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:
- The unnecessary waste of your marketing budget preaching to a far too broad segment that will never buy
- Poor quality ‘leads’ in your pipeline that are better off with your competitor, driving down sales performance
- The waste of efforts in an attempt to satisfy customers that will never become ambassadors
- 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: 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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