How to Create a Customer Segmentation Model

How to Create a

Customer Segmentation Model

Sales Focus

2

• Does your sales team call on virtually any

customer using a shotgun approach?

• You may have thousands of potential

customers to serve

• However, you have limited time and

resources to sell and deliver your services

• Critical to identify target customers where

you have the greatest chance for success

Is your sales team focused on the right customers?

© 2017 Tiger Sales and Marketing, LLC

dba Tiger Consulting. All rights reserved.

Benefits

3

• Sales: Focus resources and effort on the best target customers

Prioritize opportunities in the sales funnel

Acquire and retain customers more effectively because they are a better fit with

your value proposition, they are more likely to buy and close faster, they produce

bigger deals, remain more loyal and they are more profitable

• Marketing: Clarify marketing strategies and tactics

Develop Account Based Marketing communications that resonate

Establish pricing strategy based on overall value proposition

Focus product development on target customer needs

Diminish competition who can not compete

• Operations & Supply Chain: Improve margins, prioritize order fulfillment

Provide aftermarket services

What are the benefits of defining target customers?



Process

4

1

2

3

4

5

Define ideal

customer profile

Build customer

segmentation model

Define service

focus by segment

Assign resources

to key accounts

Communicate

segmentation plan

Customer

Segmentation

Process



5

• Ideal Customer Profile is a tool to help

us identify our target customers

• It can be used to score, rank and

prioritize our customers and to identify

the most strategic accounts to focus on

• The closer customers fit our Ideal

Customer Profile, the more likely we

are to enjoy a successful relationship

• Customer purchasing preferences

should align with our value proposition

Criteria 2

Criteria 3

Criteria 4

Criteria 5

Criteria 1

Ideal

Customer

Profile

Define Ideal

Customer Profile



6

• Geographic: Where are their headquarters

and where do they operate?

• Demographic: What do they do? Measurable,

statistical data about the company and its

business units.

• Psychographic: Who are they? Values,

attitudes and beliefs held by the company, its

business units and employees.

• Behavioral: How does the company, business

units or employees act?

Define Ideal

Customer Profile

Geographic

Psychographic

Behavioral DemographicIdeal

Customer

Profile



7

• Headquarters location

• Operational locations and reach

• Regions & continents

• Countries & basins

• Business unit structure

• Centralized vs decentralized

Geographic Characteristics

Define Ideal

Customer Profile



8

• Company size (revenue,

employees, growth projections)

• Industry segment(s)

• Activity level (Rigs)

• Capital or operating budget

• Our historic sales revenues by product/service

• Our future revenue growth potential by product/service

• Pay on time (Days Sales Outstanding/DSO)

• Financial stability (Debt, cash flow)

Demographic Characteristics

Define Ideal

Customer Profile



9

• Cultural fit (Core values)

• Level of integrity & business ethics

• Loyal / honor their commitments to suppliers

• Buyer-seller relationship (Partner vs supplier)

• Communication style (Open vs closed)

• Price sensitivity (Value-based purchasing vs price-based)

• Commercial terms

• Safety culture

• Delivery & quality sensitivity

• Technical expertise & knowledge

• High performance standards and reward performance

Define Ideal

Customer Profile

Psychographic Characteristics



10

• How are purchasing decisions made?

• Centralized vs decentralized procurement

• Purchasing urgency or readiness

• Product & service features, needs & preferences

• Technology fit (Innovative /

Early adopters of technology)

• Risk adversity

Define Ideal

Customer Profile

Behavioral Characteristics



Build Customer

Segmentation Model

11

1. Select 5-8 criteria for your Ideal Customer Profile

2. Score each customer against each criteria

3. Develop composite score and rank customers

4. Group potential customers into tier 1, tier 2 & tier 3 accounts

CustomerC

rite

ria

1

Cri

teri

a 2

Cri

teri

a 3

Cri

teri

a 4

Cri

teri

a 5

Co

mp

os

ite

Ran

k

Segment

Customer 1 95 90 95 85 95 92 1 Tier 1

Customer 2 95 85 90 90 90 90 2 Tier 1

Customer 3 90 85 85 90 85 87 3 Tier 1

Customer 4 85 90 85 85 80 85 4 Tier 2

Customer 5 90 85 80 85 75 83 5 Tier 2

Customer 6 85 80 80 85 80 82 6 Tier 2

Customer 7 80 80 75 70 75 76 7 Tier 3



12

Silver Accounts

Gold Accounts

Platinum

Accounts

Prioritize accounts & develop summary

Segment Tier Account Type Quantity Revenue

Platinum Tier 1 Key Accounts 15 ~55%

Gold Tier 2 Key Accounts 45 ~35%

Silver Tier 3 Non-Key Accounts >600 ~10%

Build Customer

Segmentation Model

•Defend & expand relationship

•Receive the most resources

•Develop, strengthen relationship

•Receive limited resources

•Selectively defend or replace

•Receive minimal resources

Silver

Non-Key Account

Selectively Defend

or Replace

Gold

Key Account

Develop into Tier 1

Strengthen

Relationship

Gold

Key Account

Develop into Tier 1

Strengthen

Relationship

Platinum

Key Account

Develop, Defend Expand Relationship

Value to Supplier

Valu

e t

o C

us

tom

er

Low

Low High

High



Define Service

Focus by Segment

13

Determine level of focus & effort for each segment

Coverage by Segment Platinum Gold Silver

Field Sales / Technical Sales Yes Yes Maybe

Regional Account Managers Yes Yes Maybe

Global Account Manager Yes Maybe No

Account Profile Yes Maybe No

Account Strategies Yes Maybe No

Opportunity Action Plans Yes Maybe No

Call Plans Yes Maybe No

Account Team Meetings Yes No No

Executive Sponsor Yes No No

Customer Review of KPIs Maybe No No

Dedicated Operations Personnel Maybe No No



Assign Resources

to Key Accounts

14

Customer

Cri

teri

a 1

Cri

teri

a 2

Cri

teri

a 3

Cri

teri

a 4

Cri

teri

a 5

Co

mp

osit

e

Ran

k

Segment Account Manager

Customer 1 95 90 95 85 95 92 1 Platinum Joe Hunter

Customer 2 95 85 90 90 90 90 2 Platinum Sara Closer

Customer 3 90 85 85 90 85 87 3 Platinum Tom Challenger

Customer 4 85 90 85 85 80 85 4 Gold Sara Closer

Customer 5 90 85 80 85 75 83 5 Gold Tom Challenger

Customer 6 85 80 80 85 80 82 6 Gold Joe Hunter

Customer 7 80 80 75 70 75 76 7 Silver



Communicate

Segmentation Plan

15

• First communicate to sales team: Why you need the sales team to focus on the highest value customers

The benefits of customer segmentation & identifying key accounts

Ideal customer criteria & profile

Customer segmentation model & summary

Account assignments

Service focus by segment

• Then communicate to rest of

internal company stakeholders



What We Do

16

Sales PerformanceTiger Consulting enhances sales performance by

performing a comprehensive gap analysis and

implementing best practices in the following areas:

• Sales Operations

• Customer Engagement

• Opportunity Management

• Sales Talent Management

Strategic MarketingTiger Consulting develops and implements strategic

marketing plans to maximize company performance

and growth in the following areas:

• Strategic Planning

• Pricing and Financial Performance

• Product and Service Portfolio Strategy

• Branding Strategy

Schedule a consultation.

Tiger Consulting 713-249-4604

www.tiger-llc.com [email protected]

Do you need to segment your customer base and

focus your sales team on the right customers?

We have grown key account revenue by 240% and overall company revenue by 85%

in 2 years through strategic account management and sales and marketing transformation.

