How to Perform Account Segmentation and Prioritization
Not all target accounts are created equal. In this post, we uncover how to segment your target account list using key characteristics that will enable your go-to-market team to grow deal sizes, improve win rates, and more.
What is account segmentation and prioritization?
For salespeople, account segmentation and prioritization is the process of categorizing the accounts in their territory according to each account's existing revenue, as well as future spend potential. These categories are commonly referred to as A, B, and C, or Tier 1, 2, and 3.
Account segmentation and prioritization is the next step in your go-to-market strategy after defining your Ideal Customer Profile (ICP), exploring your Total Addressable Market (TAM), and creating a target account list.
When organizing your list of target accounts, the key is to segment them by certain key characteristics – such as potential to convert, revenue, engagement, and model fit – so your teams understand which accounts are the highest priority (and why).
Moving through the process of account segmentation and tiering allows you to identify your high priority accounts (Tier 1), medium priority accounts (Tier 2), and low priority accounts (Tier 3). This can be thought of as a pyramid – there should be a select few Tier 1 accounts at the top, and more lower-priority accounts towards the bottom.
Why is account segmentation important?
According to the State of Account-Based Revenue Engine Report, providers that implement an account-based marketing strategy typically see 99% higher engagement rates within their target account list, 80% improved win rates, and 73% larger deal sizes. Still, these strong performances hinge on teams executing ABM properly – and account segmentation is a key driver of success.
With traditional forms of marketing, teams experienced a problem that looked like:
Marketing teams believed they were collecting a plethora of promising leads, but, when passed on to Sales, many fell out of the funnel. When segmenting accounts through an account-based marketing approach, both Sales and Marketing teams are aligned on the funnel – meaning both teams are approaching prospecting and prioritizing the same way. This looks more like:
When Marketing and Sales work together on ABM qualification, fewer leads fall out of the funnel. Subsequently, as accounts progress through the funnel by engaging with the provider, Marketing and Sales can focus their efforts on segmenting these potential customers. The process of account segmentation and tiering helps answer questions like:
- Which accounts will bring in the most revenue?
- Which accounts are most likely to convert?
- Which accounts should I contact first?
- What is the spend potential of my customer segments?
Looking for revenue in the right places will drive larger deal sizes, faster sales cycles, and improved win rates.
How to identify and tier target accounts for account-based marketing
Tier 1: High priority
Accounts in your Tier 1 should align perfectly with the characteristics outlined in your Ideal Customer Profile. They represent the most promising opportunities for your business, and should therefore receive the most attention from Sales and Marketing. Consider assigning your top-performing sales reps to these accounts (and the buyers within them).
Ideally, Marketing and Sales work together to create personalized touch points for these accounts. Because Tier 1 indicates the potential for large deal sizes, providers happily invest a significant amount of time and resources into building and nurturing these relationships.
Tier 2: Medium priority
Tier 2 accounts meet most of the requirements in your ICP, but not all. For example, these accounts may have a lower lifetime value (LTV) or lower spend potential compared to your Tier 1 accounts.
Accounts in your Tier 2 will not receive the same level of customization and priority as those in Tier 1 – but they should still be on the receiving end of multiple touch points and targeted campaigns.
Tier 3: Low priority
As you can probably guess, Tier 3 accounts possess some characteristics of your ICP, but not to the extent that Tiers 1 and 2 do. While these accounts are worth paying attention to and pursuing, they don't require the same level of effort often seen with higher priority accounts.
Getting started with account segmentation and tiering
There are a number of ways to approach account segmentation, depending on factors that impact an account’s likelihood to purchase your product.
When creating a lead scoring methodology, consider the following:
- Model fit: What characteristics does your "ideal account" possess?
- Behavior: What does the account's activity look like across different channels?
- Intent: Does the account's activity indicate a likelihood to purchase?
- Needs: What does the customer need and how can your company fit those needs?
Depending on the account’s overall fit with your ICP, it will be assigned to Tier 1, Tier 2, or Tier 3. As you continue with lead scoring, you can refine the key factors that differentiate one tier from another.
When teams begin their account-based marketing journey, they’ll need to agree on the number of accounts that fall within each tier. This will vary dramatically across organizations, largely depending on the above factors – and will likely change as your company scales.
Ultimately, account segmentation and tiering is about optimizing your go-to-market process as you build relationships with your target accounts. It's essential that Marketing and Sales work together to research the challenges unique to each account in order to identify how their solution can solve those problems.
Which types of data drive account segmentation?
A diversified dataset will vastly improve your chances of success with account segmentation and tiering. With this, you can assign a weight to the different factors used to tier accounts.
The basics of a company's profile can be described using firmographic data – such as geographic region, number of clients, employee count, type of organization, industry, and annual revenue. For example, a profile of Nike using only firmographic data would look like:
- Industry: Retail
- Headquarters: Beaverton, OR
- Company size: 10,000+ employees
- Annual revenue: $10B+
While firmographic data is a solid starting point for gaining a high-level understanding of a company, its basic insights are just that – basic.
Technographic data reveals the tools within a company's tech stack. For marketers, this makes it easy to create personalized messaging for campaigns; for salespeople, technographics provide insight into how the solution they’re selling might fit into a prospect's existing tech stack.
Some technographic data providers, such as DemandMatrix and Datanyze, monitor and notify users when an account implements a new tool that complements the one they're selling. Conversely, a user can choose to be notified when an account removes a product that rivals their own.
However, technographic data doesn't provide a salesperson with the context needed to understand how an account uses a given technology.
Behavioral and intent data
Behavioral and intent data is generated when an account interacts with your business. It monitors things like website visits, email sign-ups, demo requests, etc. Using this data, Sales and Marketing teams can see how accounts are engaging with their content – and where they are in the funnel.
If an account is consistently engaging with your business, you cannot afford to look the other way. Certain behaviors (i.e. downloading a case study, attending a webinar, or requesting a demo) are strong indicators that the account is getting close to making a buying decision. Engaged accounts should take the utmost priority – even over those that may be a better fit for your ICP but are showing less activity.
Contextual data answers the "how?" behind an account's usage of a given technology. It provides clarification on how much of a company's revenue is being spent on a certain product, when its contract with existing vendors expire, and more.
As you analyze accounts with a contextual lens, you can answer questions like:
- Will this account move through the funnel quickly?
- Does the account have a compatible tech stack? How are they currently using the products within it?
- Is the account in an existing partnership with a competitor? If so, when is the contract up for renewal or cancellation?
The bottom line
The foundation of any successful account-based marketing strategy is built on alignment between Sales and Marketing. Together, these teams can pursue the most promising and valuable accounts by creating shared plays that compliment each other.
Empowering your salesforce with the right data to pursue your Tier 1, Tier 2, and Tier 3 accounts means you'll be able to cultivate the trust that enterprise sales are built on with ease.
Move past basic firmographic and technographic data with Intricately
Intricately collects contextual data on the cloud product adoption, usage, and spend at over 7 million global companies. Our actionable data also includes insights into when a company starts (or stops) using cloud technologies, the rate at which those technologies are being used, and how much revenue is being allocated towards them.
Reach out to our team of data analysts to discover application-level insights of the top prospects your company is targeting in 2022. We can evaluate your target account list based on adoption, usage, and spend of cloud solutions, reshape your Ideal Customer Profile based on these insights, and more.