Choosing Initial Segments and How Many...

In reviewing my postings, I realized that I didn’t elaborate on how to choose what initial segments to target and how many. This is a very important topic because making the wrong decisions can lead to failure. I recall one organization I worked with – the CEO explaining how he had launched a solutions focus by identifying 27 different solutions across who knows how many segments. The company couldn’t afford to execute to that and so it was not a surprise when the organization moved back to a horizontal focus.

For many enterprise software companies, hiring industry domain expertise means adding additional personnel. If your organization continues to maintain a horizontal play as well as a focus on industry segmentation, industry managers don’t replace product marketing managers. This means that you need to keep the investment in industry sales and marketing to a minimum in the initial stages. Strong recommendation: chose 1-3 industries to start and no more. Establish a beachhead first…focus on that for 2-3 years, then move forward.

The best approach to identify what initial segments you want to address is to analyze (using the 80-20 rule – not analysis paralysis) your current customer base to identify the top 1-3 segments that historically have been a natural fit for your product or solution. These should be your first choices for replication since already having customers in these solution areas (let's call them "charter customers") provides an opportunity for your organization to “reference sell” . An analysis should also consider the economic growth of your chosen industry over the next 18 to 36 months, including projected IT growth rates, potential industry consolidation, industry initiatives, recent legislation/regulations as well as the number of prospects, average deal size and what market share you believe you can win. Recommendation: quantify the market opportunity and your organization's projected revenue opportunity as best you can.

Here are some links that may be of interest on some of the topics discussed above...

http://www.referenceselling.com/

http://www.customerthink.com/blog/how_social_media_wont_revolutionize_reference_selling

http://relationshipeconomics.net/blog/reference-selling/

http://www.svpg.com/charter-customer-programs/

I believe that talking about the evolution of solutions in the next posting now makes sense.....