As a B2B marketer entering the market, you might wonder about the best way to segment your audience. Segmentation is an integral part of your marketing efforts. It allows you to send out a personalized message to your audience and enjoy a better return on the investment.

It is also an effective approach from the customers’ point of view since they will only get a few irrelevant ads and marketing campaigns. They would get targeted ads that would interest and engage them. Though there is no clear approach to segmenting audiences, I’ll help you with some basics.

To succeed in B2B marketing, you should focus on segmenting your target audience into proper categories. You’ll have a clear buyer persona allowing you to create marketing campaigns according to the customers’ needs and demands.

What is B2B Market Segmentation?

Before we move on to the different ways for B2B market segmentation, you need to understand what it is. The term refers to categorizing your total addressable market (TAM) into different segments with similar characteristics.

Most people use the firmographics way for market segmentation to divide the TAM according to the company size, industry, and location. But there are other ways, such as demographics segmentation, behavioral segmentation, etc., that you can use to segment your B2B audience.

Why is B2B Market Segmentation So Important?

The B2B market segmentation helps you divide your potential target audience into different categories. You can create relevant ads and marketing campaigns instead of bombarding them with irrelevant content.

It will increase their engagement level and help you get optimal investment results. Moreover, you can also enjoy some great benefits from B2B marketing segmentation, such as:

  • You can reach out to groups that are more interested in your products. It will increase your conversion rate and ultimately enhance your overall business revenue.
  • B2B market segmentation simplifies the overall product development process. You can get a better idea about the needs and requirements of your target audience. You can make relevant changes to the product’s design and features to cater to the audience.
  • Delivering customers products and services that resolve their problems will enhance the overall user experience. Therefore, they will likely stick with your brand in the long run.
  • Segmentation also allows you to find untapped markets or groups that you wouldn’t have been able to figure out. You can expand your product’s reach in those areas.

And there are many more benefits that you can get from B2B segmentation. Let’s move on to dividing your TAM into different segments.

Different Ways to Segment Audiences for B2B Marketers

While there are different ways to segment your target audience, you must choose the best one that suits your business needs.

Behavioral Segmentation

Behavioral segmentation is about understanding the customers’ behavior toward your products or services. You can segment customers according to their approach and interaction with your products. This way, you can identify the customers who have become more engaged or disengaged with your business. 

By dividing the customers according to their behavior, marketers can find out opportunities for upselling and enhancing the business revenue. They will pay special attention to clients more engaged with the brand to get a higher value out of them.

Moreover, you can try out different strategies or give preferential treatment to disengaged clients. It will ensure that they stay on board with you and that your churn rate isn’t too high.

Firmographics Segmentation

Another popular technique that many marketers use is firmographic segmentation. It divides the audience according to their various descriptive qualities, such as the revenue per annum, workforce, geographic location, etc. It is quite similar to the approach that B2C companies use demographics to segment their target audience.

The best thing about this method is that you can easily access data without incurring high costs. Therefore, many marketers rely on firmographic segmentation to identify potential opportunities in any industry. Moreover, the firmographics data doesn’t change quite often.

However, there is one drawback of the firmographics segmentation; you won’t have the complete details. For example, you can find out the demand for bookkeeping software in the finance industry but won’t know the average amount each company is willing to invest in the system.

Demographics Segmentation

The demographic segmentation is pretty much the same that most B2C marketers use. It categorizes your potential customer base according to their personal data, such as age, income, gender, family size, ethnicity, education, and other characteristics. However, many B2B marketers don’t prefer using this framework.

Since you mainly target businesses, dividing them according to personal data is difficult. Nevertheless, you can collect relevant personal information and data that you can leverage to understand your target audience’s preferences.

Needs-Based Segmentation

Needs-Based Segmentation is the best and most robust way to segment your B2B audience. It helps you to divide your target audience based on what they need from a particular product or service. They could be looking for a particular feature or a critical element of the product before buying it.

The best thing about needs-based segmentation is that it allows you to scale quickly and provides accurate information. You can find the aspects your clients are looking for and then target them with relevant ads and marketing strategies. 

However, it can be a challenging task to collect relevant data. But one thing is sure: the results are extremely beneficial for your business. Before you go for needs-based segmentation, you need to ensure that you have the relevant resources to go through and complete this process.

It won’t give you effective results if you fail to fulfill the entire activity’s intended purpose. If you don’t have the resources to conduct a needs-based segmentation, then it is best to choose any other framework.

Client Tiers

Lastly, you can also segment customers depending on their priority. You can take into various factors to determine the importance of a particular individual for your business, such as their overall probability, CLV (customer lifetime value), etc. You can also rank customers according to their ability to bring potential leads to your business.

Many clients would recommend particular goods and services to others if they offer them significant value. Marketers today can take advantage of AI and machine learning tools that help them calculate how valuable a particular client is.

The downside of this segmentation process is that each client’s needs might differ. For instance, your highest-paying client wouldn’t require too much attention from you, but the lowest ones would.

Moreover, customers in the same tier would have different preferences and requirements. You would require additional segmentation criteria with the client tiers.

Wrapping Up

B2B market segmentation ensures that you spend money on avenues that will yield fruitful results. Even the biggest companies don’t have infinite resources and need to channel money in the right direction. Therefore, it is vital to use money to deliver the message to the target audience.

And that is where B2B market segmentation can come in handy. You can divide customers into different segments to refine all your activities, from product development to selling and even after-sales services.

Choose the right B2B market segmentation method that aligns with your objectives and is suitable for the industry you are operating in. Doing so will allow you to reap long-term and short-term positive results.

Aniket Warty

Aniket Warty

Adventure Capitalist. The creation of wealth is merely an extension of my innate freedom to produce.

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