Marketing - What is Segmentation and How Will it Increase Sales?

What is Segmentation Marketing and How Will it Increase Sales?

By Stan Rydzynski

Typically, all contractors claim they are skilled in the residential, commercial, institutional or industrial markets. Their business card and truck signage identifies all or some of the markets they can provide a service. However, are all residential dwelling units the same? Is an apartment the same as a mansion? Or a modular home? Or a summer home in the extremely high end Hamptons market on Long Island?

The same analogy can be used for the commercial market. Is the electrical for a hair salon the same as a supermarket? Or an office? Or a restaurant? It even becomes more obvious for an industrial facility. Is the electrical installation of a beverage plant the same as a food processing plant? Or a steel mill? Or a wiring device plant?

The basic residential, commercial, institutional and industrial markets are each made up of a subset or subgroup of markets called segments. Does your marketing or sales pitch address these individual segments? Do you have a plan to expand you sales in the segment that provides the most profitable work? More importantly, has any of your competition established a foothold in any of these profitable submarkets that is preventing you to expand?

And we’ll grant you that this is easier to do in larger marketplaces where there may be more opportunities in various segments. Another definition of a “segment” can be the type of work you do. Are you a lighting installation specialist? Dimming systems for the commercial and institutional markets? A remodeling specialist? Electrical safety expert (which could encompass arc flash)? A low voltage specialist? Landscape lighting or outdoor lighting? Or are you an energy efficiency expert?

To illustrate the requirements of a marketing segmentation strategic plan, let’s use the commercial market as our overall market group. This group contains strip malls, offices big and small, restaurants, hotels/motels, supermarkets, movies, night clubs and bars, doctors/dentist offices and etc. Each one of these examples requires special electrical products and installations expertise. While they may have similar products they still contain particular electrical needs. If you were a real estate developer, property manager or owner wouldn’t you want a contractor who understood the special requirements for new work or maintenance?

Utilizing a marketing approach, what plans and techniques should be used to increase sales by segmenting the market?

First you will need to identify the segments of the markets that you feel are profitable and plentiful within the radius of the territory you cover. As an example, one of the hottest topics today is anything to do with Solar, Wind or Renewable Energy. These would be great market segment opportunities.
Determine the nuances that segment requires. For example, a supermarket will require particular lighting, large power for refrigeration units, and weather/ water proof electrical environments such as meat/fish processing areas as well as vegetable/fruit sections. In addition, voice and data transmission installation demands for office, cashiers and inventory control.
Identify the 3+ reasons (attributes) a customer in this segment must want from you to do business with you. Years of experience, bonded and licensed is important but everyone requires (or should require) this. You need to state how your company is different. Can you perform the work while the business is open? Or, can you work at night or weekends when the business is closed? Do you carry a variety and enough supplies on your truck to perform emergency service at any time? How much experience do you have in this niche? Highlight your expertise in motor repair and controls (training, certificates).
To illustrate your skill and knowledge, identify marketing/selling tools that will be required to attack that segment. Here are some examples:

Separate business cards (i.e. – Electrical Office Division)
Copy and graphics on your truck to highlight your specialty.
Segmented 2 or 4 page brochure.
Web site modified to market your specialty. Or a separate web site aimed at the subgroup (Electrical Contractor Specializing in Supermarket and Restaurant Electrical Installation and Maintenance).
Direct mail to key target segments or email.
Being a member of applicable customer association (i.e. BOMA for office buildings) as well as advertising in association publications – or even presenting at their meetings.
Testimonials from previous jobs to use in all literature and electronic communications.
Testing ability from grounding, thermal, arc flash, harmonic, surge to voice/data. (Equipment and certifications would look impressive to establish your competence.
Ability to handle outside inspection and comply with code and building requirements.

With the need to expand your business in today’s economy, a marketing segmentation strategy will be an effective approach. Everyone is trying to expand their business and price is usually the approach that is taken to sell a contractor’s service. The most profitable approach is to sell your expertise in the service your customer requires.

In addition, there are many elements that make up a solid marketing driven company. Showcasing and communicating what you can do for the benefit of your customers is a critical foundation to succeeding profitably.

Stan Rydzynski, Executive V.P., Channel Marketing Group, has over 35 years of experience in marketing/sales/product excellence in the electrical industry. The Channel Marketing Group provides strategic planning, marketing planning and market research for contractors, manufacturers and distributors with a focus on growth initiatives to accelerate performance. If you have a marketing/strategic planning question, you can contact Stan for a FREE consult at srydzynski@channelmkt.com or 516-319-1191. In addition, Stan conducts a 2-3 hour marketing/planning contractor seminar covering basic marketing concepts as well as teaching how to write an effective contractor marketing plan. Contact your local IEC, NECA chapters and/or your local distributor to arrange for him to conduct his highly effective and informative seminars.