When looking to grow a business, one of your main concerns is finding customers. But it isn’t enough to find just any customer – you need to find the right customer. It is the only way to reliably increase your revenue, as one good, long-term client will be worth to you more than a dozen on-and-off customers.
This is especially true for B2B business models. B2B is much more complex than regular business models, because companies, both large and small ones, prefer to form long-term relationships, as it is the most efficient and profitable way of running a business.
So, how do you find your ideal customers?
The answer is: through customer market segmentation.
In this short article, we’ll go over some of the advantages of market segmentation, as well as some obstacles you might face and what to focus on when creating your own market segmentation plan.
Obstacles to Market Segmentation
Implementing market segmentation for B2B is no easy feat. When implementing segmentation for this business model, here are a few things that you need to be mindful of when planning your strategy:
- B2B is more complex – B2B is far more complex to segment than regular business models. The reason for this is simple: businesses go through a much more thorough decision-making process than individual customers.
While an individual might make some considerations before purchasing something, their decision-making process comes down to how badly they need the item.
When it comes to businesses, they often need to consider how this affects their own sales, how easy the product is to implement and integrate into their own systems, how much maintenance it will require, etc.
- B2B is more calculated – An individual making a purchase can make that purchase on a whim. People often buy things they don’t need, just because they want them.
Businesses have to weigh the cost of their purchase very closely, as every purchase is an investment for the future.
- B2B is long-term – Companies don’t only seek to make a purchase; they seek to create partnerships.
And while a customer can be loyal to a business, their purchases can be sporadic, while a business buying from another business does so in a much more controlled manner.
- B2B target audiences are much more concentrated – B2B is a $6.7 trillion-heavy industry; however, it has a lot fewer available customers than any other business model.
While a retail business has tens of thousands of customers to work with, a B2B company has but several thousand to choose from. This forces that company to have a very specific niche and very precise parameters for their target audience.
Benefits of B2B Market Segmentation
Now that we’ve seen some of the considerations you have to make when creating your B2B market segmentation strategy, let’s take a look at how that strategy benefits your business.
First and foremost, a good segmentation strategy is bound to reinforce your message to your potential clients.
As a business, you want to make a clear statement about who you are and what your qualities are, and segmenting the market helps you tailor that statement for those who need to hear it.
Second, having a very precise target audience lets you improve your product. Knowing who is likely to buy your product means you can tailor it to match their exact needs. This might incur additional costs in the beginning, but it’s guaranteed to increase your profits in the long run.
Third, market segmentation helps you get higher-quality customers. B2B is all about the quality of the purchase, rather than the quantity, and getting the right customer should be your top priority.
We can also recommend you read additional guides and articles on digital marketing strategies, as they explain in detail how to target your audience and find that perfect customer.
Finally, segmenting the market means you don’t waste as much time and resources.
A smaller niche means you can use your precious resources more efficiently, and, ultimately, get more out of them than you would have you tried to carpet-bomb the market to get as many customers as possible.
Implementing Marketing Segmentation
Now that we’ve got that out of the way, let’s see how one might implement a B2B marketing segmentation strategy, and what are some of the avenues of segmentation you ought to pay attention to.
One of the most common ways to segment the B2B market is by classifying companies by their size. This lets you target small, medium, or large businesses, and tailor your product to serve their needs specifically.
However, this “firmographic segmentation,” as it is called, might not be sophisticated enough to give you a very precise target audience. Behavioral segmentation is much more accurate, as it divides the customers based on how they approach a particular purchase.
Knowing how your customers behave when making decisions allows you to further tailor your presentation to suit their needs.
Certain companies will buy your services no questions asked; others require only the bare minimum. Some want extensive maintenance, others do not. All this allows you to separate your customers and focus on those that bring with them the greatest value.
Finally, consider creating geographic segmentation of your market. If you’re running one of, for example, best SEO companies, or an international business, the location of your customer might not matter, as you’ll have coverage no matter where they are, but for a smaller business, targeting companies within your reach is vital for getting the most out of your resources.
So, where do you start with your marketing segmentation strategy? Surely, you can’t just jump straight in and start dividing customers blindly?
No, you won’t, naturally. You’ll first start with a good, solid database.
Your database will be an invaluable resource in trying to segment your market. This data will include purchasing behaviors, locations, employee numbers for companies, and everything you’ll need to create a perfect buyer profile.
That being said, you’ll also need data analytics tools to enact segmentation. 86% of B2B marketers are using some kind of data analytics tool, which speaks volumes about their utility and value.
In the end, all that’s left for us is to reaffirm what we said in the beginning – marketing segmentation is all about finding the right customer.
As we said, B2B companies have fewer clients to work with, so finding the right one is not only a solid investment but a partnership that can span for decades and benefit both you and your client.