Medical Device Customer Segmentation: Why Is It Important And How To Do It Right?
Although the medical device industry has grown substantially over the past few years, it has also faced significant challenges. Government cost control measures, an intricate regulatory landscape, hospital budget cuts, decreasing reimbursements, high production costs, and supply chain issues have caused many companies to reevaluate the viability of their business models.
Although the medical device industry has grown substantially over the past few years, it has also faced significant challenges. Government cost control measures, an intricate regulatory landscape, hospital budget cuts, decreasing reimbursements, high production costs, and supply chain issues have caused many companies to reevaluate the viability of their business models.
In addition, the industry has become much more competitive, forcing Medtech companies - big and small - to find new, creative ways to thrive. Especially established blockbuster device categories - coronary stents, wound care, and orthopedic devices - have become incredibly crowded.
One-Size-Fits-All Marketing Strategies No Longer Work
As a result of the multitude of challenges, many companies have placed more emphasis on their marketing efforts. Although recognizing marketing's potential impact on device makers' bottom line is a step in the right direction, there is more to the story than that.
Companies that implemented traditional "one-size-fits-all" marketing strategies quickly realized they did not work. The problem? Creating a single marketing campaign that appeals to today's sophisticated and diversified healthcare buyer personas is no longer an option. Segmenting medical device customers is vital to optimizing marketing strategies, maximizing a customer's value, and improving customer experience and satisfaction.
Segmenting medical device customers is vital to optimizing marketing strategies, maximizing a customer's value, and improving customer experience and satisfaction.
What is Medical Device Customer Segmentation?
When Medtech companies take a product concept from ideation to product launch, they often fail to segment their market - i.e., divide their heterogeneous market into homogenous customer groups. Instead, they focus on building a brand story for a generalized clinical audience. For instance, a stent manufacturer develops ONE message for ALL interventional cardiologists.
But in reality, a targeted approach is a more effective way of creating your value proposition. Developing separate messages and brand stories for each segment of your target audience is critical for market uptake. For example, a segment may consist of cardiologists who are early adaptors of new technology, those looking for a specific product benefit, or loyal to your brand. The segments can vary and depend on the category of your device.
Why is It Important to Segment Your Customers?
Segmentation is crucial in building an effective medical device marketing strategy, as it aims to divide the market into separate groups of customers with similar needs and characteristics. The purpose of this categorization is to optimize your marketing to each group so that individual customers receive the most appropriate and relevant messages and to maximize each customer's value to your business.
Once you finish segmenting your customers, you can tailor your marketing messaging to each segment's unique needs. However, remember, not every segment is worth targeting, and sometimes it is best to stay away from those that don't have the market potential needed to become meaningful.
How to Segment Medical Device Customers?
Here are five criteria to guide you through the segmentation process:
Make sure the variables used for segmentation are based on a logical framework.
Ensure the groups are heterogeneous in the sense that each member in a given segment has the same or very similar product needs.
Estimate the segment size, sales potential, and cost-to-serve of each segment.
You need one or more segments that can generate profit; otherwise, you don't have a case for developing and commercializing your product.
You must be able to reach your target segment through one or more marketing channels.
Not every segment is worth targeting, and sometimes it is best to stay away from those that don't have the market potential needed to become meaningful.
Most Common Segmentation Strategies
Choosing the best segmentation variables is crucial. If you use more than one variable, you will end up with more buyer personas than if you only used one. In either case, ensure your variable is measurable and allows you to divide your market accurately.
Here are the most common segmentation strategies:
Demographic segmentation relies on physician demographics, such as age, career stage, sex, socio-economic information, geography, specialty, time in practice, and others.
Psychographic segmentation is based on lifestyle, social status, activities, opinions, interests, and others.
Behavioral segmentation relies on clinician behaviors and product usage. For instance, the variable could focus on how a surgeon performs a specific procedure or which competitor device they use. However, unlike attitudinal segmentation, behavioral segmentation does not tell you WHY a surgeon behaves in a certain way.
Attitudinal segmentation is based on a clinician's underlying attitudes, beliefs, and hopes. This variable seeks to answer why the surgeon behaves the way he does. Although attitudinal segmentation is more complicated to define, it is longer lasting.
Geographic segmentation is based on location.
Hybrid segmentation is a combination of multiple strategies.
Most often, the segmentation of medical device customers involves a combination of various criteria. Depending on your product, you will find different variable combinations that may give you the best results. For instance, you could combine physician specialty (i.e., interventional cardiologist) with the number of procedures performed per month. Once you create your segments, you may develop a marketing strategy to target interventional cardiologists performing a high volume of angioplasties per month.
Benefits Of Segmenting Your Medical Device Customers
As we mentioned above, segmentation is crucial for marketing your medical innovation. When done well, you will optimize your marketing activities, maximize customer value, and improve customer retention.
Nonetheless, these are not the only advantages.
Here are additional benefits you can expect from customer segmentation:
Thanks to the power of personalized marketing messaging, you can expect an increase in conversion rates.
Segmentation allows you to gather customer feedback grouped by consumer segment, providing you with invaluable insight and helping you meet each group's individual needs.
Segmentation means you can focus your efforts on high-value potential sales.
By understanding the different customer segments, you will be more likely to provide them with the customer experiences they need.
It's time to face that the "one-size-fits-all" go-to-market strategy is a thing of the past. Instead, listen closely to what each segment of your market needs and wants. Then, align your value proposition to your market segments to reap the multitude of benefits of customer segmentation.
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