When reaching out to customers with an advertisement or a marketing message, it is essential to target the right market with the right message. If not – your message may reach thousands of people, but only a handful may be interested in your product, and you’d end up wasting a lot of your marketing budget. That’s why market segmentation is essential – to make sure your marketing dollars are wisely spent in targeting the people who are actually interested in your product with tailored messages to meet their specific objectives. ## Example of Market Segmentation 1. **B2C Market Segmentation -** Imagine you are starting a pet products company. Now, you can choose to advertise your products to everyone or segment your market by pet owners and non-pet owners but animal lovers. You can further divide the pet owners according to their pet to share customized content with them for better results. 2. **B2B Market Segmentation -** The same rules apply in the B2B domain, that is, dividing your market by common characteristics to understand their needs and perceived value to drive better marketing results. Imagine you have a consulting company that provides services for Salesforce CRM, Marketo, or Eloqua Marketing Automation Platform. Then you need to segment the market by companies that use either of these platforms. ## Benefits of B2B Market Segmentation In a marketing survey conducted by the [Data & Marketing Association (DMA)](https://www.emarketer.com/content/improving-audience-segmentation-is-top-campaign-management-goal) in North America in 2018, 62.0% of respondents cited better audience segmentation for ad targeting as their top campaign management priority. In fact, one could say that it is almost impossible to have a [marketing strategy](https://www.clodura.ai/ai-powered-growth-marketing/) without segmenting your market first because if you don’t do segmentation, you won’t know what to sell to whom. If you are a B2B firm, this means reaching out to customers who matter the most to your business and are also likely to stay longer and contribute significantly to your company’s bottom line. ### **Below, you can see some top advantages of market segmentation for B2B companies:** - #### Improves Campaign Performance With market segmentation, you can improve the performance of your campaigns by targeting the right people with the right message. Besides, by segmenting your customers, you also learn more about their preferences and needs, which can help you personalize your marketing campaigns better. With segmentation, it also becomes easier to focus on a market segment. For example, you may choose to focus your marketing effort on firms in a specific line of business in specific regions. - #### **Expands Your Reach** With geographic segmentation, it becomes possible to develop your market quickly by identifying interested buyers in new territories based on your existing customer profiles. - #### **Boosts Customer Loyalty and Retention** With market segmentation, you can learn more about the business objectives and challenges faced by your customers and directly cater to their needs to improve the efficiency of your sales script as well as build confidence in your brand that leads to higher retention and loyalty. - #### **Aids Product** Development With market segmentation, you can fine-tune your products to better meet the needs of your customers. For example, if your product is accounting software, can you add some new features to it to make it more useful for another market segment and add a new revenue stream to your business? With segmentation, you can also expand your market further by analyzing the behavioral data of your customers. So, if you have been selling offline all this while but your data shows that a large percentage of your prospects shop online – you may decide to open an online store to reach out to this segment of customers more effectively. In addition to the apparent benefits of segmentation for marketing, it also helps companies formulate other business decisions, such as pricing and distribution. However, market segmentation in B2B comes with its own sets of challenges, such as the complex nature of products or services involved, the number of decision-makers involved in the purchase, longer sales cycles, and the importance of cultivating personal relationships. Therefore, it is essential to know about the various types of market segmentation used in B2B before choosing the right metrics for segmenting your target audience. ## Top B2B Market Segmentation Strategies Here are five ways of market segmentation popularly used by B2B organizations: ### 1\. Firmographic Segmentation With firmographic data, B2B businesses can segment their market by categorizing firms along with relevant variables. This is similar to what B2C companies do to segment their customers according to demographics, but B2B firms rely on firmographic data to understand their target market better. In precise terms, firmographic segmentation can be defined as the classification of B2B customers according to shared company or organizational attributes. Five general categories of firmographics can be identified as: **Industry** Industry firmographics refer to information about an organization’s primary activities. This is the primary basis of segmentation to group firms that are in a similar line of business. **Location** The location of a firm can be used for market segmentation. City, state, country, continent – you can choose any of these factors depending upon your line of business. For example, a cybersecurity firm may offer different features in its software in different countries or regions, according to the challenges or threats faced by its prospects in those specific areas. **Size** Size firmographics enable segmentation based on the size of a firm – which could be determined by the number of employees or the revenue generated by the firm. Ideally, it makes sense to use both, the number of employees and revenue, as firmographic categories depending on your marketing goals. **Legal Structure** In firmographics, structure denotes the legal status of a firm. For example, is the company a sole proprietorship or an LLC? Also, how is it related to other companies? Is it an independent business, a parent company, or a subsidiary of another business? These factors will help you create targeted content for different types of companies, leading to better personalization and results. **Performance** How do you determine if a firm needs your product or service? One way is to measure the performance of a firm, such as revenue, profit, and loss, employee growth, etc. Now, if you find that a company has grown immensely, it is likely that they are looking for automation solutions to sustain their growth while reducing costs. On the contrary, a company showing significant losses may require a new solution to drive efficiency. As you can see, firmographic segmentation helps you group companies according to their common characteristics. It also enables you to understand your prospects better to create compelling marketing content that resonates with the targeted audience. Key benefits of this technique include: - Increased sales and ROI - Identifying new markets and revenue streams - Understanding current and prospective customers - Improving marketing content ### **TRY IT NOW:** [**GET FREE ACCESS TO FIND HYPER-FOCUSED FIRMOGRAPHIC DATA FOR SALES PROSPECTING**](https://bit.ly/try-clodura) ### 2\. Technographic Segmentation Technographic Segmentation is based on various hardware and software technologies used by the customers. Just like demographics reveal the habits of a prospect, technographic data shows the technology stack used by a prospect – which makes it easier to identify whether they’d be willing to invest in any new technological solution in the future. With technographic data, you can glean information about the tools and technologies used by a company, its marketing technology, etc. It also helps you identify prospects that use the products or services offered by your competitors. Such information not only gives you a competitive edge but also enables your salespersons to prepare for objections related to competition that may arise in the last stages of a deal. Besides, [technographic data in B2B](https://www.clodura.ai/blog/what-is-technographics-and-how-to-find-and-use-technographic-data-for-b2b-sales/) can also be used for account-based marketing, upselling, and market analysis to refine an existing product or develop new products. Especially for B2B companies dealing in technology and software, technographic data can be used for creating granular customer segments. You can achieve this by mapping the tools used by your audience to solve their problems with respect to the services or products offered by your company. You can also identify whether a prospect uses cloud-based services or relies on in-house IT infrastructure to refine your marketing message for the segment further. Imagine you have a consulting company that provides services for Salesforce CRM, Marketo, or Eloqua Marketing Automation Platform. Then you need to segment the market by companies that use either of these platforms. ### **READ NOW: [HOW TO FIND AND USE TECHNOGRAPHIC DATA FOR SALES](https://www.clodura.ai/blog/what-is-technographics-and-how-to-find-and-use-technographic-data-for-b2b-sales/)** At [Clodura](https://www.clodura.ai/), we provide our clients with high-volume technographic data that is over 99 percent accurate and updated. Such quality data helps B2B organizations to prioritize target accounts or identify the low hanging fruits in the market, leading to higher conversions and shorter sales cycles. Relevant industry updates also enable news-driven marketing campaigns, which translate into better outreach and first-mover advantage in the market. #### 3\. Needs-Based Segmentation Is there a point of [marketing a produc](https://www.clodura.ai/product/)t or solution to someone who does not need it? Or, would it make sense to market X, Y, and Z to a company when it only needs X? Today, prospects in B2B demand highly personalized conversations, and bombarding them with generic information will only harm your business. Instead, reaching out to prospects with need-based marketing campaigns is likely to yield better results. Need-based segmentation is centered on the philosophy that all customers are not created equal – enabling you to focus your limited resources on prospects that are potentially more valuable to you, based on their need for your product and the ability to purchase it (more about this in the next section). Besides, salespersons can also use need-based information to create compelling sales scripts focused on solving the challenges faced by their prospects. _How do you carry out need-based segmentation?_ Well, first and foremost, you need data to identify the needs and requirements of your prospective customers. Once you evaluate their requirements, using technographic data and other methods, match the needs of various prospects to your product or service offering and prioritize them accordingly. Based on this, you can also divide the prospects into segments that are most likely and least likely to need your product. You can further subdivide these segments according to the product features or services that are most likely to benefit them and send them personalized communications targeted at achieving their objectives with your product. #### 4\. Value-Based Segmentation Value-based segmentation is a method of prioritizing or grouping prospects according to the potential value they may bring to a business. It differentiates customers by their transactional worth by placing prospects with the same value level into individual segments for targeted marketing. To achieve such kind of segmentation, you must look at the previous purchase data of firms to determine how frequently and how much they purchase and what is the value of the items they are buying. Once you map the transactional worth of a firm with need-based segmentation, you can build a pipeline of high-quality leads that are interested in your product or service and also offer high transactional value in the long run. A value-based segmentation model also helps you in pricing your product optimally to optimize the profit from different market segments. Of course, to determine this, it is also essential to map the value delivered to a customer in addition to its transactional worth. #### 5\. Behavioral Segmentation As any experienced marketer would agree, understanding the behavior of your customers is the only way to improve your customer retention and loyalty. Besides, customer segmentation based on behavior patterns also helps in picking the right marketing strategy for every segment that is vital for creating a steady stream of quality leads. But how well do you know your customers? Are you aware of the type of content they interacted with or whether they opened your sales email or not? Did they click on your landing page but didn’t take any further action? Behavior tracking using analytics gives valuable insights into the needs and interests of your prospects and existing customers, which can be used for market segmentation and also identifying opportunities for upselling and cross-selling. For example, you can use behavioral market segmentation to answer the following questions and accordingly prioritize your leads and fine-tune your marketing conversations: - _What do they think about your company?_ - _How do they engage with your company?_ - _What benefits are they seeking from your product or service?_ - _Who is involved in the buying process?_ ## Closing Thoughts When you are competing in a [B2B market](https://www.clodura.ai/b2b-data-lists/), it is important to remember that all prospects and customers are not equal. If you treat the entire market as the same, you are going to waste immense time and money in reaching out to firms that are neither interested nor have any requirement for your product. Market segmentation is, therefore, a necessity for every marketing campaign to give it a razor-sharp focus. Of course, the way you choose to segment your market depends upon your business objectives and the industry you operate in. However, irrespective of the method you select, market segmentation is likely to reduce your cost per lead by allowing you to focus your efforts on the right target audience and also aligning your content with the type of user you are targeting. If you wish to improve your marketing ROI, use clean and accurate market data that is updated in real-time and customized to your business requirements.