Marketplaces have moved on a lot from the traditional open space for a market to be held. Images of cobbled squares, small stalls and possibly even live animals have given way to a much more modern, digital approach. The new enterprise marketplace is still a way to bring buyers and sellers together, but it now offers significantly more goods and services. It also involves far more vendors and buyers, and is not limited by geographical boundaries or locations.
From internal marketplaces for talent through to marketplaces for software and apps, enterprise marketplaces have come a long way. Our research in this area over the last year to 18 months shows that there is now a huge range of marketplaces in many different sectors from labour through software and even to pets. On the face of it, the varying marketplaces would seem very different. However, they have one thing in common.
This factor is that they offer a huge advantage for marketers, by making it possible to serve micro-segments. In other words, it is possible to use data to distinguish customers and markets to a very fine degree—and then adapt sales and marketing tactics to fit each micro-segment or even customer. Research from McKinsey suggests that there are four key differences between the data-driven micro-segmenting approach and traditional marketing.
Data management is faster and more specific
Traditionally, sales teams would collect data from multiple sources, including billing, customer relationship management databases and customer service systems. They would combine and analyse data quarterly or even annually, often with the aid of external statisticians brought in just for this work. The micro-segmenting approach is much more agile. Data are brought together from far more sources, including external sources like social media and demographic information, as well as traditional sales and other internal information. These data are also analysed more frequently, sometimes even in real time, and by internal experts who therefore know the business as well as having analytical expertise.
Resource allocation is about the future, not the past
Traditional (large) sales territories were usually given resources depending on their past history. Profitable past, it was assumed, meant equally profitable future. Micro-segmentation takes a very different approach. Sales territories are divided into much smaller micro-markets, with each one given resources that reflect the level of opportunity. More opportunity means more resources. Opportunity is decided by comparing market share against growth potential. The ideal segments to target are those with high growth potential and relatively low market share: practically the opposite of the traditional approach.
Performance management is about opportunity
Traditionally, sales reps competed against each other for sales. In marketplaces, this would mean comparisons across channels and channel partners, and rewards for those with the highest sales. However, in micro-segment marketing, performance is assessed against the size of the opportunity, and against the targets set in each micro-segment. This encourages sales teams to prioritise segments by opportunity, and focus on those with the greatest potential. It also encourages a much more realistic to targets, driven by data and knowledge, rather than historical performance. Crucially, this means that sales teams can take the right approach to their own micro-segments. You can effectively compare those successfully nursing a declining market and those growing new markets—and on personal performance, not simply raw sales figures.
In traditional sales systems, everything is separate. Sales, marketing and post-sales are often kept siloed, even competing against each other for customer attention and resources. In micro-markets, everyone works together. The approach is collaborative, with sales, marketing, customer service, and strategy all co-operating to serve customers better and more coherently from the very first point of contact. The role of marketing is often expanded, and far more targeted to focus on the most lucrative potential areas. This also means that sales and marketing work together, rather than competing to attribute sales figures to their own activity.
Using data to drive marketplace approach—and sales
The micro-segmenting approach to markets and marketing is therefore agile and data-driven. Companies using this approach are able to consider customers and markets in a very granular way. Businesses can identify under-targeted areas and segments—and avoid those that are over-targeted by competitors. Most crucially, however, they can identify where the real opportunities lie, whether by geography or by customer. That, in turn, means that they can take advantage of those opportunities, by approaching them in the right way, leading to better targeting of resources—and better results.