Improve Sales Conversations by Segmenting Customers
Understanding who your best customers are starts with segmentation. Also known as grouping similar customers by type and rankings. Segmenting customers provides context for your choices during your interactions with them. Segmentation can improve your pricing strategies and the quality of your sales conversations, ultimately improving customer satisfaction overall.
The Importance of Segmenting Customers for Pricing Strategy and More
While it seems obvious that you should treat every customer with individual, tailored interactions, it’s easy to let that slip when you’re dealing with thousands of customers with dozens of different employees. Left with your own devices, you tend to homogenize your customer base.
The danger in that is that your customers are not the same. Not only are they inherently different, occupying different spots in the marketplace, having different verticals, or selling different products, but they have not interacted with your company the same. Some have bought more, some have been less profitable, and some have been far easier to deal with on a day-to-day basis.
Recognizing differences between your customers and intelligently ranking them as A, B, C, or D customers allows you to make smarter choices while wasting less time. A segmented pricing strategy based on ranking customers into distinct groups means different prices will be offered to each customer segment based on real data and more informed decision-making. This improves your pricing strategy overall.
Why is Segmentation Difficult?
Not many people segment their customers, and it’s easy to see why. It’s a complex issue. For example, if you’re going to rank your customers, you need to look at things like profitability, sales, returns, margins, and much more. That information is likely captured in your ERP, but it’s buried there. No prebuilt, configured reports to pull actionable insights quickly or easily.
Once you have the data for each customer, the question arises of how you will weigh the importance of customer profitability vs. their margin vs. your total sales vs. the cost to deliver. And after you decide what’s most important, how do you ensure the process is consistent between all customers now and far into the future?
White Cup uses customer segments and rankings in two key areas: Pricing strategies and improving the quality of sales calls.
Price Segmentation
Similar customers buying similar products should be paying similar prices. Simple and straightforward. Customer segmented pricing ensures similar customer profiles do not see a disparity in paying a higher price or lower price, which will improve their willingness to pay.
Effective price segmentation based on the ranking of different customers means price-sensitive customers will see pricing that aligns with their customer behavior and analysis of existing customers, thorough market research, and more. This will lead to a more satisfied customer base and an intelligent pricing strategy rooted in data rather than gut feeling.
Improving Sales Calls
Aside from pricing strategy and making more informed decisions about the perceived value of your products and brand image, certain customer segments will play a key role in your sales conversations as well. Knowing how your customers are ranked gives you a pretty good idea of why they’re ranked that way. And that fosters great sales calls about what it would take to move them forward and offer discounted prices or other incentives to earn their business and trust. As time is a finite resource, you want to spend it with your A customers and your customers that have an opportunity to move up in ranking—from a C to a B and from a B to an A. Ultimately, that’s where you’ll make the most impact on your bottom line.
So, now what? Well, the conversations you should have with your customers will be dictated by the data found in your pricing strategy software.
See it in Action to Improve Your Price Segmentation Strategy
To see customer segments in action and the steps you should take with segmented pricing once you’ve ranked your customers, check out this 12-minute webinar recording by Vice President of Business Development Brian Friedle. Learn how to really know who your best customer segments are. In it, he walks through the importance of ranking customer groups, how to make it easy, and then what is possible once you’ve done it. He shows step by step how to unlock the power of the data you already have using White Cup Pricing, including the right time to offer customized pricing, higher price, lower price, or the same price.
About White Cup
White Cup turns a distributor’s sales pains into profit gains. Our CRM, Business Intelligence (BI), and Pricing software make it easier for you to sell more, keep more profit, and beat the competition. With over 20 years of experience, White Cup is trusted by more than 1,000 customers globally.
