Segmentation is a key aspect of any Go-To-Market (GTM) strategy. It helps illuminate an organization’s target market. Without it, businesses risk investing time and money into developing the wrong messaging for audiences in a high-paced competitive market, potentially causing an organization to fall behind and miss out on customers. Therefore, Cloud businesses must understand and prioritize customer segmentation that can clearly define which audiences will benefit the most from your services. Once this is created, a GTM strategy can be made.
Defining customer segmentation and its importance for a business
Customer segments are usually decided by senior leadership teams, who determine strategy based on the ideal audience for the organization. The focus point of this is normally how an organization can make a profit. However, profitable growth may take a backseat to initially being first to market and generating strong brand awareness. In this instance, clear customer segmentation will focus a company on who they should be driving awareness to and maximize messaging and resources in the right areas.
Within customer segmentation, five main types are commonly implemented for Cloud businesses. Originally cited by Bain & Company in 2017 Cloud customers can often be grouped as Transformational, Heterogeneous, Security-Conscious, Price-conscious and Slow-and-Steady.
Transformational customers are heavily invested in the cloud. Usually being early adopters, their focus is more on performance and innovation than cost saving in their decision-making process. This type of customer looks for innovative cloud solutions services and vendors which can offer hands-on and best-in-class support.
Heterogeneous customers have only partially moved their workload into the cloud. Working at a slower pace for a full migration due to the scale and complexity of their current system and their future IT needs. Therefore, they use both private and public cloud components within their tech stack.
This customer segment focuses on the strategic value to be a decision driver as most organizations of this type have plans to migrate a larger part of their workload to the cloud in the future. Therefore, having an emphasis on the strategic value of the cloud in your messaging is key.
Security-conscious customers look to become public cloud users, however, have some obstacles which inhibit them, mainly Industry-specific regulations, privacy laws and security requirements.
Security-conscious customers tend to have many of their cloud applications running on private cloud environments. When targeting this customer group, it is important to assist them in carrying due diligence and demonstrating your compliance with specific industry requirements.
Price-conscious customers prioritize cost when choosing their cloud investments. Organizations that have this mentality look to make the most practical use of cloud resources to allow their workloads to be agile, flexible and cost-effective.
When targeting this group, offering a range of service bundles at verifying price points for example, free trials to attract new customers and then advance them through a multi-tier service model can be beneficial to convince price-conscious customers of the value of your service.
Slow-and-steady which is also referred to as traditional customers has not yet moved the bulk of their IT stacks to the Cloud. There are several reasons for this such as security issues, barriers with industry regulations or logistical issues within an organization. Due to this the customer’s IT portfolio is made up of mainframe and legacy systems.
Slow-and-Steady customers are usually open to learning about opportunities that the Cloud can provide if it benefits there, IT development and business processes, cloud migration is done gradually. Tending to choose mostly private cloud architectures but open to the public if it fits in with their best interests.
How Cloud business can excel in customer segmentation.
When developing customer segmentation, Cloud businesses take advantage of having high agility and flexibility to identify markets early in the GTM process. To quickly tailor service offerings, acquisition of skillsets and experts and the financial management needed to develop them.
Successful Cloud providers that excel also make sure they have clear data and understanding of key areas of a market. This includes what type of businesses they want to attract, its total addressable market, its diversity and the base groups at the foundation of the market.
Taking advantage of these thought processes can help build a strong foundation towards a GTM, giving it a more robust and targeted goal which everything else can be built around.
Defining customers through segmentation is essential to developing a robust GTM strategy. This includes having a deep understanding of the total addressable market, their needs, wants and channels that customers frequent. With these in place, targeted messaging can be created which will engage with the intended audience. Without this in place, investments may be made into the incorrect messaging, which will likely not resonate with the needed customers.