πŸ”† Getting segmentation wrong is more costly than we often think.

πŸ”† Getting segmentation wrong is more costly than we often think.

Yesterday reflected on the topic of Segmentation. The thought sparked after realizing that the bulk of SaaS businesses I spot get it wrong – or better, not perfectly right.

The art is in getting it ‘perfectly right.’ Every inch you’re off harms performance. Just think of:

  1. The unnecessary waste of your marketing budget preaching to a far too broad segment that will never buy
  2. Poor quality ‘leads’ in your pipeline that are better off with your competitor, driving down sales performance
  3. The waste of efforts in an attempt to satisfy customers that will never become ambassadors
  4. The pollution of your product roadmap with feature requests that are pure one-offs

These examples negatively impact CAC, MRR, ARR, NRR, CLTV, and Gross Margin – to name a few metrics.

The problem:Β Most SaaS businesses think they’ve defined their Segmentation deep enough.

“We’re focused on this [industry], in this [region] and in particular on organizations in this [revenue-band] that employ [xxxxx] employees” is what I hear 99%.

At the surface, this seems pretty detailed – but believe it or not, often, it still leads to a funnel that’s loaded with waste, and that’s where all the metric problems start.

Seeing the metrics getting worse often leads to the measures that worsen things even more: Widening the Segmentation to address an even larger market. You can imagine what there this leads to.

So to address this, I’ve decided to write a series of posts in the coming weeks to help you solve this problem. The answer is in narrowing down – getting laser-specific across five layers. The magic is not in picking ‘the right layer’ but in how you blend them as a cocktail.

Question for you to reflect upon

If you critically (and honestly) assess your pipeline: What % are you chasing that would be better off with one of your competitors?

 

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