig deeper and know who is doing what,how and why.
Therefore, you must take the necessary time to understand each and every persona concerned directly or indirectly by your offer.


Business-to-Business marketing is : dealing with people.

who is the real use of your product ?
Photo by Alev Takil on Unsplash

Coming back to the basics : the foundations of every organization are people.
Organization being often structure in a pyramidal way , it makes easy to list each sub-function and then categorize and describe the personas that marketers must understand.
Do not forget also to understand the customer of your customer !
Sometimes named as the end-users.
The values you create and deliver must address this end-user’s real needs and pains !
In our Cartesian logic education, we would build our personas-understanding from the top of the pyramid. From the C-levels, down the base of the pyramid : the workers or the end-user.
As a result, the understanding of the real user , or end-user, is influenced by what we discover and learn from the above levels. And our final picture is not the real one.

Who to Start with ?

When digging in customer’s need, please start by the bottom of the organizations.
Then you must start by the end : the end-users. The end is the beginning !
Start with the real user of your product.
Then learn from other levels to understand better the decisions processes and indirect needs that your offer must answer to.
Even if this looks like a linear process, from bottom to top, it’s not!
You must challenge your learning and knowledge’s : always come back to your personas end-user to check and value what you may have discovered. 

Real life vs objectives

Ideally, every companies would like their marketers to follow a timely defined process.
In a very summarized steps approach :
1- describe customer needs
2- create values
3- monetize the values

But the reality is quite different:
The marketers must discover and learn about their customer’s personas every day.
Each interaction with a customer is a unique and priceless moment. The unique moment to learn more about who is doing what, how and why.

Projects to create new offers, as well as to maintain and evolve existing offers, must be fed by marketing knowledge.
This knowledge is acquired along years of customer’s experience. Therefore, the marketing knowledge can not only be fed by  short campaign of interviews or customer-interest-check meetings.
What is B2B marketing : Business-to-Business marketing is dealing with people, interacting with the personas of your targeted segments.

Marketing needs time.

The activities I describe TAKES TIME.
But it’s the only  way to get robust offer requirements.
Marketing is delivering business opportunities from customer understanding ; those marketing facts are the trigger of offer creation and offer evolution.
Marketing facts are also the triggers for design thinking and co-creation.

Business-to-Business delivers values

Finally, marketing must deliver the values : Show and Tell .
The tools and media used can be very similar to those of Business-to-Consumers. But the how to
“show&Tell ” must take into account that Business-to-Business customers have a different behavior.
They don’t buy your product because of the product.
In fact they don’t care about your product!
They care that your created value is solving one or several of their needs or pain points.
The list can be long and embraces topics such as productivity, safety, return on investments, easiness, robustness ….
Therefore , your Show&Tell must speak more about customer than product.

Long-term but short-time ?

Business-to-Business customers are usually loyal and long-term customer, and remember : they don’t buy , they invest.
Therefore their decision can take time. Sometimes months, even years.
You must never skip those key facts when delivering your values to your Business-to-Business customers.
Messages must tell about how their issue is solved and communication Campaigns must last. Targeted media must be those your customers-as-personas are used to get … and have time to go through.

That’s a paradox in Business-to-Business Marketing :
Excited by the tremendous successes from brands acting in Business-to-Consumer, companies managers ask to copy/paste those successes in Business-to-Business. Awaiting for short-terms business results.
Business-to-Business marketer’s roles and responsibilities are to create the future , but the paradox is that they struggle under pressure for immediate actions and short-term results.

In a nutshell.

What is B2B marketing ?
Business to Business marketing is :
understand the needs then create and deliver values, to the various and complex organizations of companies, and to their own customers : other companies and sometimes consumers.
Therefore, Business-to-Business marketer’s value stands in their abilities and skills to listen and understand the real needs of the various personas along the decision chain, from the real end-user up to the c-level of the targeted customer segments.
It takes time.

 

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B2B marketing Beginner Marketing Marketing basics Marketing definition

What is Marketing ?

Marketing is often misunderstand. The real roles, responsibilities and actions of marketer are most of the time, wrongly seen. From outside point of view, people do not get the crucial importance of Marketing and its army of marketers.


I want here to give the basics understanding of marketing .

 

Preconceived ideas

What is marketing ?

When I was working as a marketer, my friends , families and even co-workers had a lot of preconceived ideas.
My friends thought i was travelling around the world, meeting other marketers and having funny meetings and events with them. What a wonderful dream job ! Being paid to travel and get fun time with others people , also paid to travel and get fun. Wrong ! 
My family was believing that my job consists in  doing marketing tricks, convincing customers to buy some products they don’t really need. Designing promotion campaigns , nice leaflets and ads , ultimately distributing coupons to convince people about incredible opportunity to buy. Wrong !
My bosses and co-workers were convinced that my job is about interviews, surveys and PowerPoint. Unfortunately, many of them are still believing that’s the roles and responsibilities of marketers are only about quantitative data.
They believe that most of my energy is focusing on collect customer’s opinion and satisfaction level, through preset interviews templates, simply by ticking the right box in a Q&A form. Wrong !
Many of my colleagues are convinced that I browse the web and some boring financial reports to collect figures and quantified achievements. Excel spreadsheets are therefore the law books to show the past … and to forecast the future. As a result, decisions are taken because of the past figures, which is exactly the same as driving your car forward by looking in the back mirror. Wrong !
And finally, another common  belief is that marketing people are kind of expert to do PowerPoint files for amazing presentations an meetings. Transforming the Excel data in nice graphics and pictures, displaying on large screens some un-readable huge quantities of figures.Wrong!
Instead of being tools , Excel and PowerPoint have become the killers of marketers.


When I’m asked to explain what is marketing , I use to quote Philip Kotler :  he defines marketing as
the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.”
Everything is in this sentence.

Targeting

target : attractive and accessible

Marketing is responsible to define a target. Not by chance, not by feeling . But using tools such as BCG* matrix to help in decision making.
Marketing is having tools ? Yes , and they must be used to help building pictures and help in decision making. I mean the tool or the method does not give you the absolute best answer, but help you to decide what are the most attractive and the most accessible (with your weapons) market segments.
You may dream of targeting a lot of customer categories, on the principle that if you can move mountains you can move molehills. As far as targeting market segments is concerned, too much targets will lead you to miss all of them.
This introduces the concept of market segments, which i will explain in detail in another post.

Treasure Hunter

Exploring intends to give you an understanding of your customers needs and pains. That’s where the science and art of marketing stand.
You don’t want to provide the very same product as your competitor. You want to create the so-called competitive advantages that later, will become values of differentiation and money.
Then knowing exactly your customers real needs is of marketing’s responsibility.
There’s no magic behind this marketing activity , it’s to be a treasure hunter. Listen and observe your targeted customers, be curious about your surroundings, be curious about remarkable event in other markets, observe mega trends that may impact your business field, observe evolution of social behaviors, be curious towards new technologies, look outside your business… be CURIOUS !.

a Marketer is treasure hunter


It’s also about quantifying. Quantify , measure, even estimations are worthwhile. You have to size your market, measure or estimate its total value, measure the accessible and available value for you. Be CURIOUS to collect your financial data. Be CURIOUS to read financial reports, company news and market surveys .
Along this treasure hunt journey, you have to start writing down a list of all your weaknesses. Everything you miss to address the total value of the targeted market. This can go from brand recognition to available and trained sales force. Then you’ll get a first picture of the accessible part of your targeted market. As well as a first list of potential actions and investments to grow your business.
I really want to insist : be a treasure hunter and stay curious of everything, ever.
This will drive you to build your market understanding and, your customer understanding.
Keep in mind that it’s not a linear process, neither a recipe with a starting point and arrival. You are told that the market is changing fast, very fast. You and your customers are drown in a flow of permanent information. We are information eater , and we change on-the-go. Like it or not, Internet and its tremendous of data influences us.
Everything you discover and learn today may be false tomorrow. Then you must always challenge your market understanding. Be opened to listen to new inputs , stay curious and ready to change. Being a marketer means that you are highly adaptable to market changes. Training daily to stay curious will give the power to anticipate changes.

 

Value creation

real customer value is priceless

Doing so, you can define and create new values that will really be the answers to customers needs and pains.Neither simply the easy but wrong answer to what customer wants , nor what your noisy colleagues know and believe.
In other words, your robust knowledge makes you the customer voice in offer creation projects. Your proposal of new values to create will become the potential new business.
Creating is transforming the robust requirements into a business object. As a marketer, you have to collaborate with many others functions in your organisation. Designers, programmers, purchasers, …. each of them bringing their knowledge and expertise.
Great moments to see your new offer coming to life. Exciting !
You should however remain alert :
– the target is to deliver the needed value , not to deliver the most amazing and new technology.
– your market is still moving during value creation. Stay curious and opened to influence and convince your peers when you see major changes in your targeted market.

Deliver

Show and tell

What about a new offer, product, service or solution, that fits perfectly your targeted customer needs , solve most of their pains, is innovative and affordable … but stays on your shelves, awaiting desperately to be sold and delivered.
Yes, the created value must be delivered.
A product, as good as it is, doesn’t sell itself.
The benefits it provides must be shown and told.
This may be the most visible part of the marketing roles and responsibilities. SHOW and TELL, those actions give the feeling that marketing is all about communications and only communications. From lead generations to customer retention and engagement , that’s when the marketing is noisy. Creating promotional tools, sales tools , training tools, is the way that marketing is delivering the values.
The marketing is not selling ?
NO, marketing is not selling, goals and actions are totally different.

in conclusion, what is to be a marketer ?

I always value marketing folks who master the art of asking question and always challenge their knowledge.
Be curious.
Shut up to listen and observe.
Give room to silence.
Be humble and challenge your knowledge.
Enjoy the surprise of discovering something new , learning with pleasure in every interaction.
Be a watcher more than a speaker .
Whatever the role you have in a marketing organization, strategy, offer management, or communication, never forget that the marketing starts and ends with your targeted customers.

* BCG : Boston Consulting Group.

 

 

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B2B marketing Marketing Marketing skills

your Market Segmentation

Build your business on a solid foundation.

The market segmentation is the foundation of your marketing strategy.

You had the greatest offer ever. Your new product was a real breakthrough. Everything was obviously being successful.
And you failed! Slow ramp-up of your business, few customers are captured, you are starving to get orders.
Like most of the business’s failures, you focus on yourself and do not spend enough time on customers.
Who are your customers? Those who value the benefits of your offers? Those who need it? Those you can access to?
To define them properly, you must create your market segmentation.
You think this article is not for you because you already have a good market segmentation? Maybe you’re right. However, you know that things are changing fast, so your market. Nowadays change is the only constant.As consequence you should challenge your existing market segmentation on a regular basis.
To select the right business opportunities through unique targeting and positioning, the market segmentation is the foundation of your marketing strategy.

Why?

I’d like to start with a quote from James D. Hlavacek :

Very few general managers realize that the definition and selection of market segments is the most important strategic decision facing every industrial manufacturer

That’s simple.
If you have no clue about what is your target, how can you aim at it?

Reductio ad absurdum!

Do you have a target?

Let’s imagine what may happen, or happens, in business without clear targets from a market segmentation:


When a product is released on the market, communication experts are building marketing campaigns to deliver its values to customers. With no targeted audience, the campaign has no impact. Loss of energy, time and money.
Much earlier than its commercialization, the offer is created by a team of designers who are technically answering to customer’s needs.
Without a defined target from the market segmentation, it is difficult to see this offer as likely to meet anyone’s needs. 
That seems stupid! But there are many technical products which are just the result of engineering distraction.
What about a sales team? Struggling to sell an offer without knowing who are the customers that are targeted and why?

The market segmentation is the foundation of your marketing strategy.

We all agree! Market segmentation is important for your efficiency. It impacts positively your time, money and other resources.
The market segmentation is the foundation of your marketing strategy.
A wise segmentation is providing many benefits:
– Spend time on real opportunities and eliminate distractions.
– Define priorities and invest where the return is substantial.
– Reduce the risk of unsuccessful promotion campaign.
– Create the right products for your targets and therefore more satisfied customers.

Above all, working on your market segmentation will unveil some battlefields where your competitors are weak or absent.

And never forget: Not all customers want to buy the same product.

What is market segmentation?

Market Segmentation

Now, we are all convinced that we need a market segmentation to do a good targeting and a good positioning.
But what is market segmentation?

Market segmentation is a process. It consists of dividing your customers and potential customers into small groups, your market segments.
Each group contains customers that share the same characteristics and behaviors.
Each segments are homogeneous, and different segments have different features which make them unique. 
The ultimate objective is to create a marketing mix that matches the expectations of a segment.


Let’s take an example often used to explain segmentation: the toothpaste market.
Above the cleaning aspect, first and obvious feature, different categories of customers are expecting different benefits:
some are willing teeth whitening, some others have sensitive teeth, some are focusing on fresh breath, or cavity protection, or tartar control.
Each of those criteria can define different market segments. They ultimately are leading toothpaste manufacturers to create different products with different pricings and different promotion messages.

How to do?

First and foremost

I urge you not to head down create a huge and unusable database or excel spreadsheet to do your segmentation.
First of all, you must collect information.
Collect in your company and outside your company everything you can find about:
your market (size, trends,…),
your existing or potential customers (behaviors, needs, decisions process,…),
your competitor’s position and strategy,
The technologies you use or may use,
Everything from direct and indirect connection with your business.
All those data, either quantitative or qualitative may be useful during your segmentation process. I wrote about quantitative and qualitative data in a previous article: Why you must meet customers?
Start internally! I mean starts with the gold mine in your company: understand the customers, the offers, the values, etc.
And give yourself time to do this.

A process more than a task.

Market segmentation is a process. Image by Gerd Altmann from Pixabay 

Let’s now see how to do, or re-do, your market segmentation.
As written in the previous paragraph, it’s a process. 
And it takes time.
The market segmentation is the foundation of your marketing strategy. Therefore, it deserves enough time and resources to be done.
This is a process that you are not doing alone. Involve your partners, your management, and any third-party organization that could help you along the process and challenge your proposals.

Segmentation can be done following some steps:

  • Select the variables to identify possible segment
  • Evaluate the attractiveness of each segment
  • Profiling

Select the variables.

Type of business

In Business to Business, B2B, there are commonly used variables:
The first one is usually the type of business, or activity, of your customer. You can easily find a global list such as the North American Industry Classification System that I already mentioned in a previous article: What is B2B marketing?
Too complex or too many information in the NAICS, then go to the yellow pages. Businesses are already sorted by categories and you can use these classifications.

Size

The second mainly used variable is the size of the users.
Using the business size and/or the number of headcounts as statistical values will help in targeting. Depending on your offers, the way to address large quantities buyers may require a different approach than the way to address buyers of small or medium quantities:
their behavior toward pricing and purchasing is going to be different.

Work already with these 2 variables to make a first draft of segmentation. You will already be able to eliminate some segments.

Geographic

Photo by Bundo Kim on Unsplash

Geographic segmentation must also be considered in B2B. Differences in ways of working, values, and preferences vary a lot throughout countries, therefore it is important to recognize these differences.
Sharing my own experience on this criterion:
In one of my former position, we tried during years to deliver some software engineering tools to Chinese customers without any success. This software tool was designed upon our deep understanding of western customers and had pretty good success in Europe. However, we completely ignored the ways of working of our potential Chinese customer toward software engineering tools. A late dive in the Chinese market highlighted the key differences and allowed us to adapt the offer to this segment.
Geographic segmentation is not simply to list the countries you target but to understand what the geographical differences are. This should lead you to create a kind of sub-segmentation covering criteria such workforces, currency impact, climate impact…

Demographic

Demographic segmentation can also be one of your criteria. It divides your market upon variables such as age, gender, education level, income, and more.
Age is incredibly important for marketers to understand, its most important impact is the way to communicate efficiently.
Behaviors and expectations vary dramatically between generations. There’s a great article by Tracy Francis and Fernanda from Mc Kinsey here.

Behavior

Behavioral segmentation. As its name tells, it is grouping customers showing similar buying behavior. It usually covers the habits, the motivations and the loyalty to brand.
Let’s have a look at Apple’s segmentation with a zoom to their behavioral segmentation here. And to illustrate it, here is the behavioral segmentation that leads them to create the unsuccessful Iphone lite in 2013.

Psychographic

Psychographic segmentation classifies your customer on their intrinsic characteristics.
Those are values, personalities, interests, attitudes, conscious and subconscious motivators, lifestyles, and opinions.
Those are key criteria in the Business to Consumer market, B2C.
In B2B, buyers make decisions that are more rational than in B2C. Consequently, a psychographic segmentation seems useless in B2B. Only seems!
In fact, decisions are made by human beings. And more you will collect information about your existing customer more you will be able to identify the emotional components in their purchasing history. So, you need to meet with customers!
What are you going to do with this?
You will create relevant content, targeting the right segment for your product or service. For example, send personalized emails that better speak to the reasons, why people need your product or service.

Benefits

Benefits segmentation. This market segmentation is based on the different benefits that different groups of customers look for in your product.
In other words, to divide the market based on the perceived benefit of the product or service. Which means that you must know who are your customers!
This is the example I used in the introduction of this article: the toothpaste market segmentation.

You don’t need to use all these different models of segmentation. Of course, select more than one. Use a mix of method that are relevant to your company, customers and offers.

Attractiveness

To select the right segments, you must define their attractiveness.
First, you cannot go and sell everywhere. Unfortunately, you have limited resources and you must optimize the profits. That’s the legendary equation of doing business.
What are the common criteria to define the attractiveness of a market segment?
The market segmentation is the foundation of your marketing strategy, so take time to answer the following items.

Is there a need?

Despite this seems stupid to ask, is there a need for the solution you promise to provide in the segment?
You may have a wonderful technical idea for a new product, but no one needs it.
Just google “useless products” and have fun discovering the millions results.

Measurable?

Can you size the segment? Even an estimated value.
Can you name the competitors acting in this segment? At least the major direct competitors?
If not, either you have to search for more date, or the segment is not measurable.

Substantial?

Complementing to the previous criteria. Is the size of the segment large enough to justify the efforts?
The efforts being the creation of an offer and all the marketing tasks that are needed from offer creation to commercialization.
It’s money, time and other resources.
Your company has minimum requirements for the financial return from its investments, so it is necessary to only consider segments that are substantial enough to be of interest.

Actionnable?

marketing mix

Are you able to create and implement a distinctive marketing mix for the segment?
Basically, can you describe the 4 P’s for the segment?
Want to know more about the 4 P’s of the marketing mix. Jim, from refresh:b2b and I talk about them in our podcast The B2B Beach Bar.

Accessible?

Can you reach the customers of the segment?
In other words, do you have the resources to address the right communication channels of this segment?
Moreover, ask yourself : do you have the sales force ready for it (in number of headcounts and competencies)?
Or maybe you have the available resources to recruit the right sales force?
A good way to address this topic could be also to imagine how you may re-route your existing sales forces.
If it’s a segment mainly served by a distribution network, do you have those distributors as partners? Are they opened to your proposals both for promotion and sales?
Try to estimate your expenditures to access the segment.

Profiling

Most of the above question can be easily answered by yes or no. Therefore, you can eliminate the segments that are not attractive.
Do not hesitate to really dismiss them.
There are always too many remaining. They need you to do more work.

Market data

After this sorting out process of attractiveness, then you’ll set up the profile of remaining segments.
This consist in giving the qualitative data to each of them:
size, potential growth, current and future profitability, competitive structure.
Once again, this step is taking time. You may not have all the data.
It’s time to wear your treasure hunter suit and dive in the web. However, not everything you need is accessible.
Therefore, buying some market studies is important. That’s nothing you can get for free. But you need several to assess your profiles with robust data.

Mistakes

Segmentation is burdensome and complicated Think about it as a project more than a task.
Mistakes in the early steps are inevitable. So be aware of the most common mistakes. This may help you and your team to avoid them.

Creating too small segments.

When you’ll try to define all variables to ensure you capture everything, you will define some segments with low attractiveness due to their business value. Or you may create too small segments that do not need your offer.
Then you should revisit your proposal: grouping some “small” segments, but do not forget the rule of homogeneity.

Not updating your strategy.

Your customers are changing. People in your customers are changing. And it happens fast. Consequently, you must refresh your segmentation from time to time.
I’ll never say it enough: meet your customer to always challenge and update your understanding.

Forget the upstream impacts

Most of marketers, and I am one of them, we focus on customers in their roles of users, or buyers, or decision makers. But we tend to forget about influencers.
They have the power of words of mouth, they can be individuals or organizations … And they must be considered in your segmentation exercise.

Weak or limited data

None of your segment should be set in stone until their qualitative data is robust and up to date. Moreover, you must have large quantities of data (sorry there isn’t a magic number).
– Having wrong data, or feelings instead of values.
– Relying on data that are 3 or even 5 years old.
– Using a limited number of data.
All those will lead you to build a strategy on a foundation of sand.

is your segmentation correctly done?

Ask yourself this question.
Not so easy to answer. There are some criteria that you can use to assess your segmentation.
Those criteria can help you to answer by yes or no to the above question. However, this will not tell you if it’s a good and valuable segmentation.
What are those criteria?

  • The segments are homogeneous.
  • Segments are not overlapping.
  • Marketing mix are different for each segment.
  • The segments are substantial and sustainable.
  • The segments are accessible.

So Much to do!

Overwhelmed?
Image by annca from Pixabay 

Market segmentation requires a lot of time and energy.
The market segmentation is the foundation of your marketing strategy.
Are you ready to do or to review your market segmentation?
Then set up a project, with the right resources in people, time and money.
That’s a priority investment for the efficiency of your organization. By efficiency, I mean your return on investment.

You may not have the marketing expertise in-house to lead this process. Consequently, you should think about bringing in a consulting firm. Take it as an opportunity to also train your in-house marketing team and upskill your people.

References and web links

True Gen’: Generation Z and its implications for companies, McKinsey & Company, November 2018, by Tracy Francis and Fernanda Hoefel

Apple Segmentation, Targeting and Positioning, Posted on April 20, 2019 by John Dudovskiy

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The NewsLetter from Paris-Mekong

During this high-temperature summer, unfortunately from climate change, I decided to give a new boost to my activities.
The first and visible action is to send you a newsletter.
About my actions, my discoveries, my thoughts, and more.

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product marketing manager B2B marketing Customer Marketing Marketing skills product Manager

How many customers you should meet?

Can you pick a number?

You are Product Marketing Manager; your role is to build and deliver robust market understanding. More than your role, it’s your duty!
You know why you must meet with customers: Qualitative information are coming from customers, both existing and future potential. Therefore, your one and only way to collect qualitative data from customers is to meet them.
How customers you should meet?
Is 10 or 50 per year the right numbers? More?
Is it linked to your current task of delivering customer’s voice into an offer creation project? In this case, testing with customers along the project cycle require 10 or 20 or 100 interactions?
Just pick a number, write it down, and follow me through the following post to get the answer.

You are not allowed to fail

You can not Fail
Image by Arek Socha from Pixabay

I always said that we must give room to failures, that’s one of the best ways to learn. However, as far as collecting customer’s voice is concerned, the Product Marketing Manager is not allowed to fail. Delivering usable customer’s voices, needs and pains, is the key value of his role!
A lot of new offers, products, software or services, are failing. Why?
– In 42% of cases, just because the offer requirements are not clear or change along the project.
– In 37% of cases, it’s coming from a wrong analysis of markets and customer’s needs.
These failures impact negatively your sales volume and your profitability.

Remember Philip Kotler’s quote:
Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.”

Therefore you have to interact with a lot of customers and users to deliver the right understanding that will lead to create the right values.
How many customers? How many users?

Start with your target

What is, or are, your target?
That’s the compulsory and earliest stage of your marketing strategy. If it has not been worked out, it means you don’t know who your customer are. Then you can’t say how many you must discuss with.
It’s never too late to create your segmentation and select your winning targets. (I’ll write about this in a future post).

Let’s say it’s done!
Great! How many market segments have you selected to be your winning segments?
There are more than 700 industries represented in NAICS coding!
Let’s imagine that your wise targeting ends with 20 market segments only.
Therefore you simply need to meet 20 customers, opinion leaders from each of your target segments.
Right? Wrong?

The actors of your targeted segments

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You believe 20 feedbacks from opinion leaders of your targeted market segments is enough? Of course not!
It goes without saying that you have to meet and understand the real users of your offers. But it’s not enough!
Between you and the final users of your offers, there could be several intermediary and influential players. They may act as prescribers, architects, designers, machine manufacturers, integrators, contractors, installers, or distributors. It’s 8 different influential players in this short list. You need to know who they are and what they do in the playground of your business.

They are all interacting directly or indirectly with your offers. Meaning that they can be satisfied or not with your proposals.
Therefore their opinion matters.
You have to collect the feedbacks of those 8 key influencers within your 20 targeted market segments. How many customers you should meet?Yes, it’s 160 influencers to be added to your interviews list.

Where are your targeted customers?

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Groups from different geographies or different cultures have different expectations and different habits. Those differences matter.
Therefore, you must list your key targeted countries and know why they are different from each other.
There are several criterias that are impacting your customers.
Their countries are mature? Emerging new economy?
What is their level of education? What is the impact of their social environment? What is their lifestyle? What is their behaviour toward e-commerce? 
We could list hundreds of questions to qualify the differences between geographical areas. The fact is: those differences are impacting the needs and expectations of you targeted customers.
That’s not only the impact on the features of your hardware or software, but the impact on the languages, on the working habits, on the purchasing channels …

As example, if your geographical target is made of

  • European Union (28 nations),
  • North America (USA, Canada, Mexico) without forgetting that some states in USA can bring you different requirements,
  • and key countries in Asia (China, Korea, Japan, Singapore, Indonesia). 
    Even if we reduce the number in European Union by key influencers (North, South, France, UK, Germany, East), this short list is already 14 areas that can bring differentiations to the feedbacks.

Previously, we count 160 companies or organizations to meet with.
With the geographical variable that I just introduced, how many customers you should meet?
Now you must meet with 14 x 160 = 2240 companies.

The number starts to be huge. You may say that some companies are global, or that 10 key geographical areas is more reasonable.
Well, with 10 countries, it’s still 1600 interviews and observations to run.

Can do less?

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I wrote ” only 20 targeted market segments”, but it’s huge and that’s always a big challenge even for large organizations and multinational companies.
Let’s decrease to a limited 5 market segments (meaning that your targeting has been done professionally and is indisputable).
You still have 10 countries to cover.
And I recommend you to select 5 types of players that are influencers or deciders.

This is still 250 clusters in your list.

Saturation

The next question is: how many interviews for each cluster ?
What is the number to reach till you don’t receive any additional insight?
This is named saturation.

Usually, from the 10th interview in a homogeneous cluster, you are not getting much new information. To ensure reaching the saturation level you must meet a number of customer higher than the theoretical number 10.
By experience, I would recommend 12 to 15 interviews for each homogeneous cluster.
In the previous section, we count 250 homogeneous clusters, 15 interviews for each, how many customers you should meet?
Then you have to run through 15×250=3750 interviews to capture the qualitative information from your customers.

Regulations

Why do I suddenly introduce regulations in this story?

Simply because they influence how your offer must meet the user’s need.
Moreover, if you go to the market with a new technology, you will need regulations and certifications authorities to define the rules to fulfil. Even better, you must influence and co-write those rules; or influence to be part of committees that update existing rules
Those authorities can be global or local. Sometimes, it’s at the level of a state or a city.They can be public or private organizations, and I count all lobbying association (such as green lobby) within the private organizations.

I will not number those influencers you must meet. It always depends on the market you play in, the geographical areas you target, and sometimes the applications you serve. 
Nevertheless, they must be added to the list of interactions and meetings you must hold to complete your description of market need.

From theory to real life

I gave you a basic principle to estimate the number of interviews and/or observation you must do in order to bring robust customer understanding into your organization or project.
15 per cluster.
Cluster=homogeneous group of personas (market segments, influencers/deciders/real users, geographical/cultural)

So, the right number depends on your target, which you have to describe perfectly in your strategy and business cases.

A last example,How many customers you should meet?
[15 interviews] x [5 market segments] x [3 types of influencers/deciders/real users] x [5 geographies] = 1125 interviews.

Collecting customer information through interviews, groups meetings, and observation is the daily task of the Product Marketing Manager. The usable knowledge cannot be built overnight from one single shot interviews session. It takes years , that’s what we name the Experience!

Running 1125 interviews to feed a project with robust customer’s understanding is impossible, knowing that a project lead time is often defined before deciding of the content (cruel but real paradox).
This is why the experience of the Product Marketing Manager is of paramount importance. I mean years of experience fuelled with a lot of customer’s interactions.

The most valuable moment is the one you spend with customers

Consequently, you must organized your available time for customers (do not go to useless meetings and stop staring at your e-mail inbox all the day long).
Depending of your country’s law, you’ve got about 48 working weeks per year.
Trying to meet 4 customers or influencers per week (that’s a small number), leaves you 3 to 4 days each week for your important internal tasks ( meetings, reports, workshops, trainings, …).
As a result, you’ll do 192 customers interaction in one year (I’m very optimistic).
Then you’ll need about 6 years to complete the theoretical 1125 interviews and observations!
 Undoubtedly, nobody will wait 6 years for you to bring customer’s voices.

You must de-multiply and delegate your efforts. You’re never alone, lead and involve your colleagues sitting in other countries. Be curious of everything, knowledge is coming from your day-to-day observations and discoveries. The Product Marketing Manager is a treasure hunter.

Finally, take notes, shot pictures and videos. Write and share your customer’s meeting reports. If you keep your experience in an hidden place of your brain, that will be of zero value.

As a consequence and a corollary, you are not a Product Marketing Manager because you get promoted to the title. But you become a Product Marketing Manager when you accumulate and share decades of useful and usable customer’s experience.

Special thanks

Special thanks to Philippe Metayer who taught me and coached me several times about this topic.

Categories
product Manager B2B marketing Customer Marketing Marketing basics

Why you must meet with customers ?

Can you imagine that the genius who described customer’s needs, never met any customer? Not a single one?
Awkward question! One might therefore wonder why I ask.
To unveil customer’s need is the essential mission of the product manager. Being the customer’s voice in his organization, the product manager must deliver a useful and usable description of customer’s real needs.
However, I know many product managers who spend less than 10% of their time with customers. How a product manager can be credible when he is interacting with less than 2 customers per month?
For robust marketing, I always require product managers I work with, to build their own customer understanding.
How?
Product managers must meet with customers:
Despite we are in the digital age which simplifies and amplifies the search for knowledge, the face to face interaction is still the most important way to discover the true life. To understand the personas all along the life cycle of your product, you will spend time with a lot of them.
Hence, I explain hereafter the reasons for which Product Managers must meet with customers, and what should be asked.

What are you looking for ?

A product manager is a treasure hunter. His obsession is to collect quantitative and qualitative information.

Quantitative information.

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The web is a goldmine for quantitative data. Through a few searches, using proper keywords you can access to financial reports, companies presentations and videos that contain a lot of quantitative data. Moreover, there are information companies which are competing to sell the market data you may need. Just to name a few : IHS, ARC, or MarketResearch. I list more in this page.
Searching for numbers takes time, but most of this task can be done using internet, in the comfort of your office.



Qualitative information.

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Let me phrase it simply :
those are all data that can not be given as a number.
The qualitative information are the key outcomes from customers interviews. They are coming as results of opened questions (mostly), using the magic of the 5 W and H. 
What, Why, When, Where, Who, How.


A poem to remember

I keep six honest serving-men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who.

 Rudyard Kipling in his “Just So Stories” a poem, accompanying the tale of “The Elephant’s Child”

Keep this poem in mind, you will never forget that the 5 W and one H tell you everything your know.

What a product manager must know ?

There are two priceless knowledge’s delivered by a product manager.
– The market understanding.
– The customer needs.
We all agree that market understanding is the result of quantitative data analysis. This helps to size business opportunities, attractiveness and accessibility.
But for customer needs, there aren’t any publication, any figures, any list of verbatim. 
The only way to learn about needs …. is to meet the customers!
Product Managers must meet with customers!

What are you looking for ?

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First of all, remember that you are not selling. You are discovering customer’s needs and pains.
Secondly, you are learning by listening to the customer. So just shut up and let them speak. The art of the marketer, the product manager, is to ask the useful opened questions and to reword when needed.
Hereafter is a list of  questions you will adapt depending on the context.
However, do not simply read this list of questions when interviewing a customer. You must do some homework, preparing your interview guide and adapt it depending on the context.

Who is the customer?

That’s the first understanding you have to build wen meeting a customer.
It’s not about knowing about his life and hobbies (not yet! You may come to this later. When your relationship is more of friendship). It’s about understanding about his business and his organization.
The best way is to ask him or her.

  • What is/are the activity of the customer ?
  • In which market do they act? Sell?
  • What is their organization structure? Who’s who?
  • What are their decision process? Who decides and how? Who influences the decisions and how?
  • What is their business figures? their business health?
  • What are the geographical areas of their business? What is their export ratio and why?
  • Who are their competitors? How do they fight against their competitor? Why are they better than their competitor? Why are they different from their competitor?

What are the customer needs?

Above all, that’s the product manager’s mission.
You can ask directly. The answers seldom helps to discover the real needs.
– Dear Mr Customer, what do you need from us?
– I’d like lower prices, higher quality, higher performances, better delivery services ….”

Those are not needs!
Most of the time the answers are only what the customer wants and it does not give any clue for creation of innovative offer.

The needs and pains can only be discovered when you explore the full life cycle at your customer’s :

How do your customer work?
  • How do you decide to create? Invest? Buy?  something new … Why?
  • How the purchasers work? Their tools, habits, preferences, like and dislike? Why?
  • How the designers work? Their tools, habits, preferences,like and dislike? Why?

Remember, it’s easy to observe and ask for each personas: the tools they used ( hardware and software), their habits, their preferences, their like and dislike. You just need to be on your customer’s sites.
IRL as gamers would say.

Listen to each and every department
  • How the engineering team works? Why?
  • How the blue collars works? Visit workshops, spend enough time to observe the workers. Come back if the time is too short.
  • How the supply chain is operating? Upstream? Downstream? Warehouse? Why?
    Visit the warehouse if there is one. You’ll discover more about habits in regards to used brands and products. As well as it will give you knowledge about handling stuff.
  • How their after sales and customer support are working? One more time, what are the tools they use, their habits, their preferences, their like and dislike? Why?
Opportunities to discover more

This list of questions is a simple guide to help you to discover your customer problems, pains … and workarounds.
Interviewing customer to build you understanding and discover needs is also impacting the interviewees. As a matter of fact, your customer will naturally discover that he needs some solution to untold issues, and may ask you about your proposals and ideas. But remember, you’re not selling or promising! You are learning! That’s opportunities to tell to your sales team, and opportunities for another face to face meeting when you have a new offer to be challenged and tested.

Learning customer’s needs is also coming from opportunities you meet everyday. When you commute to your workplace, when you travel for business, when you meet new strangers at your fitness club…There’s always discoveries with people you talk to. 

What is the customer experience?

Lost? Confused? Unclear?
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An interview with customer is also delivering some insights about his experience. His experience with your company, his experience with your offer, his experience with your competitor.

How is your customer aware of your offers?

How does he receive information?
What the sources he uses to search for information? What type of information?
Ask him to list the documents and media he is looking for? what for? why?
How are they easy to find? How are they easy to use? 
What is he doing when he does not find what he is looking for ?

That’s an opportunity to understand and test your documents, the promotional collateral’s, the catalogs either printed or digital, the technical documents and user guides. How are they used? By who when, where and why?

What is he buying? How is he buying?

Asking for an exhaustive list of products and solutions he is purchasing, it’s not enough! You will ask also:
Whom from? Why? What is missing?
How is he satisfy with what he is buying? Why?

Here you ask for more details about his satisfaction. Covering  pre-sales support, offer quality, delivery service level, pricing and values, etc.

The 5W and one H list would not be complete without asking more about how:
How is he buying? From outlets and shops?online? How could he describe the two experiences? How can he define the most efficient and enjoyable way of buying? Why?


Hunt for feedback

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A Customer interview is also a great moment to get feedback about new ideas, prototypes, even existing offers.
You may ask about your offer features, to check if you deliver the minimum viable product. In this case you ask about what the product is doing.
More important is to ask what the customer is using the product for, and why. His answer will tell you about the real perceived values.
Learning what the customer is doing with your offer can help you to jump to quantified interests: values pricing, projects and business opportunities.

When you get a customer who agrees to test your offer, whatever this is an existing offer, a prototype, or a field test, asking for his feedback face to face is of great value for both parties. Do not replace this face to face interaction by an impersonal and inhuman questionnaire form. Never!

More

Listen
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In conclusion, Meeting with customer must be the obsession of every product manager.
That’s the only place where the real life happens. Where you can discover and experience.
That’s not easy?
It’s never easy if you are not prepared. The minimum is to write your interview guide. Not a questionnaire to be filled, but a step by step guide to help you during interviews.
Moreover, if you work with customers in different countries, having an interview guide means that you can give it some weeks before the meetings, to you local colleagues. Then, they can localize it and run the interview, with your support, within the native language of the customer. That’s proficiency!

We could talk during hours and days about customers visit. This short article is just an introduction.
Do not hesitate to share your comments and suggestions with me, I’ll be more than happy to update this article with your feedback’s

References.

This article is built from my 20+ years of experience and from web searches which I’m please to share the links to.
It is also the result of discussions I recently had with one of my good friend, Christian Pillot, and I’d like to simply thank him.

Links :
Who Is Your Customer?
by Filip Duszczak, CEO at Growthlab pl.

The 4++ times Product Managers meet B2B customers
by Phil Hornby, Product Focus Associate and Independent Consultant.

The rising importance of Product Managers in a digital transformation
by Emily de Vale, Marketing executive at UcaDO

10 Weekly Habits of Product Managers That Make a Big Difference
by Gabriela Araujo

Explaining user research to skeptics 
by Cameron Spilman, Co-Founder and Managing Director at Paper and Co-Founder, organiser and mentor at legup.social