Segmentation Is About to Get Interesting

Segmenting is about to get a lot more interesting. 

“Knowing your customer will be the only source of competitive advantage in the future,” said Laura Ramos at Demandbase’s Marketing Innovation Summit for B2B this month in San Francisco. “We need to get past the [criteria of] size of company, geography and which industry they are in.” We’re now four years into what Forrester calls the Age of the Customer, a putative 20-year business cycle when buyers hold unprecedented power over the purchasing process.

Customers are now self-serve. Empowered by the internet and access to global competition, customers are researching, comparing and choosing products long before they ever speak to the sellers themselves. Marketers must now assume roles once filled by sales. Rather than volleying messages to the masses to raise awareness, marketers are technologists who identify, find and target potential customers longer before (and after) a sale.

To gauge the pace of change, Gartner analyst Laura McLellan predicted CMOs will spend more on technology than CIOs within three years. Marketing concerns already touch almost half of all technology purchases, estimates Gartner. 

Pinpointing the Audience of One 

In the future, we may see the segment of one: a personalized buying experience for every individual, executed at the scale of billions. Already, companies like Little Rock, Arkansas-based Acxiom have built the world’s largest database of customer data offering profiles of more than 500 million people worldwide, including the majority of adults in the US, reported The New York Times. Acxiom process more than 50 trillion data “transactions” per year. It is able to “recognize consumers, remember their actions, classify their behaviors” and catalog each person with an average of 1,500 data points.

“The ultimate goal,” said Ramos, "is to give the individual exactly what they need and when they need it at that moment.” For businesses with a single buyer, that may be possible. But it’s a far more difficult proposition for B2B marketers who must sell to businesses and convince teams of decisions makers and implementers at large firms.

A new generation of marketing automation tools let companies systematically understand these powerful customers. There are two tiers of options: core platform providers such as Marketo, Eloqua, Adobe Marketing Cloud and others, as well as a growing constellation of specialized “apps” that integrate into these platforms.

The theme seems to be decentralization, said Scott Brinker, co-founder and CTO of ion interactive and creator of the blog Chief Marketing Technologist. The largest players are opening up their services as platforms for independent developers to plug into and build native services (think Apple’s App Store for enterprise software). The emerging ecosystem lets you not just create campaigns or track activity, but design and track the buyer's journey at every step with creative combinations of apps.

That’s also redefining segmentation, said Brinker. It’s now about asking the right questions, ones not even possible a few years ago, rather than producing a simple answer.

The biggest challenge for marketers is that they’ve never had this capability before,” said Brinker. “We’re rethinking what it means to segment the audience: on what characteristics and level of granularity. That’s really where the challenge is right now -- the marketing part, not the technology.”

Segmentation will become ever more about behavior, personalization and active interaction with the customer. “Digital is less of a display, and more of a dialogue,” said Scott.

That’s where businesses like Demandbase and others are getting into the game. They have brought together massive B2B databases with the ability to segment, target and personalize in real time. Peter Isaacson, Demandbase’s Chief Marketing Officer, said his company is focused on linking the sales process (via CRMs such as Salesforce) with automated segmentation and personalization. Marketers will soon have the tools to identify leads in their funnel, segment them based on behavior and buying process stage, and then serve up targeted advertisements, documents, CTAs and other materials whether leads are online at the office, at home or on mobile devices.

Where We Are Today 

That’s still a ways off. Despite the pace of technological change -- or perhaps because of it -- CMOs don’t have enough talented bodies to fill the seats. A recent Duke University CMO survey found just 6.1 percent of respondents fully agreed their company had “the right talent to fully leverage marketing analytics,” while more than 50 percent put themselves down as 1 to 3 (on a scale of 7 being the strongest agreement). The full results are here (pdf).

Ramos suspected the majority of marketers -- 70 percent or more -- still run their practices on gut feeling and past habits. Yet competitive pressures are forcing more marketers to become technologists who configure, operate and optimize their technology products, and skilled analysts who can interpret the data to drive better campaigns and digital experiences. Once, only the largest enterprises had this need and luxury. Now even small shops find it within reach.

That trend will only accelerate, said Ramos. Business technology has historically focused on automating the record-keeping of commerce: the routine but necessary tasks such as logging sales to tracking invoices. Machines let businesses cut costs and increase productivity by making this process far more efficient. Now the same thing is happening for “systems of engagement.” All the touch points to “win secure and retain customers,” said Ramos, are moving into software. At that point, marketing becomes more than just awareness. 

“It’s about how to get customers to stay with you and invest in your success,” said Ramos, “You can always be better by knowing your customer better.”

Title image by Timofeev Sergey /