Customer Segments: Two frameworks to help prioritize your target customer segments
It may feel overwhelming to craft a go-to-market or growth strategy, especially with limited resources. One of the first ways you can help focus your efforts is by analyzing and prioritizing your target customer segments.
At 500 Global, we typically share two different prioritization frameworks - using a plot diagram to visualize your segments and using the ICE method. These are just starting points for identifying and prioritizing your target customer segments. You will want to consider other factors like objectives and resources, but these frameworks provide a great starting point.
How to use a customer segment prioritization plot diagram
Richard A. MacDonald, Jr., one of our fellow coaches at 500 Global, has evangelized his customer segment prioritization plot diagram. It’s a great way to visualize how your target customer segments compare against one another.
Using this diagram is pretty straightforward:
Each target segment would be represented as a plot point.
The size of the plot point would be relative to the size of the Impact this customer segment would have on your business. You can use Sales Efficiency, Confidence to close the sale, or Ease instead of Impact if you want to prioritize one of those variables instead.
Identify the intersection on the map between how large your total addressable market is (Y) and how high their need for your solution is (X). That’s where you plot your point.
Repeat this for each customer segment.
You will probably want to prioritize target customer segments that are larger plot points in the upper right quadrant of the diagram.
Your diagram may look something like this:
How to use the customer segmentation ICE method
Another method we commonly teach at 500 Global is the ICE method for prioritizing customer segments. I typically use ICE frameworks across most of my strategic planning, and this one follows the same structure.
Using this method is also straightforward. Whereas the plot method allows you visualize using a diagram, this method easily prioritizes segments by assigning score values to each of them.
List out your customer segments.
Create three columns labeled: Impact, Confidence, Ease.
I: IMPACT (1 - 5 high): How impactful is the segment to your business
C: CONFIDENCE (1 - 5 high): How confident are we
E: Ease (1 - 5 high): How easy is it to capture
You can add another column(s) if there is another variable you want to compare, such as market size or sales efficiency.
Add a last column labeled: Score.
Add your ICE values (and any other columns) to find your score.
Sort list by high score to low score.
You will probably want to prioritize target customer segments that have higher scores. Your scorecard may look something like this:
These are two of the simplest methods for prioritizing how you should target your customer segments. Again, you will need to probably need to consider some additional factors, and of course, your priority may change as you learn more about your customers and evolve your solution.
💡TLDR: You can easily prioritize your target customer segments by using frameworks like the plot method or the ICE method. These methods make it easy to compare the viability and marketability of different segments. They are just a starting point, though. You may also want to consider other factors such as market size, resources needed, and time to market.
📖 Exercise: Using either the plot framework or the ICE framework, prioritize your top 10 customer segments
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