Subscribe Did a colleague forward this newsletter? Sign up to receive your own copy. News Webinar: Increasing Marketing Effectiveness at Professional Firms, co-presented with Larry Bodine, July 20. Registration and details. IQPC Workshop, co-presenting with Larry Bodine: Proving ROI on Marketing by Measuring Marketing Effectiveness. September 26, New York City. Event website, event brochure. Branding: Let’s not get fooled (again)!, co-authored by Suzanne Lowe and Larry Bodine for The Marketer, June 2006 (we hope to provide a link in the next newsletter) Measuring ROI for Marketing Efforts, by Suzanne Lowe and Larry Bodine, Accounting and Financial Planning for Law Firms, June 2006 Proving ROI on Marketing by Measuring Marketing Effectiveness (PDF), May 2006, (© Marketing the Law Firm) Increasing Margins (PDF, sorry about the quality), IOMA Contractor's Business Management Report, June 2006. (© IOMA) This article also appeared in IOMA's Law Office Management and Adminstration Reort and Design Principal's Report. New from the Expertise Marketplace Blog Drinking the Competitive Intelligence Kool-Aid®. Competitive intelligence is great, but it's not enough to drink the competitive intelligence Kool Aid® without studying the rest of the market -- the clients! Measuring the results of social media. Measuring the results of your social media initiatives can be tricky. Here are a few observations to keep in mind. The Baggy-Pants Marketing Syndrome. Criminals have a tough time running away from the scene of a crime when their pants are falling down around their ankles. What does this have to do with PSF marketing? You’ll have to read my blog to find out! Professional firm CMOs: watch your back? PSF managers are putting increasing pressure on their CMOs, including, in one case, making them accountable for the weather. In this kind of environment, we need a robust market-driven infrastructure to be able to guide our firms toward marketplace leadership. Marketing, get out! Should the entire professional services marketing function evolve upward within firms, or actually be sent offshore? My father and my career. I may have been too young to understand it at the time, but my father taught me about strategic differentiation 50 years ago. Swim with the tide Parts 1, 2, and 3. According to a new book, these are three supposed pitfalls that trip up CMOs starting new jobs. See my comments: Isolated Blind to culture Fail to define success New targeting efforts - are PSFs ready? A nugget in Adweek points to a new way to target and segment potential clients. It’s the next big thing! Nature calls. What if PSFs used web cams to give their clients a bird’s eye view of the inner workings of their service provider? Making it real. PSFs need to harness their authenticity to create compelling experiences for their clients. Professional service firm identity management: Part 1 - branded experts Part 2 - celebrity spokespeople Part 3 - identity and strategy The Myth of Intellectual Capital. Using technology (podcasts, blogs, etc.) to market one’s intellectual capital. Professional productivity. Should professional service firms take a cue from major league sports in assessing the economic value of individuals on their teams? Harnessing word of mouth. How serious are professional service firms regarding word-of-mouth about their firms? Social Networking or Communities of Practice. Is your firm participating in this phenomenon? See all the posts at the Expertise Marketplace blog Subscribe to the blog's RSS feed for regular updates. (Need RSS help?) Recent Issues Measuring Your Top Marketing Strategies, May 2006 Five Goals for CMOs of Professional Service Firms April 2006 Spotlight on Benchmarking - Findings from New Research on Increasing Marketing Effectiveness at Professional Firms March 2006 You can order Marketplace Masters from Barnes & Noble, Amazon, your favorite online bookseller, or CEO-READ.

The Marketplace Master^TM is a monthly email publication on professional service marketing from Expertise Marketing, LLC.

Targeting and segmentation: must-have marketing skills

In the last few months, I’ve been struck by the omnipresent marketing topic of digital and Internet-based communications as new channels to reach professional services buyers. All of my senior marketing friends are trying to get smarter about this arena, and that’s good.

It reminds me, though, of marketers’ reactions when websites were a new phenomenon. Every firm had to have one! It was only later when we began to ask ourselves: for which buyers are we investing all this money, making all this effort? In so many cases, our early website visitors weren’t the buyers we hoped for.

Websites were only the tip of the iceberg when it comes to the potential for new digital and Internet based communication channels. E-mail communication is another. Unfortunately, an underlying problem is still with us: many professional service firms’ lack of skill at the extremely important strategic act of targeting and segmenting our firm’s optimal buyers.

This month’s newsletter explores targeting and segmentation as a must-have professional service marketing competency, and the potential of behavioral targeting as a stepping stone to build this competitive skill.

Suzanne Lowe
Author, Marketplace Masters: How Professional Service Firms Compete to Win
President, Expertise Marketing, LLC

Targeting and Segmentation in Professional Service Firms

Sometimes it takes a series of disparate facts to help us focus on potential trouble spots, doesn’t it? This is what has happened as I look at some of the findings of the study, “Increasing Marketing Effectiveness at Professional Firms,” that my research partner, Larry Bodine and I published in February, 2006.

• Fact #1: Our 377 respondents ranked “targeting and segmentation” third out of 30 choices for “best results marketing initiatives.”
  
  
• Fact #2: Only 19% ranked “Defining and identifying the most strategically important prospects/clients” as their most important strategic marketing goal over the last three years.
  
  
• Fact # 3: A May 26, 2006 Adweek article cites findings from a Forrester Research study on emerging media that “[253 interactive marketers] plan to beef up their spending on new targeting options for finding customers. Nearly three quarters said they either use or plan to try behavioral targeting in the next year.”

This third fact offers professional services marketers, many of whom are still grappling with whether or how to incorporate digital media into their marketing programs, a glimpse into some very compelling targeting techniques. Behavioral targeting, which is growing in popularity, allows e-mail senders to segment lists based on recipients' past behavior. But I’ll get to that later.

The first two facts by themselves are enough to stimulate a discussion about targeting and segmentation in professional services marketing programs.

I wasn’t surprised to see that “defining and identifying the most strategically important prospects and clients” was ranked by so few as the most important strategic marketing goal. Certainly, when compared with marketing’s traditionally most important goal (acquiring clients), defining clients just isn’t as sexy. Lately, retaining clients has gained in favor – and our study findings reflected this – but again, defining the best potential clients loses out.

A right and wrong way to “follow the money”

This is more understandable when one considers the simplistic approach professional service firms have historically taken to grow their businesses. Regardless of professional sector, company leaders have said, in essence, “Defining our most important prospects and clients is easy! It’s those who need our services!” It’s been largely a business development pursuit; the definition of the most important prospects is simply those who have the short-term money.

Consider the following illustrations of how professional service firms employ tactically-oriented logic to choose their clients, rather than making strategically astute competitive decisions.

• An architecture firm makes a decision to open up a new geographic office based on a client’s regional project. The project ends. Partners gamely try to develop business in that location, only to concede after too long that there was no compelling strategic reason to be in that location in the first place. They close the office.
  
  
• A law firm hires a hotshot lawyer* based on her track record of bringing in revenues from a market segment that is booming, and in which the partners dearly desire to build revenues. Unfortunately, the hotshot isn’t as hot in her new environment, and the clients in this hoped-for segment aren’t buying the firm’s supposed new focus. Partners concede they tried to build a book of business with a client base that never fit strategically to begin with. The firm closes down the practice and the hotshot lawyer* gets “recruited away.” (*Substitute consultant, engineer, accountant, or other professional)

To their credit, many firms are already fairly sophisticated in defining and identifying their most strategically important future prospects and clients. These companies know how to:

• make astute segmentation and targeting choices, using “fact-based marketplace growth” criteria instead of “short-term revenue”
• operationally support their segmentation strategies
• employ their relationship intelligence systems -- contact management databases, practice management and accounting software, and the like -- to analyze their clients’ and prospects’ buying behavior
• monitor their marketing ROI along the way

Three good examples of firms knowing who their best clients will be include Hewitt’s early recognition of HR outsourcing, IBM’s early 1990s move to services from hardware and then last year adding a focus on small and middle markets, and Bain & Company’s hatching of Bain Capital in 1984 and The Bridgespan Group in 2000.

But the majority has yet to move beyond the flawed logic employed in the “defining our best clients” decisions above. Too many still think that targeting and segmentation is about picking the client base that will bring the most near-term money, instead of employing it as a strategic discipline to capture expanding market segments with their firm’s long-term unique competencies and plans for future growth.

Behavioral targeting: small steps, great gains

And this brings me to Fact # 3. Forrester Research’s study says, “three quarters [of 253 interactive marketers] said they either use or plan to try behavioral targeting in the next year.” Behavioral targeting is a technique whose time has come! And whether they fancy themselves to be interactive marketers or not, professional service businesses should use behavioral targeting in their digital media interactions to target and segment their clients and prospects.

E-mail marketing is the foundation of this concept. Legions of firms, regardless of professional sector, revenue size or marketing budget, are using e-mail campaigns to build awareness and relationships with preferred clients and prospects. Applications abound that provide reports on how recipients click through to websites or request certain information. Using this data, even the smallest of those enterprises – with real actions visible right at their fingertips – can begin discerning recipients’ behavioral patterns that will eventually help them identify or confirm their most strategically appropriate segments. This small step can offer a potentially huge gain.

Marketers must build skills in Targeting and Segmentation

Targeting and segmentation will gain traction as an important component of a professional service firm’s strategic marketing program. The smartest executives will increasingly require their senior marketers to be skilled at this function. The most capable firms will excel in their marketplace.

Professional service marketers, take heed: Begin now to build your skills at targeting and segmentation. Prove the value of targeting and segmentation quickly.

Behavioral targeting may be the way to begin.

Your feedback is important to us. Please contact us with your comments and questions.

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