Segmentation - divide and conquer

We will shortly be starting a segmentation project for one our clients.

Locked inside the firm's client records will be a wealth of information about its clients' needs and how to make them more profitable. Tapped strategically, this information should generate enormous value for the firm.

Turning the theory into practice will be a challenge. We agreed the value of the approach with the firm at the end of last year and now need to maintain the momentum through to implementation.

To put the programme into operation, we will need to rank the clients according to existing and potential profitability, group them and then investigate in detail the needs and behaviours of each segment.

Segmenting and analysing the data will be one thing: changing the core skills and behaviours of the staff to make best use of the emerging knowledge about each segment's needs and profitability will be another. Getting the information and the organisation to work together in this way will be the key to the success or failure of this initiative.

We are prepared for a long journey, but hope it will turn into a successful and useful case study. Look out for reports on progress in future posts.

Payment by results

I was asked at a recent networking event if I knew of a telemarketing agency that would be prepared to work on an exclusively payment-by-results basis. The same question has been asked directly of me in the past: the 'put-your-money-where-your-mouth-is' challenge.

Agencies willing to work on this basis undoubtedly exist (try peopleperhour.com), but I don't think it is a good idea for the client or the supplier.

The client is asking the agency to take all the risk - the risk that the product or service is saleable and that there is a market. If the client believes there is a market for the product or service, then it should be prepared to make the investment required to promote it: it is not for the agency to finance the hopes of the client on the promise of later riches.

For the client, the risk is that the agency is inappropriately motivated to deliver results. This can result in poor quality leads, unduly aggressive tactics to achieve sales or other forms of corner cutting to accelerate the cash-flow.

The whole scenario is a recipe for blame and the relationship to breakdown.

Any choice of agency (or client) should be based on trust. The client needs to be discerning in the choice of agency and the agency must convince the client of its credentials and competence. If the client has doubts that the agency can deliver the service they want, then the agency shouldn't be employed in the first place.

I don't object to agencies being accountable for their performance: on the contrary, they should be. Clear objectives should be agreed and under-performance dealt with through termination of the contract or pre-agreed non-payment conditions. If the agency has done all the work, but the results are slower than expected, then it should be a matter of partnership to work out the next steps. This makes for a much more satisfactory and ultimately successful relationship for both sides.

We'll get through this together

We are launching our new advertising campaign today. Based on a theme of ‘We’ll get through this together’, the campaign recognises that many of our clients are currently focused on survival and security.

Survival and security doesn’t mean cancelling all marketing – on the contrary – it means marketing wisely and in areas that will deliver results. There are several things that we are talking to clients about at the moment that don’t involve them spending more money.

Knowing and staying in touch with customers is probably the most important one and is at the forefront of many plans. We describe this as ‘reviving that first date feeling’: looking for excuses to get in touch and be together.

Watching competitors also yields results. Competitors are eating our client’s lunch and we need to know what they are doing. Asking customers if they are being approached and to see what they are being offered can be very informative.

Whatever field our clients are in, we look for the one thing that will make them stand out from the crowd. Without differentiation, there is only price to compete with, which can often be a downward spiral. The starting point for differentiation is to understand what our clients are very good at - what the signature dish is. With this established we can focus the marketing effort on the core strength.

Finally, we advise concentrating on one thing at a time. In reality, and particularly now, it is better to take small steps towards a goal than embark on a huge project that will absorb a lot of resource and take a long time to deliver. Results breed confidence and confidence is what is needed right now.