Bill Canady breaks down the 80/20 segmentation method: plot customers and products on a grid to create four quadrants. Quadrant 1 is your core business (A customers buying A products). Quadrant 2 is high-value customers buying your weak products. From there, you decide whether to use outside sales, inside sales, or focus on the website for each group.
So the segmenting phase of 80/20 is really once you have your— you get your data from the organization, wherever it comes from, and you're starting to take and organize it. And it's interesting, I say it almost backwardly. It's like we separate unlike businesses. So we take things that belong together and start looking at, at those pieces as a whole, as a group with it. It's the math behind it. We're looking at the customers and we're looking at the, uh, at the products, and we're going to segment the data into 4 key buckets. So, and we call them A and B. A customers, B customers. A products, B products. So in Quad 1 of it, A customers buying A products. In Quad 2, it's A customers buying B products. So A means they're our best. That's our best product, our best customers. But best customers also buy products that we don't do so good at. Then we have B customers. That's going to be our Quad 3. B customers are going to buy products that we really like to sell. Right? So it's a B customer buying an A product. And then the final one, right, this one is our B customers— customers that don't buy very much from us buying products that we don't sell very much of. And just by the very nature of it, this is a place that we typically make very, very little money. We want to understand how those fit together because once we understand it and we're able, uh, to— we're able to take and organize ourselves around it, and then we can determine what type of What type of structure does it need? Does it need outside sales? Does it need inside sales? Does it need a website? Does it need different products with it? We're able to surround it, focus on it, and give it its best chance to, to be successful. So segmenting is understanding deeply how your business goes together and putting the appropriate amount of resources around it so that it has a chance to go out and really win.
