Part II - Tips on how SMB Enterprise Software Companies can better segment

This is a 2nd posting on this topic. See posting dated August 12, 2009 for Part I of this series.

'Segmented messaging’ is typically a first “baby step” that many SMB software organizations choose when “going vertical”. The challenge you face is: where do I get the content? The answers are:

(1) Identify company personnel who have specific industry expertise and/or

(2) Hire part time consultants who have the domain expertise you need as an interim step and/or

(3) If you have already defined your longer term roll-out plan for verticalization and plan to move to “segmented marketing”, you may want to consider hiring marketing professionals with domain expertise.

‘Segmented marketing’ means that you plan to target all of your marketing messages directly to a given segment by developing an “integrated marketing” model and I emphasize the word “integrated”. In the past, I have seen organizations move to segmented marketing but in a fragmented way, e.g., run segmented lead generation campaigns but not segment the message in media, public or analyst relations. I have never seen a fragmented marketing model work. In fact, every like-kind approach was an abysmal failure forcing the organization to revert back to the former “horizontal” model. (And typically try a vertical approach again a few years down the road).

Marketing messages need to be consistent. If your PR team is talking a different talk than your lead generation team, you will more than likely waste marketing dollars and never realize an acceptable ROI on segmentation.

‘Segmented sales’ occurs when the sales force is verticalized but this is not an all-or-nothing approach. In fact, in most cases, sales verticalization is localized. Metropolitan areas may realign sales over verticals where there are large concentrations of companies whereas rural geographies might identify multiple verticals or not verticalize at all. In some cases, both sales and pre-sales technical support may be verticalized or just sales. In other cases, (and this is prevalent in initial phases), sales will not be initially verticalized but sales “domain experts” - what we call “rain makers” - work with sales as an “overlay” function.

Unlike segmented marketing where only an integrated approach will work, there are many successful segmented sales models.

Next blog answers your question: Ok…I’m convinced I need to “go vertical” but what product/solution am I selling?

How SMB enterprise software companies can better segment...

As a marketer, I am embarrassed that I haven’t continued blogging these past few months but family issues have kept me busy. Now that life has settled down some, I plan to focus on more timely blog entries. Over the next week or so, I’d like to focus on segmentation challenges and tips for SMB enterprise software companies.

In speaking with executives of SMB enterprise software companies (tech companies with less than $1b in annual revenues), one top of mind issue that prevails is how to improve messaging so that it better resonates with the audience. While some software companies have been temporarily successful staying with an extended horizontal play – one message for everyone – (e.g., Pre-Oracle Seibel for CRM), eventually even these organizations needed a segmentation approach.

Segmentation and targeting is not a cookie cutter approach. What works for one organization probably doesn’t apply for another. So here are some tips…

For most organizations, segmentation means “going vertical”. The reason is simple. If you are looking to refine messaging to identify business pain points, companies in the same segments have the same problems and pain. Other organizations tend to focus on what I call “cross-company segmentation” – focus on “like-kind” departments such as legal, marketing, finance, etc. regardless of the vertical.

Most of this blog series will address the “going vertical” approach although I’ll touch briefly on some lead generation tips for organizations that execute to a cross-company segmentation approach later on.

So how does a small enterprise software company go vertical? The answer is…slowly and deliberately. The first step - get agreement across the organization what “going vertical” means because there are different approaches and or phases:

(1) Segmented messaging: Collateral and online content are developed to address specific vertical market(s).

(2) Segmented marketing: Uses segmented messaging to execute marketing communication and/or lead generation campaigns.

(3) Segmented sales: Some or all of sales force and/or channels focus on specific verticals.

(4) Any combination of the above

Next blog: Choosing what verticals and how….