In this episode of The Chemical Show, host Victoria Meyer focuses on segmentation and personalization. B2B companies in the chemical industry often focus on organizational factors when segmenting their market. However, limited use of segmentation can leave both parties feeling unheard. By prioritizing customer relationships and serving them appropriately, companies can address specific needs in a unique and important manner. Victoria highlights the need for businesses to shift towards a more structured and customer-centric approach, using buyer personas to understand their customers’ roles, drivers, and interests.
Learn more about the following in this episode:
- The importance of using both Personalization and Segmentation with B2B customers
- Why Personalization is critical to creating value in B2B chemicals
- Four scenarios in applying segmentation and personalization and their impact
- Supplier-centricity vs. Customer-centricity
Discussing the challenges companies face in implementing personalization and the impact it can have on improving the customer experience, Victoria provides valuable insights into the importance of segmentation and personalization in creating business value and improving customer relationships. Join us this week as Victoria takes a deep dive into customer segmentation and its impact!
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Listen to the Podcast Here
Using Segmentation and Personalization to Grow Customer Value
Hi. This is Victoria Meyer. Welcome back to The Chemical Show. This is a quick hitter episode where I focus on a particular business topic. Today’s topic is using segmentation and personalization together to grow customer value. Now segmentation is not new. Chemical companies have been doing this for decades, and many companies and individuals feel like they’re old hat at this. And yet, I know from personal experience and from my clients and companies across the industry that segmentation is not always implemented consistently.
It’s not necessarily used to drive business decisions, which would be to effectively sell and market to customers, to how you run your business, and even how to positively impact the customer experience. Part of the issue with that is we’re missing the second piece, personalization. Personalization involves using personas and the customers “why” to drive the relationship, experience and business value. Now I believe really great sales execs know how to use personalization and sometimes they’re stifle a little bit with this dominance towards segmentation. We’re gonna talk about that a little bit later and what that means. But first let’s talk a bit about personalization.
Personalization is often considered the domain of B2C companies rather than B2B Companies. After all, when we think B2C , we think selling to consumers and the individual. Yet the reality is, personalization is critical in B2B companies and in the chemical industry. You’re dealing with people and people crave personalization. They want to be seen. They want to be heard. They want to be understood.
“Recognizing what the customer really wants and how the customer sees themselves and not just how we see our customers, and creating a value proposition and a relationship and engagement that marries the two.”
When you and your company pair both approaches, segmentation and personalization systematically, you can create real value for both parties. So that’s what we’re talking about here today, the importance of segmentation and personalization to increase business value through the customer experience. If you want to get more information on this, you can download a B2B Customer Experience Best Practices document. Go in there and check it out and let me know what you think.
So what prompted this episode? Something’s always prompting these quick hitter episodes for me. My family and I just recently returned from a summer road trip. We trekked from our home in Klein, Texas all the way up to Eagle River, Wisconsin with a few detours along the way. I really like a driving vacation. I am happy to fly point to point, but there’s something about driving that gives you a different experience and a different perspective. What I really enjoy about road trips is experiencing the vastness of the countryside, going through small towns and around big cities, driving past miles and acres of farmland. seeing the similarities and the differences along the way.
Now I’ve talked to friends, and I know people that are like, “Oh, gosh. It’s all the same, what a boring thing to do.” What I would say is they’re not looking and seeing the differences. Right? If I take the example of farmland and just the variance you’ll see. We drove 2400 miles round trip, past hundreds of farm fields from Wisconsin through Illinois, Missouri, Arkansas, Texas, and it’s really easy to think that a farm is a farm. But yet when you look at it, you recognize that there are differences. Differences in the crops, differences in the conditions, differences between whether it’s a corporate or local farm.
The same thing is true with our customers, and I think we know that. You all know that. We see our big companies differently than we see our small customers. We see customers in certain markets differently than others. That’s part of what goes into segmentation. The personalization piece though, is recognizing what the customer really wants and how the customer sees themselves and not just how we see our customers, and creating a value proposition and a relationship and engagement that marries the two. When you pair segmentation with personalization, you amplify your customer supplier value. You grow the pie. You create more value for each other, you strengthen relationships, and you improve the customer experience.
So let’s talk really quickly about a couple of basic concepts. First of all, what is segmentation? Market segmentation is the practice of dividing your total addressable market into unique segments based on shared characteristics. In the chemical industry across most B2B Companies, we tend to focus on organizational factors. The specific industry, company size, location, potentially their decision making process which we often factor into are you a price buyer or a value buyer, revenue potential or the size of the price. That’s often how we, the industry as suppliers, create market segments. Segmentation typically is internally focused. It makes sense to the supplier. It is how the supplier sees the customer.
Personalization on the other hand is a bit more like B2C segmentation. As it focuses on the individuals and individual groupings like demographics, psychographics, role and preferences. Companies that are really effectively personalizing their business and their customer experience are using buyer personas. These are focused on role, on the common characteristics, what the drivers and interests of those roles are. That may be a buyer, it may be a manufacturing manager, it may be a marketing manager, all people that are potentially related to the buying decision with very different interests and very different ways that they need to be sold.
Personalization is truly customer centric and customer focused. How does the customer see themselves? It brings in the buyer’s point of view and their why. And the why is so critical in creating value and in the decision making process. Nonetheless, both segmentation and personalization are critical and they go hand in hand. So I’ve mapped out for you four scenarios with how companies marry together segmentation and personalization and what it means.
What I’ve seen as the most common thing is a strong use of segmentation and little to no personalization. Personalization is hard. Only the most sophisticated companies are really diving deep and implementing buyer personas. Maybe some companies have created them, but really using them takes hard work. Use of segmentation is great. That is a great standard to have. I like to characterize this as “Well-served.” So the value is structured and it’s optimized for the supplier. So it’s in the supplier’s favor, typically. Clear on supplier defined segments, fits the needs of the overall market structure, but not necessarily the specific customer requirements and how the customer sees themselves. Overall though, you’ve got a pretty good relationship.
You don’t hear me.
At the opposite end is poor use of segmentation or low use of segmentation and no personalization. Value can be minimized for both parties. You’ve probably experienced this and wondered why. Often it’s reactive and transactional relationships. Performance is mixed. Sometimes it’s great. Sometimes it’s not. Part of it’s because there’s no systems in place. It is not a systemic decision about how you are reacting to your customer and how you’re reacting to that supplier-customer relationship. The perception internally is often that you are tailored to the customer. But the reality is you’re not satisfying either party.
I like to call this when there is limited use segmentation and limited use of personalization, “You don’t hear me.” You just don’t get me. If we move up the the personalization quadrant, some companies are really more structured, value structured and optimized for the customer. So they are personalizing to customer needs, but they’re not really leveraging customer segmentation. I would say we saw a lot of this a decade ago, but even more recently.
In fact, I talked to a client recently, who said when she moved into her role, a leadership role at her company, she realized there was almost no use of segmentation in the business, a large global well established business. It was viewed that their customers were this one monolithic block. By implementing segmentation, they were able to make a real difference. But in the meantime, when they think about personalization that was the road that they were in.
Anything to retain the customer.
In the upper left quadrant, we have companies that are really much more focused on personalization to the customer. They are valued, structured, and optimized for the customer. Meeting customer needs, but really ill-defined customer segmentation. It makes it harder to run the business, and it makes it harder to make structured business decisions. On the value continuum, the value skews towards the customer. There’s no tension in the relationship. Often, it’s a really good relationship. But many times, it’s a dissatisfied supplier.
I like to call this quadrant “Anything to retain the customer.” It is all about keeping that customer happy and to heck with the company’s needs, to heck with the business segmentation.
Seen and heard.
Now to me, the holy grail in this model is the upper right quadrant. It’s really high use of segmentation and high use of personalization. You are maximizing value for both parties. It is cooperative and collaborative. Often, when we see this you recognize the various roles and personas within your customer and are meeting them. Meeting them with one individual, meeting them with many individuals. It is a more complex supplier-buyer relationship working with their unique needs and very much in sync and smoother.
Not necessarily smooth and not necessarily without tension because, I think there’s a lot of good healthy tension that occurs in the buyer and supplier relationship. But when companies are using high segmentation and high personalization, they are maximizing value for both parties. In fact, creating more value because there’s the opportunity to be very specific, to find their why, to address it in a really unique and important manner. I like to call that “seen and heard.” That is an ideal place to be. You may not be there with all your customers. That’s the other benefit in the beauty of segmentation. It allows you, the supplier, to prioritize your customer relationships and serve them appropriately.
At the same time, there is supplier segmentation, and companies can and should be actively doing the same thing on the flip side. When you married the two, it’s a happy marriage if you’ve matched up the segmentation, the personalization, the why, very effectively. So take a look at your customer relationships and your customer experience. Where do you see great matches or significant misalignment and figure out the reason. Is that customer in the wrong segment? Do they perceive themselves in a different segment? Is there a way to use more personalization through buyer personas, through understanding your customers’ why to help match them up and matching segmentation and personalization to create value. So I hope you’ve enjoyed this week’s episode.
Send me an email, shoot me a DM on LinkedIn, and let me know what you thought about this episode. And thank you for reading. Keep reading, following, and sharing, and we will talk to you again soon.
You can download the B2B Customer Experiences Best Practices here!