Segmentation for success

Does your firm stalk tigers or elephants? Do you get along best with bulldogs, or do you snuggle up coziest with pussycats?

These animals are metaphors for different kinds of clients. Market segmentation is not just for client-side marketers. It’s for you and your agency, too. When you use a segmentation strategy to analyze your current client portfolio, you’ll understand better what kinds of client firms complement you beautifully, which ones will give you dyspepsia, and some of the reasons why

You’ll understand why you’re more likely to win certain types of pitches than others. You’ll know why your staff complains more about working on some kinds of accounts than others. And in turn, you’ll know better which clients to target for your prospecting efforts, so that you can narrow down the long list to a sharp, focused one most likely to result in a quick win.

The “tigers and elephants” model is just one of several ways you can segment your clients. Client sophistication and client size are the two dimensions of this model, described by Philip Kotler and Paul N. Bloom in their book, Marketing Professional Services. I’ve taken their model, originally developed by an accounting firm, and adapted it for your kinds of communications agencies.

Tigers: They’re big clients who employ experienced, sophisticated managers. They’re aggressive. They’re looking for outside firms with specific expertise to tackle large-scale assignments in well-defined areas. In healthcare, these are often the big, marquee brands in blockbuster categories like cholesterol reducers and proton pump inhibitors. Tiger brands teams will pick ad agencies, PR firms, and med ed companies individually rather than look for an integrated solution: these clients seem themselves as the integrators, and are proud of it. They like to call the shots; they expect you to track with them and execute flawlessly, but they’re not typically looking to you for your opinions. Their demand: “Listen to me.” (Any clients of yours come to mind?)

Agencies that fit well with tigers typically are highly service-oriented and relatively singular in their focus. They tend to be located close by the client, ready to hop on over at a moment’s notice to execute their client’s every whim. Tigers pay well; they believe they’re buying quality and like to flaunt their “hot” agency the same way they show off a Rolex. They often feel they have better things to do than process invoices, however, so getting timely payment can be a challenge. And because many tigers press their thumb prints deeply into the creative process, the agency’s portfolio of published work typically looks better to the finance director than the creatives. The more self-confident agency people chafe at the way tigers may dismiss their strategic thinking or edgier ideas. Nevertheless, many agencies compete fiercely to win tiger business, for the prestige their brands bring and for the margins and revenue potential they provide.

Elephants are big, too, but their managers are less sophisticated, and less able to define what needs to be done, even though their assignments are large in scope. They may be new to the product category, or with less time in grade. Some older brands become elephants as their markets mature and as the teams that launched them move into new positions. Elephant brands value your expertise and advice, and seek a broader set of experiences from their support partners. Their demand: “Tell me what we should be doing.” They’ll often appreciate an integrated, multidisciplinary offer if it makes their job seem more manageable and less overwhelming.

The work they require from agencies is often more challenging than that of tigers, but it can also be more rewarding. Elephants often really appreciate strong strategic thinking, and tend to treat agencies more as partners than vendors. The downside is that their inexperience may result in unclear direction, so misunderstandings and re-work are more likely. Contingencies may be overlooked, resulting in mad scrambles to try to make up for lost time. These clients also may lack confidence in their own judgement, and may require your work to be tested again and again before it reaches target audiences. If your agency can be patient and calm, elephant brands may be a good fit for you.

Bulldogs are like tigers, but a lot smaller. They may be niche players, but they bring a high level of marketing smarts to their game. You’ll often see someone with big-client marketing experience in a senior yet hands-on role. Look at a hot biotech product in oncology, and you’ll probably find a bulldog brand. Bulldog clients are likely to trust their gut more often, to be risk-takers, and to value action over reflection, so they can be a good fit for highly creative agencies trying to develop a cutting-edge reputation. But don’t count on getting rich fast with them. Because their revenues are smaller, there’s less volume of work for you to live off. And bulldogs typically pride themselves on both attention to detail and out-smarting everyone else—so be prepared for your negotiation over fees and costs to feel like two dogs fighting over a bone.

Pussycats are smaller than elephants, but like them have less-sophisticated managers. They have neither the manpower nor the budget to support individual specialty agencies for each communications function, so they’ll look for a more generalist firm. They’ll also be looking for bargains. Prepare to spend a lot of time hand-holding these clients, and don’t expect them to be able to pay for every hour of it. On the other hand, these clients are a great opportunity to build a book of business and a portfolio of great work if you’re a small, up-and-coming firm, as the competition for their accounts isn’t as fierce and these clients typically feel lost within the bigger agencies.

Segment at the brand level, not by corporation

It’s important to recognize that segmentation works best on the brand, not corporate level, for most clients of communications firms. An oncology brand in a big pharma company that markets lots of tiger brands, for example, may be a pussycat if the market it serves is small and the brand management team responsible for it is inexperienced.

And even entire corporations can change. One major pharma player, for example, cleaned out its entire top marketing management echelons in a management shake-up, bringing in operations and finance people to head up business units. As a consequence, brands that were tigers became much more like elephants, and their agency needs changed. So you’ll want to analyze your firm’s portfolio at least every other year to stay current.

What do you do with the analysis? For one thing, you can strive to be consistent in serving one segment, not many. Agencies that work well with elephants typically struggle with tigers and bulldogs, and vice versa. It’s easy to see why. The values that would delight an elephant—say, new strategic initiatives brought to a meeting—can come across as irritations to tigers.

And agencies that try to keep all kinds of clients within their portfolios often end up sending confusing and conflicting messages to their own staff about priorities, incentives, and values. I remember working on a highly directive tiger client account while at an agency with lots of elephant clients; our team was constantly frustrated by the creative compromises it entailed. If you find your agency has a mix, recognize that the outliers are probably the most vulnerable lines of business you have. If your clients are mostly elephants and there’s a tiger or two in the portfolio, you might try to change that client’s approach. Be warned, though: it’s hard to change the stripes on a tiger, as the folk saying goes. (Or is it leopards who never change their spots?) Better to be thinking of ways to help the tigers on that client team move on to other brands, or to start looking for more elephant-like business to replace that client in your agency.

You also can use this analysis to help focus your prospecting plan. Take a long, hard, and honest look in the mirror. Which clients does your agency best fit, by virtue of temperament, expertise, size, hopes, values? Which brands that aren’t clients today have the kinds of values that closely match yours?

Once you have a better idea of exactly what you’re looking for, you can ask people you know to help you discover potential client soul-mates. You can lay out the profile of the ideal client to all your staff, and empower them to help you find suitable matches. And within your preferred segment, be it tigers, elephants, bulldogs, pussycats—or some other approach to segmentation, using different criteria, that better suit you—you can narrow down by product category, location, etc.

That will give you a nice, tight, manageable territory in which to go hunting for the right new business. And it will give you great odds of bagging exactly the game you’re after.

Photo credits: istockphoto.com: 000005038273; 000005214657; 000004925985; Flickr Creative Commons 401930619_c6ce5e6f54. May not be reproduced without permission of copyright owners.

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