I’m starting a Britpop band to teach B2B marketers about the importance of segmentation
Columnist Sam Scott offers an admittedly unusual lesson into market segmentation through the prism of Britpop. ParkLife, forget it, this is MarketingLife.
Sam Scott (Left), the rest are Suede
We’re in the final quarter of 2023. B2B marketers are starting to review their results and plan for 2024. Many will revisit their ideal customer profile (ICP) – even though it is often useless.
Canadian B2B marketing consultancy ProductiveShop describes ICP as: “A hypothetical description of the type of person who is most likely to benefit from your product or service and become a loyal and profitable customer.”
It is often a random list of descriptors and qualities.
Put simply, an ICP is a poor type of market segmentation and targeting.
But why is that? And what is an actual good use for it? Stay tuned.
How to segment a total addressable market
Whether and how much to segment a market is a topic I will leave Mark Ritson and Byron Sharp to fight over. (I’ve previously argued against the inane obsession with the most extreme form of segmentation – ‘personalization.’)
Instead, I am going to approach segmentation using Britpop, seeing as it has become popular again with Blur putting out a new album, Suede going on tour, and the Gallagher brothers still doing their thing. The movement was a reaction against the darker and harder grunge and shoe gaze music of the early 1990s and epitomized ‘Cool Britannia’ and Tony Blair’s New Labour optimism at its height.
Then, after Brexit, Donald Trump, the coronavirus pandemic and now with the ongoing global political turmoil and international wars, let’s just say that I need a break from marketing and journalism. Instead, I am starting a Britpop band, and I am to become big on Spotify.
So, whose specific sound should inspire our new band? Whose fans should we target? A Britpop Spotify market segmentation map can help us to find the answers to those targeting questions. So, let’s build one as an example that I will also use to explain the segmentation process.
First, one must decide whether to segment the market based on demographics (who they are), psychographics (what they believe), or behavior (what they do) in the context of the business at hand. The answer will be different for every company and market.
Note: One reason that the generalizations that marketers make about ‘millennials’ and ‘Gen Z’ are so terrible is that they combine the different types of segmentation into one single mess. The only thing that all people born between an arbitrary set of years have in common is that and nothing else.
Here is a graphic that I once created to show why purely demographic segments are rarely useful.
For my Britpop Spotify example, I will use behavioral segmentation – how many times per day each band’s monthly listeners stream their songs on Spotify. (In B2B, marketers will typically segment with firmographics such as company size, industry, location, or other things.)
Then, you determine the several variables that are the most relevant when it comes to your business. Here, I will use the biggest war of the 1990s – Blur v Oasis. I will plot each band on one axis for Blur and one for Oasis based on how similar their music is to the two bands. I’ll use that as a proxy for how much each band’s fans like those two groups.
Oasis has a melodic and anthemic sound, while Blur has a harder style combined with wry societal commentary. Pulp’s showy Jarvis Cocker and lyrics put them closer to Blur. Suede can both rock and have sweeping melodies. Radiohead is squarely in the middle and just wants to be left alone as ‘art rock.’ The Verve is Oasis-light. The Spice Girls are for people who just like all British music, no matter how much a band might suck.
Next comes the segment research. For each segment, I have listed each band’s monthly listeners on Spotify, their total number of streams per day and the daily revenue based on the reported payment of $0.004 per Spotify stream. The last figure shown is the percentage of Britpop revenue on Spotify for each band.
Now, I can use information such as segment size, relevance and potential revenue to decide which one to target. I could go after the ‘big fish’ and target Radiohead fans with a similar musical style. Or I could go more niche with Pulp and grow bigger from there.
For my example here, I’ll choose Suede fans because I had front-row tickets to their June 23 concert in Tel Aviv, and Brett Anderson still puts on a wonderful show despite being – checking my notes – 56 years old. Wow.
Then, I will choose how to position my new band to that segment – obviously, it will be Suede-like. Suede-ish? That will inform our type of music (the product), how much we can charge for our songs, merchandise and concerts (the price), where we perform and make our music available (the place) and how we will get attention (the promotion).
Of course, I can always change targets in the future. In marketing terms, musical artists ‘crossing over’ from one genre to another is simply targeting a new segment and repositioning themselves accordingly before releasing a new product type and doing new promotional communications.
Madonna became famous partly by changing her positioning from the Material Girl in the mid-1980s to a Pop Art Icon to Repentant Catholic to Erotic Sex Symbol to whatever she is today. Taylor Swift moved from country to pop music in the 2010s, likely because she thought she had fully penetrated that first segment and needed to target another.
So, market segmentation takes us to the targeting, then the positioning, and then through the tactical 4 Ps of product, price, place, and promotion.
In their quarterly or annual reviews and plans for the future, marketers can choose to do something similar. Or they can keep going after the same target segment. But the question remains: Is using an ICP in B2B marketing really that much different than doing this whole standard segmentation process? Yes.
How to create an ICP is in B2B marketing
WebFX, a self-described digital marketing solutions provider in the US, recommends this process of ICP creation: defining the ideal customer, conducting market research, identifying the key decision makers in target accounts, and creating buyer personas for each decision-maker role.
The company’s further description: “You can gain insight by analyzing data from customer relationship management (CRM) software, surveys, websites, and social media analytics. Doing so paints a complete picture of your ideal client and adjusts your marketing strategy appropriately.”
What does that mean in practice? It often means trying to sell to anyone and everyone in the marketing version of throwing spaghetti at a wall to see what sticks – all without having done any strategy. And whatever sticks becomes the ICP. More on that below.
But all of that hassle and wasted time could have been avoided with proper market orientation, research, segmentation, and targeting from the start.
Why ICP is a bad example of market segmentation
Advocates of using an ICP say that it allows marketers to create customized marcom campaigns for that wannabe (sorry, Spice Girls) target segment. But let us count the ways that it is a lousy method of doing so.
An ICP does not exist in reality. US consulting firm iSales Dynamics writes on LinkedIn that “the Ideal Customer Profile represents a fictional archetype of the perfect customer for a business.”
Sales intelligence software company Cognism states that the ICP is “a description of the perfect company or customer you want to target for your business.”
‘Fictional’ and ‘perfect’ are two words that should never be used in business. First, marketers should not care about any fictional depiction of the market. Second, ‘perfect’ does not exist in reality. When I was in high school, my ‘ideal girlfriend profile’ was the character played by Liv Tyler in the cult 1995 movie Empire Records. Yeah, that never happened.
Marketers should not waste time by thinking about a hypothetical segment that exists only on paper. They should target, position, and sell their companies, brands, and products based on actual segments that exist in the real world, like Britpop bands on Spotify.
Few, if any, actual people are in many hypothetical ICPs. In my example above, my research says how many actual listeners on Spotify are in each segment of Britpop fans. The same would be true in any properly done segmentation. And those actual numbers would inform everything from market share calculations to media planning activity.
But if you have an ICP with dozens of random attributes, what would be the actual size of that segment? How many real people in the world would fit into that tiny box? Five? People matching the ‘ICP’ often do not actually exist in any meaningful numbers.
Imagine that I wanted to target an ‘ideal’ band that had the melodies of Oasis, the commentary of Blur, the sex appeal of the Spice Girls, the artistry of Radiohead, and the showmanship of Suede and Pulp. That ‘ideal’ does not exist.
In the ICP model, the product comes first rather than towards the end. Qualtrics, a company that sells customer experience software, describes the ICP this way: “a description of a company that you believe to be a perfect fit for the products or services you sell.”
Basically, it is building a product and then trying to figure out later who the hell would want to buy it. Just as blockchains and cryptocurrencies are solutions in search of problems, so do many companies have products that are in search of markets.
And that is completely backwards from having the market orientation at the beginning in which you build a product based on the market segment you have decided to target first.
Peter Weinburg and Jon Lombardo of LinkedIn’s B2B Institute have called it the “product delusion” – that marketing’s job, in part, is simply to tell the world how awesome a product’s features are.
An ICP is the opposite of market orientation. ‘Market orientation’ is the process of orienting everything you do towards the market you are trying to sell. It is doing the strategic part of market research, segmentation, targeting, positioning, and goal setting and then the tactical part of product creation, pricing, distribution methods, and promotional communications.
Using an ICP as a target segment by itself is not doing any of that. A company’s ICP often comes from the aforementioned spaghetti approach – the company decides who it wants to target rather than first orienting itself towards the existing market.
Over the years, I have spoken at some 45 marketing conferences and events. I do not remember seeing a single session anywhere where a speaker discussed anything in that lengthy list except for the marcom at the end. That probably explains why so many marketers think that an ICP is a good type of segmentation and targeting.
How companies can actually use an ideal customer profile
The idea of an ICP seems to have arisen first in the world of so-called ‘account-based marketing’ (ABM). First, it is important to know that ABM is not marketing – at least not in the sense that I described above. ABM is just a new buzzword for a type of enterprise sales that focuses on specific companies and targets many different people at those businesses.
However, it is marketing’s job to paint an accurate picture of the total market and then decide which segments to target. But all too often, marketing is just seen in the B2B world as a slaves to sales. “Create a website!” “Make an ad!” “Give us a nice white paper!” “Get us leads!”
If you suggest that half of the budget should go from short-term lead generation to research and long-term brand building for the maximum long-term benefit, the sales team will give you looks that will turn you to stone more quickly than Medusa.
But sales is tactical, not strategic. Marketing must think about the overall big picture. Personal sales, we should remember, is just one part of the marcoms promotion mix. In that context, an ICP is not a good market segmentation and targeting tool – but it is a useful sales qualification tool.
For example, Qualtrics gives this list of questions that sales teams could use.
A sales team, for example, might have ten questions with preferred answers. For every lead that comes in, they score it out of ten. If they want only leads from the UK, all UK leads get a one, while everyone else gets a zero. And so on. An executive will have told them to pursue only leads that are above a certain score – everyone below that threshold would be a waste of time.
And now, if you’ll excuse me, my new Suede-like band is meeting soon to rehearse. But first, I need to get some tattoos, grow my hair a little longer, and re-pierce my ears for Saturday Night. I’m the new B2B Brett Anderson.
The Promotion Fix is an exclusive column for The Drum, contributed by Samuel Scott, a global keynote marketing speaker and head of marketing at the IT mapping platform Faddom in Tel Aviv. His opinions are only his own.