Segmenting the Enterprise Market

I am often horrified at just how poor many enterprise professionals are at segmenting the market for their services.  It is as if they believe that the ‘enterprise’ segment is already sufficiently well defined to enable them to engage efficiently and effectively.

In my experience there are great returnsto be had from spending some time in developing more effective ways of segmenting the  market. 

One of my favourites, and one of the most powerful models, segments the market place according to ‘Technical Competence’ and ‘Psychological Competence’.  Technical Competence refers to the degree to which the client has the technical skills that they need to develop their enterprise idea.  Psychological Competence refers to the degree of commitment, motivation, self confidence and self belief of the client.

In this segmentation clients may have a high or low degree of Technical Competence and a high or low degree of Psychological Competence.  This gives us four different market segments for our services:

  1. Low Technical Competence – Low Psychological Competence – Lets call this Type E1
  2. Low Technical Competence – High Psychological Competence – Lets call this Type E2
  3. High Technical Competence – Low Psychological Competence – Lets call this Type E3
  4. High Technical Competence – High Psychological Competence – Lets call this Type E4

The E1 client lacks both the psychological and the technical skills to realise their enterprise ideas.   Engaging E1 clients takes care and patience as it can be hard for them to take the risk of trying to make progress.  They need a lot of support with the technical aspects of developing their enterprise ideas and the work needs to be broken down into achievable steps.

The E2 client may be madly enthusiastic and quick to act – but lacking technical skills are prone to making all sorts of mistakes.  They need lots of technical assistance and a lot of emotional support too if the mistakes are not to undermine their commitment and motivation transforming them into an E1 client.  The E2 client may have been motivated to consider enterprise through clever marketing (my guess is that Enterprise Week will have flushed out a good few E2ers), they love the ‘Dragons Den’ type competitions. E2 clients require a lot of careful support over a long time period if they are to succeed.  They are likely to require frequent (if short) meetings with enterprise professionalsto keep them on track and to support them while they go on a very steep and sometimes challenging learning curve.  Their ideal enterprise professional will have both good technical skills and a good grasp of human growth psychology and its application.

The E3 client is a frequently overlooked market segment. They have good technical skills in enterprise – but they are not particularly motivated or committed. They may have been in business for decades, having started off as E2 or even E4, but never making much money in return for hours of hard work they no longer believe that enterprise is going to help them realise their dreams.  It has become just another piece of drudgery.  These clients are everywhere – but they don’t respond well to the ‘Have you got a brilliant business idea’ or ‘Dragon’s Den’ type marketing stunts so beloved of enterprise organisations and policy makers.  I believe this market segment could make a significant contribution to economic development in most communities – if only we could find a way to engage them and help them to get back in touch with their inspiration.  Community based enterprise projects that build a reputation over a number of years can start to engagethis kind of E3 client and produce remarkable results.

E4 clients are in some ways the holy grail.  Much of the effective enterprise professionals work is about helping clients move towards this E4 position.  Although high in both technical and psychological competence these clients still require help and support. They maybe ideal for referral to a good mentor or may benefit from access to a business support service on an ‘on demand’ basis.

Using this type of market segmentation can really help you to think through both your marketing/engagement strategy, the way you design your services and how you train your enterprise professionals.

Comments

  1. The inventor and entrepreneur Buckminster Fuller used to be fond of saying “If you want to change how a person thinks, give up. Give them a tool the use of which will gradually lead them to think differently.” As far as I’ve been able to tell the majority of enterprise professionals have a very limited range of tools on offer; business plans and cash-flow forecasts and some help with stationery is about it. I’m not sure that a grasp of “human growth psychology” is on their job spec. Maybe it should be. It certainly is a “tool” that I’d like to see more commonly applied. That would make more sense to me than another Dragons’ Den.

  2. As my friend Ernesto Sirolli says ‘first we have to build the person – then they will build the business’. I think if we understood this more and really considered our role in helping people to develop their aspirations, and the skills and stratgies that they have to close the gap between where they are now and where they want to be we might just find that we start to develop the ‘enterprise culture’.

    I am developing a training programme to help change agents (including enterprise professionals)to get their heads around some basic psychology and how it can be used to help clients grow.

    It will be interesting to see what interest we get!

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