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Supercharge Your Customer Segmentation with Red Flag Alert

May 06, 2019 Red Flag Alert Updated On: August 15, 2023
Supercharge Your Customer Segmentation with Red Flag Alert

Businesses can use customer segmentation to help take control of the sales process, leading to more sales and revenue. In this article, we’ll look at the example of a business that installs bespoke heating systems to see how it could benefit from segmenting its customers.

Most of the business’s projects so far have been acquired through referrals and as a subcontractor. Here is how Red Flag Alert can help the company take control of its sales process and acquire more clients proactively through customer segmentation.

Zero in on the Type of Customers that May Benefit from the Service

The first step for the heating company would be to analyse the type of customers it already serves. Finding out the characteristics of the current client base helps the heating company build customer avatars. They can identify themes in the current client base and work out what type of company is likely to buy its services.

The heating company could segment its customers by a wide range of characteristics: industry, financial performance, size and location are key areas that can be targeted first. More detailed information can then be considered: gearing, liquidity, growth, expansion, new directorships, new charges on the business, and overall financial health.

The company provides bespoke heating systems and has an average deal size of £100,000. Over the last 50 deals, managers have noticed that all their customers operate in the aerospace, hotel, or construction sectors. Furthermore, all bar one of their customers is based within the M25 and all have more than 250 employees.

Looking deeper into the client base they found out more interesting information:

  • The businesses all had very strong balance sheets.
  • Over 80 per cent of the businesses had cash reserves well over ten times the cost of a heating system.
  • 90 per cent of the companies had grown in the last 12 months.
  • The businesses were on average 15 years old.

The company added in some of its own knowledge:

  • Heating systems were a critical aspect of the value proposition to the end customer.
  • 75 per cent of customers made repeat purchases.
  • The business was often called in when a large brand name contractor failed in the first four weeks of a project.

This data can help the business decide what businesses to target and what messaging to utilise. For example, businesses that buy heating systems tend to be financially secure and long-standing. This may lead the sales and marketing department to try some of the following tactics:

  • Position the heating company as a long-established business in an attempt to resonate with the buyer.
  • Use of case studies that show the heating service working for other long-established businesses may also resonate.
  • Because the heating systems are not generally huge purchases for the buyers (probably part of a much larger project), the emphasis should be more on quality and on ensuring a fast, effective project, rather than focusing on low price.

Once the heating company has a list of prospects, it can use Red Flag Alert’s unique financial health rating system to filter out companies that are unlikely to pass onboarding, or which may be a credit risk. This will prevent its sales team from wasting time on leads unlikely to buy or pass due diligence.

The rating specifically shows how likely it is that a company will cease trading in the next 12 months, warning companies against doing businesses with those in financial distress.

Find Specific Indicators that a Company is Ready to Buy

An exciting way that Red Flag Alert can help with sales is through data that can highlight the specific indicators which show when a company may be ready to buy. This could alert sales teams to high-value leads that they should focus their efforts on.

For example, the heating company could look out for signs that a business is about to move into new premises as this might mean a new heating system could be needed. Signals it could look out for include:

  • Has the company increased its capital expenditure spending? If so, it could mean they have expanded into new buildings that may need heating systems. By contacting the company early on, the heating company may be able to give itself an advantage when it comes to being the provider chosen to provide heating systems.
  • Is the company growing or has it recently moved into a new area? Again, this could suggest it will move or expand into new premises. Even if it is still some way off doing so, getting in contact early could result in sales further down the line when the prospect company finally moves.
  • Perhaps a new director has joined the business that they’ve worked with previously – this would be the perfect time to reach out and establish a relationship with a new business.
  • If the business has new private equity owners, there is a strong chance they will be looking to grow aggressively, presenting another possible opportunity for the heating company.

If a prospect fits the customer profile and has indicators they may be looking to buy, it would be a very strong sign that the sales team should reach out to the business and open up a conversation about a new heating system. If you want to read a little more on the transformative benefits of segmentation, the Harvard Business Review covered a US-based chemical and services company that used segmentation to dramatically improve sales.

Using data to segment customers works brilliantly across different sectors. For example, companies with slowing sales but cash reserves could be willing to spend money on marketing to resolve stagnant growth – valuable information for marketing agencies.

Red Flag Alert Data Can Help Throughout the Sales Process

Red Flag Alert data is the tool of choice for hundreds of businesses looking to build highly segmented prospect lists using data:

  • Detailed information on every UK business, including the 50,000 new businesses started every month.
  • The database is updated in real time with crucial information and opportunities for your sales team – that’s 100,000 updates per day straight to your inbox.
  • Rich financial data that gives valuable insight into a business’s performance, helping businesses pinpoint where sales teams should focus their efforts.
  • Detailed information on who is making the key decisions within every business, helping sales teams know who to target.
  • The data contains 2.4 million contact details including 900,000 GDPR compliant email addresses that sales teams can use to contact businesses.
  • Data can be integrated into a company’s CRM, meaning key information isn’t missed and time-sapping manual uploading is avoided.
  • As businesses get further into the sales process, they can use Red Flag Alert data to support sales presentations by using data to zero in on how their product or service can solve real problems.

To find out exactly how Red Flag Alert can help with customer segmentation, why not sign up for a free trial of our software today?

Published by Red Flag Alert May 6, 2019

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