Ultimate guide to B2B market and customer segmentation

The B2B market covers a wide and diverse set of companies. You can tailor your marketing materials and advertising campaigns to appeal to different B2B customers by targeting them through different segments. It may seem complicated, but it’s worth the effort. 

Although B2B segmentation might seem more complex than B2C segmentation, it yields significant benefits in understanding your target groups so you can effectively cater to their needs.

There are several advantages of B2B segmentation:

B2B segmentation helps you reach the most interested groups in your products and services, which will lead to more conversions and, in turn, more revenue.

Segmentation allows you to personalize your marketing and advertising campaigns. Personalized campaigns can deliver greater ROI, so your initiatives can have more impact.

Armed with an improved understanding of your target segments, you will find it easier to improve your existing products and create new ones that better meet their needs.

During your segmentation process, you’ll find groups that you haven’t reached in your past efforts. New, niche segments can be lucrative opportunities to broaden your reach with an even more tailored approach.

Customers will reap the benefits of your segmentation efforts, as you’ll deliver new and relevant solutions to their problems. A Usage and attitudes study will help you build strategies based on purchase habits and key drivers. If you tap into these motivators, you realize the benefits of these happy customers coming back for repeat purchases.

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As we mentioned, B2B and B2C segmentation are similar but different processes. They both involve identifying target markets, identifying prospective segments, and creating focused campaigns to address each segment’s needs. 

But B2B is unique because of the following:

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Before beginning segmentation, analyze your current customer base. Look at why they initially came to your organization, which might include the problems you solve for them, whether they all have similar pain points, and if they all in the same vertical. 

With this data, create your ideal customer profile so that you know which characteristics are most important to you. You’ll use this profile and the data from your existing customers to create your B2B segments.

These are five of the most common types of B2B segments:

In B2C markets, we use demographic segmentation based on gender, age, location, and other factors that characterize customers. Businesses use firmographic information such as:

Industry: What is the company’s industry, from retail to manufacturing or transportation?

Location: Is the business located in a small town or a large city?

Size: How many employees work at the company? Are they sizing up or scaling down?

Legal structure: Is the company privately held? An LLC? A subsidiary of a larger organization?

Performance: What are the rates of growth or decline? Profits and losses?

This type of segmentation groups customers based on what they need from a product or service. This focuses on buying motivations, pain points, and attitudes. To accurately identify the needs of new customers, you can interview existing customers and infer the needs of new prospects. If they interact with your social media and blog, that will also provide clues to their needs.

Now that you’ve looked at who the customers are and what they need, it’s time to look at how they act. Use analytics to gather information about how they found your business, what content they interact with, and how they might use your product. This segmentation can help you uncover what buyers want, but can sometimes be difficult to connect behaviors to needs.

Also called tier-based segmentation, profitability segmentation examines the potential value of a customer. This method generally uses average customer lifetime value, acquisition costs, and lead quality. You may want to use this method for your top targets and segment the rest in another way.

This method is based on business maturity and acumen. Customer sophistication looks at the target company’s awareness of the problem your product or service solves. A business may know that they need a particular service, but not really understand the consequences of not having it at all. It will be up to you to explain the need to them.

Make your marketing matter by reaching out to customers who have a challenge you can solve—and tailor your messaging to meet their needs. 

B2B market segmentation is an important part of your marketing strategy. Advantages include:

Identify which types of prospects are the best fit for your brand, have higher percentages of opportunities, and are more lucrative to your business. These are your future high-value customers.

Find the customers who are closest to your ideal customer profile and personalize their experience. This will, in turn, improve customer loyalty and retention and offer better opportunities for cross and up-selling.

Once you understand your customers, you can develop messaging that speaks to their pain points, motivations, and requirements. Avoid generic language and be specific about what you have that addresses the segment’s needs.

What channels do the decision-makers use to stay in touch with their industry and gather information on vendors? Niche industry blogs? Conferences? Trade shows? Find out so you can be present when they are looking to purchase.

Once you know your target segment, you can improve your existing lineup of products or develop new products that suit their needs.

In any type of segmentation, certain best practices should be followed. These are some of the best practices in B2B market segmentation:

When you begin your segmentation, you may start with one type of segmentation and find that it isn’t working out. For example, you’re creating a needs-based segmentation, but the companies you’re looking at all have the same basic needs. But, you might notice that your products appeal to a company with different firmographics, such as business size or industry, which offers you an opportunity to explore a new segment. 

B2B market segmentation can impact many teams within your organization. You’ll need to ensure that all of the stakeholders in your organization use buyer segmentation and personas as their view of your customers. Include stakeholders throughout the segmentation process so they feel they are part of it. Share the results of your studies to determine how they will implement segmentation in their departments.

Secondary research offers a cost-effective way to gather information about prospective customers. Before collecting your primary data, review the information you already have. You may find that you already have data on how much customers spend, what products they purchase most, and how often they interact with your marketing and advertising.

Social media listening can also provide insights into the challenges your customers are currently facing.

Balance your segmentation with a mix of qualitative and quantitative research. Qualitative data is important because it provides a deeper understanding of customers—answering the “why” and “how” questions. Quantitative data is information that can be given a numerical value. It takes both of these to create a balanced ideal customer profile for segmentation.

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This is a way of dividing your portfolio of customers into accounts of similar standing, allowing you to provide a more personalized experience for each segment. You can group customers based on similar size, relative value, industry, location, product awareness, or other factors. 

Provide an excellent customer experience while optimizing your segmentation with these tips:

Be flexible: Customer segmentation allows you to observe how your product is being received and used. Be prepared to respond to opportunities or problems that may arise. Create standardized processes, responses, and campaigns ready and be proactive should the need arise.

Interview prospects and existing customers: While it is essential to gather information from your existing customers, it is also vital to learn more about prospective customers, especially those in new segments. 

Stay goal-oriented: Segmentation allows you to align your goals with the customers’. Stay up-to-date with their goals as they can change. This ensures that they experience continual value from your company.

Get as granular as needed: Expand your segmentation to be as specific as you need. This allows you to be more specific in your messaging to impact their daily workflows. For example, you may segment based on customers with international branches, those who have shopped with you more than once, or businesses that don’t sell online.

B2B market and customer segmentation will amplify your customer success with personalized marketing campaigns that address the specific needs of each segment. SurveyMonkey can help with our segmentation tools. Let’s get started!