What is segmentation?
Segmentation is the process of classifying potential customers into groups based on their common characteristics. A good segmentation allows companies to focus on the customers who matter most.
Once you segment the market, you have a better understanding of who your customers are, what they care about, and how to reach them. You also have an understanding of who your customers are not.
Now, you can adapt your messaging to resonate better with each segment you want to target.
B2B vs B2C segmentation
In B2C (business-to-consumer) segmentation, your aim is to get a complete picture of an individual customer who belongs to your target audience. Depending on what you’re selling, this individual may consult a few people before making a decision (example: when choosing a restaurant or a new pair or shoes, they may ask the opinions of friends and family). When selling to consumers, purchases are generally made for personal consumption.
B2B (business-to-business) segmentation has an extra layer. In B2B Sales, business decisions are driven based on expected financial gains. As a B2B business, your product or service may benefit some businesses more than others.
Before reaching out to representatives to pitch your services, first you need to assess which companies are the right fit for your business. Companies can be grouped based on their shared characteristics. These characteristics are also known as firmographics.
You can segment businesses based on the following firmographic factors:
Segmentation for B2B (Firmographics)
Segmenting firms based on revenue is a good way to determine the available purchasing power they have. This allows you to engage in value based pricing, where you charge customers different prices in line with the value you can bring.
For example: If you were a consultant, you may charge differently when working with a startup compared to a Fortune 500 company.
Evaluating companies by firm revenue can allow you to focus on companies with the budget to pay for your products or services.
Number of Employees:
Will your product or service impact a one-person business or a department of 50 people?
Let’s say you offer a cloud storage system. A solopreneur may store all their files locally, but an accounting firm may need to have a shared platform to synchronize files between employees.
Sectors and Industry:
Some sectors and industries may benefit more from your product or service than others.
Products and services:
You can establish partnerships with companies who are further down the supply chain.
If you make tennis rackets, it may be useful to market to sports retailers.
If you are a catering company, partnering with event management companies may be a good idea.
Does your product integrate with, or intend to replace any existing technology?
If you are a delivery company for e-commerce stores, do you integrate with popular e-commerce platforms like Shopify or WooCommerce? Then you may want to segment companies based on their existing systems and platforms.
What if you replace an existing technology?
If you replace an existing technology, you can segment companies according to:
- Companies who use the existing technologies
- Companies who are looking to implement the technology
- Companies who aren’t using existing technologies / aren’t aware of your solution
- Companies who aren’t aware of the problem the technology solves
You can segment companies based on their needs and use cases. In other words, how will the company you sell to benefit from your product or service?
If you sell spare parts for example, your customers may do one of the following:
- Resell your spare parts to their customers
- Use your spare parts in their repair centers
- Outsource manufacturing of parts to you
Behavioral segmentation revolves around the purchasing patterns of companies. For example, some companies are price conscious and would switch to a supplier with the lowest price when they feel like it.
Some companies may take more time to purchase but have long lasting relationships with their business partners.
Segmentation of behaviors is useful when determining the type of relationships you want to establish with your customers.
You may decide to segment companies based on their values. Some values for example include sustainability, innovation, community-centric, etc.
Partnering with companies that share your values allows you to establish synergy through a shared problem-solving perspective.
For example: companies who value innovation may be more open to experimental ideas your company can bring.
Once you’ve defined the segments available in the market, it’s time to choose the ones you want to focus on.
Remember: segmenting your audience is useful not only to choose the right companies to focus on – but also to filter out companies you DON’T want to target.
Determining your ICP
Once you’ve segmented the firms you want to target, it’s time to define the decision makers. Decision makers are the representatives from the target companies who will either purchase or use your products and services.
The relevant decision makers vary based on your product or service and the size of the company you are selling to. For example, in a small company, you may be selling directly to the CEO. For a larger company, you may be selling to a more specialized decision maker such as the Head of Content or the Local Warehouse Manager.
How do I know my targeting strategy is working?
Your targeting strategy is working when you are attracting your ideal customers to buy from you. When they are on your website, ideally, they should get in contact.
However, very often, potential customers end up leaving your website without filling out a contact form or getting in touch. Sometimes they just need a little nudge or reminder to turn them from a prospect to a paying customer.
With HappierLeads, you can see the B2B Companies visiting your website, connect with the relevant decision makers, and close sales up to 70% faster. Start your free 14-day trial
Once you’ve installed HappierLeads on your website, you can see which B2B companies are visiting your website. From here, you can filter your website visitors based on firmographic data to focus on the ones who matter the most to you