Is market segmentation for everyone?

According to Wikipedia, market segmentation is defined as follows:

Market segmentation is a marketing strategy which involves dividing a broad target market into subsets of consumers, businesses, or countries that have, or are perceived to have, common needs, interests, and priorities, and then designing and implementing strategies to target them.

As a professional sales executive running your territory, or as a small business owner, why should you care about market segmentation?
In my opinion, the reason you should care is because you want to make sure you are spending your valuable selling time with the prospects that are most likely interested in your products or services. Additionally, it would make sense to focus your energy on the prospects that have the highest revenue and profit potential.

I’m not advocating that you spend weeks researching and slicing and dicing your prospects into numerous segments before you begin making sales calls. What I am saying is that you should segment your opportunities into at least two categories.

One would assume that category #1 is a no-brainer. With all of the tools available today, we should never be wasting our time calling on prospects that have no present or future need for the products we represent.However, category #2 is the one that warrants more attention. Think about it. In many cases it takes the same amount of time to close a small-revenue account as it does to close a larger-revenue account. So wouldn’t it make sense to dedicate more of your selling time to prospects that offer a higher potential of revenue and commission?

As a mentor with SCORE, I have witnessed this blind spot over and over again, with corporate B2B sales execs as well as small business owners.

I believe there are two reasons for this. The first is we don’t take the time to research our prospects to determine their true revenue and profit potential. The second is that the larger-potential accounts take us out of our comfort zone. We are hesitant or somewhat intimidated to call on very large accounts, perhaps because we never have had success in the past, or we don’t feel “worthy” to even make an attempt.

As a small business owner, or as a junior sales exec, I can certainly understand being hesitant to get out of our comfort zone. You might be relatively successful selling to small accounts and prefer to stay at that level. You may not have the experience you feel is necessary to engage in a large account, or perhaps you don’t know where to begin. Whatever your reason, I would encourage you to begin the process. People are people, and decision-makers are decision-makers. In fact, in most cases a decision for a small business owner is just as important as a decision for a major corporation. Both are important for different reasons. You might stumble and fall along the way, but if you never begin the journey, you will never have the opportunity to hit the home run. In fact, if I listened to sales reps in my office, I would have never made many of the sales on very large, so-called “all IBM” accounts. Don’t make the mistake of waiting until you feel like you are ready to begin your sales campaign on higher-potential accounts. Do your homework, prepare your plan and execute with confidence.

The point of this article is to use your time wisely. Given the fixed amount of time in your workweek, why not focus your attention on legitimate prospects that have the highest potential? You will find that it takes roughly the same amount of time to close a small-potential account as it does to close a larger-potential account. I know it sounds like another “Captain Obvious” statement, but it is something I witness more often than one would expect.