Segment your clients: Understand their buying context - 03/2001

For the past few months I have undertaken some research for my MBA dissertation. The purpose of this dissertation has been to bring together academic thinking in marketing strategy with activities in the online recruitment industry. The assumption made at the outset was that in the rush to develop an online market presence, a considerable number of recruitment companies (established and start-up), had essentially failed to consider traditional marketing tools available to them, and were therefore struggling to meet their direct client's needs accurately enough, and in turn were spending, or perhaps wasting, large amounts of money selling a wholesale and untailored set of services to any customer that they could. Some still are.

In a small number of semi-structured interviews, the following areas were explored with typical buyers of online recruitment services: the context within which online recruitment services are bought, the process and criteria under which online recruitment services are bought, the buyers' needs in the buying process, and the buyers' current understanding and future outlook on their relationship with the online recruitment service provider.

The most fundamental issue for the seller to understand at the beginning of his relationship with his client is in the first of these areas: the context in which Internet recruitment services are bought. It is only then, that the seller can gauge the types of services and level of integration required for that particular buyer.

The findings suggest that there are three broad stages of buyers. In the first, the Initial Stage, buyers are either unwilling to adopt online recruitment services in the recruitment process or are still evaluating which service to use first. Some organisations in the health service fall into this last category. Sellers would be advised to understand exactly why these potential buyers are not adopting online recruitment services, and focus on their specific needs accordingly, in order to entice them into the next stage.

This next stage is the Adoptive Stage, where participants have already adopted the Internet in their recruitment process by means of mainly using services offered by pure-play recruitment service providers. The most basic services adopted here are where participants place only job ads, and the buyers who adopt these services are more likely to be still using offline recruitment agencies as well. However, as these buyers gain in confidence and develop in their understanding of the organisations' needs (or restrictions) in Internet recruiting, they begin to self-tailor their own requirements, by buying online recruitment services from different pure-plays. Almost creating a portfolio of online recruitment services for themselves.

Buyers in the Adoptive Stage see the pure-play as a 'service' and nothing more. There is little evidence of any real 'closeness' between the buyer and the pure-play (at least from the buyers perspective), as there might have been with offline agencies in the past. However, those buyers who already manage a portfolio of online recruitment services, and who by now appear to have a clearer understanding of what their organisations wish to achieve from recruiting via the Internet, are beginning to form working partnerships with pure-plays to develop more customised solutions to their actual needs.

Sellers from pure-plays would be advised to understand why buyers in the Adoptive Stage feel the need to create these 'portfolios' in the first place. Given that these buyers are their 'cash cows', surely it would be wise to develop an understanding of why they need to buy services from different pure-plays, and then strategically aim to capture a greater share of this portfolio by offering targeted and customised solutions.

The third stage has been termed the Integrative Stage. Very few participants came into this stage but the way in which they view online recruitment services is an important factor in understanding how the marketplace is becoming categorised.

Integrative stage buyers see online recruitment services fit into the larger picture of their organisational development. They appear to be adopting new structures within the HR department itself, facilitating it with networks, strategic business relationships, new technologies and support from HR professionals who recognise the need for shifts in the old mindsets and attitudes in the way that business processes work. As a part of HR strategy development, online recruitment services play a pivotal role for these buyers - they not only aid in the recruitment process of 'search' (as those in the Initial and Integrative stage use them), but also the recruitment processes of 'assessment' and 'transaction'. All this eventually leads to a concept termed 'virtual HR': a network based structure built on partnerships and typically mediated by information technologies to help the organisation acquire, develop and deploy intellectual capital.

Integrative stage buyers understand that building an infrastructure to support these processes does not happen overnight, and that a certain level of planning and investment must be made in the first place. Sellers of online recruitment services would be advised to understand the strategic direction of individual Integrative Stage buyers, and target services to where they will be of direct benefit to the buyers' business process development programme.

In essence it is argued that the foundation upon which excellent buyer - seller relationships can be built - where sellers are able to fine tune services to their client's needs and develop tailored solutions to support any of their client's online recruitment processes - is by segmenting the types of buyers in the marketplace in the very first instance. Once sellers have segmented them into the three broad stages, their needs can be distinguished much more quickly; the market can be targeted with much more precision and a more tailored service can be offered to individual clients. Successful recognition and implementation of such can only lead to a satisfied client and longer-term business success for both the buyer and the online recruitment service provider.

aziz@dhala.com