Needs-based segmentation
Stage 2 · Customer understanding
Needs-based segmentation
Needs-based segmentation groups customers by what they need and value, not just by size, industry or region. It lets you design a different offer, service level and price for each group, instead of treating every customer the same.
Questions it answers
1Which groups of customers want different things?
2Which segments value what we do most?
3Which customers should get what level of service?
How it works
The steps teams follow in our programs and projects.
Step 1
Gather needs
Interviews, sales input and data on how customers buy and use.
Step 2
Group customers
Cluster by needs and behaviors.
Step 3
Describe segments
Size, value and purchase criteria for each.
Step 4
Design offers
An offer and service level for each segment.
What you get
The output
A set of segments with their needs, size and value, and the offer for each.
Where AI helps
Where judgment decides
Clusters transaction and survey data to suggest candidate segments.
Checks segments make sense to customers and sales, and decides which to serve.
From our client work
How clients apply it
Paraphrased and anonymized from recent programs and engagements.
Application 1
A pipe manufacturer moving from a rebate-led model wanted needs-based segments to design offers and value pricing for each group.
Application 2
A food ingredients business tiered customers into four levels, with account plans and service agreements for each tier.
Application 3
Clients who define an ideal customer as "anyone aged 18 to 65" learn why a needs-based view works better.
Point of view
Seen in the market
All points of view →Recent Market Edge points of view that apply this tool.
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What does record farm debt mean for agricultural input suppliers?
US net farm income is down about 16% from its 2022 peak while farm sector debt has reached a record, so growers are optimizing return per acre and cutting input costs.
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Read →Linked tools
The output of one tool becomes the input to the next.
Where it's used
Academy program
Strategic Marketing
See dates →Academy program
Key Account Management
See dates →Expertise
Strategic Marketing & Growth
Explore →Expertise
Sales Excellence & Key Account Management
Explore →Problem it solves
Sales and rebate led for years
Read more →Problem it solves
Resources spread too thin
Read more →Situation
Moving from commodity to specialty
How we help →Situation
Reshaping the sales force
How we help →Questions about Needs-based segmentation
How is needs-based segmentation different from firmographics?
Firmographics describe who customers are; needs-based segments describe what they want, which is what offers and prices should follow.
How many segments should we have?
Usually four to seven, each large enough to act on and different enough to need its own offer.
Other tools in stage 2: Needs-based segmentation · Critical Purchase Criteria · Customer Journey Map · Influencer Map · Targeting tool
Want to use Needs-based segmentation on a live plan?
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