Segmentation tips for B2B marketers

05.20.2020

Segmentation is a bedrock principle for effective marketing. Yet, B2B marketers often don’t invest in it. It may seem too expensive, too complicated, or too “consumer-ey”. Segmentation can be all of these things, but it doesn’t have to be. B2B marketers can build an effective baseline segmentation using internal data and straightforward analytics.

Benefits of segmentation

As a B2B marketer, you can use your internal data to define segments that exist within your market based on shared characteristics, attitudes and behaviors among customers. With these insights you can better target sales and marketing resources to the segments of the market most likely to provide a return on investment. Those are buyers:

Willing to invest in solving the pain-points your solution addresses
With whom your value proposition resonates
That recognize and value your competitive differentiation

Segmentation establishes a shared understanding of the customer base within your organization. This can address the prestige/big customer blindness that comes when vendors view their customer base through the lens of their exceptional-outlier customers (prestige brand, size, high use of the solution) rather than recognizing what their typical buyer looks like.

Reasons to refresh your segmentation

Some B2B marketers have a segmentation in place already. Every segmentation has a shelf-life, and economic upheaval can shorten it. The significant changes underway in the economy highlights two reasons for B2B marketers to revisit their market segmentation.

First, the COVID-19 recession will reduce sales opportunities in many sectors. In this situation, Marketing and Sales need to use resources for the greatest impact. Reliable segmentation enables you to prioritize scarce resources to focus on the market segments most likely to buy.
Second, the recession may change customer segments in important ways. For example, some segments will become less attractive targets. The pain-points of a high-value segment may change.

Fortunately, most B2B marketers have enough data on hand.

Build segments from internal databases

Most B2B marketers have access to a raft of data about customers and prospects. Internal systems provide quantitative data such as:

Customer size (revenue or employees)
Customer vertical
Products / solutions used
# Products / solution used
Customer spend
Years a customer
Win rates

As a first step, look for simple differences between broad groups. For example, do the customers who spend the most with you come from a specific vertical, are they of a certain size, or do they use a specific set of products?

Much of this analysis can be done with readily available tools, like Excel pivot tables. More sophisticated analysis tools such as Q, SPSS or Tableau help to dig deeper into the data in search of hidden correlations and underlying dynamics.

Flesh out the segmentation with internal knowledge

Insights from the internal teams that regularly interact with prospects and customers can provide further context around the segments that emerge from the analysis of your quantitative data.

The sales team can provide insights into the questions buyers from different segments ask during the sales process, the barriers and objections voice, and what resonates most with them. Sales also knows which competitors come up in the different situations. Competitive landscape insights help determine the nature of the challenges individual segments face and their relative sophistication – does the segment tend to use commodity brands/products to solve their needs, or do they invest in new and innovative solutions.

The customer success and customer service teams know how different segments use the products and solutions. Simple information like communication preferences are valuable in defining content and go-to-market strategy for each segment. For example, customer service can identify whether Segment A prefers asynchronous digital communication while Segment D prefers to call a live rep.

The context your internal teams can provide will help you identify the job-to-be-done each of the segments is trying to address.

Fill gaps with external data

After analyzing their internal data companies sometimes turn to external firms to provide additional data and analysis. For some, the goal is to collect further data for the refinement of their segmentation scheme or to ensure it is validated in the market. Others seek help because they find their internal data lacking in detail or reliability.

Increasingly B2B marketers use voice-of-the-customer software such as LoopVOC that track text and sentiment from online reviews, support tickets, etc.

Market research firms such as Isurus are one of the most used external resources for segmentation analysis. Using an external research firm provides two primary benefits. They collect data from prospects (not just customers). And, market research firms use more sophisticated tools and analytical expertise than most B2B marketers have available.

Word of Caution – Start with Fewer Segments

As with any data analysis approach, there are a few pitfalls to navigate in segmentation analysis. Creating too many segments is a common trap. Most B2B marketers only have the resources to target 2-3 segments. A segmentation scheme that includes 8 segments provides more data, but not actionable insights. Another pitfall is creating segments that lack differentiated sales and marketing opportunities. They may have characteristics that make them different (e.g., size, vertical), but if you are going to use the same messaging, marketing, and sales strategies for each group, they aren’t segments from a tactical standpoint.

Big Picture – Using the Data

As with the other tools B2B marketers use to understand their customers – personas, buying journey mapping – segmentation analysis provides insights that can be used by different stakeholders for different purposes. Once you accurately understand the segments within your customer base you can:

Prioritize the segments based on their opportunity (size, needs, likelihood of success, etc.)
Identify the profile of your best customers
Create messaging that resonates with the segments most likely to buy
Inform the sales qualification playbook – Our best prospects display the following characteristics

Isurus recommends that all companies take the first step by conducting a segmentation analysis of their customer base using the internal data and resources they have available. For those that want to go deeper or simply need assistance Isurus is here to help.

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Additional Reading

Harvard Business Review: Rediscovering Market Segmentation

Isurus: Understanding Markets & Buyers

Isurus: Blueprint for Cost Effective Competitive Intelligence