Focusing On Your Customers Customer

For the price leadership group, they largely eliminated field sales reps, focusing instead on corporate contracts, flawless logistics, and compliance reporting. 

One of the most powerful tools for segmenting customers is evaluating their customers.  As a genera rule, businesses focus more on the sell side than the buy side, so assessing the markets in which they operate can provide major insight into their business behavior  For example, a large facilities supplies distributor segmented its national accounts based on each account's "generic" strategy, not just the usual hotel, restaurant, office building type demographic categories.

They recognized that businesses pursuing a price leadership strategy were primarily driven by transaction and product costs, while those adopting customer intimacy or product leadership strategies were more interested in carrying differentiated products.   For the price leadership group, they largely eliminated field sales reps, focusing instead on corporate contracts, flawless logistics, and compliance reporting.  For the customer intimacy or product leadership group, they added product specialists and intensified their local presence.  The compensation programs they developed under this strategy were far different--and far more effective--than what the company would have developed without this critical customer segment distinction.

ACTION POINT: Understand your customer's customer.