When first thinking about market segmentation, many of us probably imagine different groups of consumers for retail and packaged goods brands. While there are countless consumer segmentation schemes out there, it is also possible to create valuable segmentation within a business customer audience.
Business-to-business (B2B) market segmentation is an advanced analytical approach used in market research to identify distinct segments of business customers (current and/or potential) for a brand.
This post will tell you what you need to know about B2B segmentation including how it improves B2B marketing and business efforts, why it can be harder with B2B audiences, types of B2B segmentation, and how you might want to approach it.
For more general segmentation help, check out our six easy steps to conduct customer segmentation.
So what’s there to gain from B2B market segmentation? Often the most significant benefit is better marketing to your target audience.
Establishing unique segments will tell you what messaging will resonate with segment members. For example, Segment A may prefer advertising that speaks to the customer service offered by your company while Segment B may react strongly to messaging around fast lead times.
The segmentation can also inform how to craft content for each B2B segment like helpful resources, white papers, and blog posts (like this one!).
Operationally, you can use B2B segments to improve internal research and product development. Knowing what features or services are preferred by each segment will increase the chance of success for current and new offerings.
Looking to start an all-encompassing customer experience program for your business customers? Read our Expert’s Guide to B2B Customer Experience Research.
B2B market segmentation is no doubt beneficial for many companies, but it can be challenging to execute. This additional difficulty is largely due to targeting business customers over regular consumers. Below are some key distinctions between B2B and B2C (business-to-consumer) segmentation.
More on the difference between B2C and B2B market research here.
As a business, you have several options for segmenting a B2B market. There is a spectrum of complexity ranging from simple segmentation (based on one variable) to advanced segmentation (incorporating tens of different inputs). Below are a few examples of how you might conduct B2B market segmentation.
On the simpler end of B2B segmentation, you can look at your audience based on their business profile. A basic but effective approach may be dividing up your market by company size or annual revenue. These facts are usually easy to come by, offering a low barrier to entry for those who want to test out a segmentation. The shortfall of this type of segmentation is that it does not provide much depth. You may miss out on critical nuances based on other factors.
To bring B2B segmentation to life, you may want to look into persona segmentation. A persona is a composite of a segment that describes who they are, what they do, and what’s important to them. This type of segmentation builds out the full picture of a segment member, helping you think about the entire segment in more realistic terms versus a collection of data points. You might collect psychographic information about B2B customer attitudes, behaviors, and feelings. This segmentation can help you draft messaging that truly resonates with your target audience.
Another segmentation that may work well with your B2B market is intent segmentation. This method aims to understand your audience based on differing levels of interest in your products and services. It may seem obvious that those with the highest purchase intent are the ones worth prioritizing. However, the work shouldn’t end there. Intent segmentation allows you to construct a holistic understanding of your best leads, learning how to reach them, when to reach them, and what discussion points will close the deal. For the segments with lower purchase intent, you can discover what it might take to make them more interested.
There are important steps to follow in any B2B market segmentation. Use the following milestones to achieve an actionable and reliable segmentation solution.
A key first step for B2B market segmentation is zoning in on your target audience. To get the most out of the study, include respondents from the market who represent your range of potential customers. Decide what questions will be used to qualify respondents who meet your criteria for the study.
It will also be useful to see where your customers fall within the segmentation solution. Be sure to include questions in your online survey that gauge awareness and usage of your brand, as this will help identify customers of your business and competitors. You may also want to supplement the total market with your own lists for a more sizable sample of your customers. This can be especially valuable if it is unfeasible to find your customers with online random samples.
Once you have amassed data on your target audience, you can begin the segmentation analysis. In a common segmentation scenario, you may cluster the data around the respondents’ needs and priorities. This will provide you with anywhere from three to ten segments who each have distinct motivations. Once you have solidified your segmentation scheme, you can apply it to your whole customer database and apply it in future research using a typing tool for segment assignment.
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