Strategies for B2B market segmentation

Market segmentation can help inform and create a marketing plan that meets the needs of a target audience instead of creating a one-size-fits-all marketing strategy. These characteristics include location, age, income, credit rating, usage rates, or buying habits. Whether you’re looking to launch new campaigns, localize your product, or double down on retention, segmentation gives you the framework to do it with precision.

With lead scoring, you’ll track how well your efforts are working. It’s the power of knowing exactly who you’re talking to and speaking their language. If you’re not using some type of B2B market segmentation, you’re missing the mark. This helps companies personalize offers and improve retention. However, in B2B, purchases are tied to performance. So, segmentation has to consider not just who the customer is, but also how complex their setup might be and what kind of solution they are looking for.

Where demographics are concerned with people, firmographics are concerned with companies. Marketers can segment B2B markets based on firmographics, technographics, needs-based segmentation, value-based segmentation, and behavioral segmentation (see Figure 5.7). Just like its consumer market counterpart, business-to-business (B2B) market segmentation focuses on identifying unique market segments based on common characteristics. To segment their customers, B2B companies need to gather data on their behaviors, interests, and preferences. See how Twilio Segment powers account-based personalization with unified customer data (or sign up for free to get started.)

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For example, they offered free trials and low-cost plans for hobbyists, customizable templates and integrations for entrepreneurs, and enterprise-grade features and support for enterprises. Shopify used needs-based segmentation to target different segments of the e-commerce market based on their needs and goals. IBM used customer sophistication segmentation to target different segments of the technology market based on their level of knowledge and expertise. Salesforce used tier-based segmentation to target different segments of the CRM software market based on their value and potential for the business. Slack used behavior-based segmentation to target different segments of the collaboration software market based on their usage and engagement. HubSpot used needs-based segmentation to target different segments of the marketing software market based on their needs and goals.

This layered understanding—knowing your buyer's generation and their readiness for new tech—is crucial. At the same time, AI is changing expectations, with 34% of B2B buyers in sectors like manufacturing and healthcare looking to AI for process automation. For instance, nearly half of all B2B buyers are now millennials—a digital-first generation that expects personalized, research-driven engagement. You're speaking directly to a well-funded scale-up that values integration and is actively looking for a solution to manage its growth.

After all, you wouldn’t market a software solution specifically for a doctor and try and sell it to a police officer, would you? There’s no use selecting a market segment you can’t reach, whether that means geographically, or psychologically. For example, a company like Mercedes Benz focuses on customers who value luxury and status, while Volkswagen, which literally translates to ‘the people’s car’ in German targets an audience who value affordability and reliability. Next, let’s delve a little deeper into the different types of segmentation listed above and throw in a few examples of segmentation in practice to give you a clearer picture.

• In this guide, you’ll discover all you need to know about B2B market segmentation — including how to do it — so you can start strategically engaging prospects and closing deals faster.
• It can help resonate with groups such as ‘productivity focused’ or ‘budget conscious’.
• Successful targeting requires seamless collaboration between marketing and sales teams.
• You then create marketing campaigns tailored to each segment’s needs and preferences.

This segmentation can help you uncover what buyers want, but can sometimes be difficult to connect behaviors to needs. To accurately identify the needs of new customers, you can interview existing customers and infer the needs of new prospects. This type of segmentation groups customers based on what they need from a product or service. If you tap into these motivators, you realize the benefits of these happy customers coming back for repeat purchases. 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.

If you're a clothing retailer, for example, segment the market based on people who care about sustainability. "We've opted for behavioral segmentation as it allows us to comprehend and address customers' desires based on their online activities, such as browsing habits, purchasing history, and product preferences," says Kevin Wang, co-owner of Inyouths. An ecommerce-only b2b marketing segmentation brand that sells coats, for example, could promote raincoats to customers in a city that has high levels of rainfall.

New, niche segments can be lucrative opportunities to broaden your reach with an even more tailored approach. During your segmentation process, you’ll find groups that you haven’t reached in your past efforts. The whole point of identifying niche markets is to enable companies to micro-market and target their product or service to an often smaller, more nuanced client base which might otherwise make lead generation challenging. This process starts by identifying and categorizing potential clients that form the consumer base and who might be unique in terms of goals, outlook, or demand. There is rarely an ideal solution for multiple partners that isn’t bespoke, so by trying to appeal to everyone companies chance poor ROI by creating a strategy that fails to appeal to anyone. Buyer personas are a useful method through which to connect with prospects on a deeper, more personal level and serve as another example of how effective marketing segmentation can provide more power to campaigns.