Whether your business is B2C or B2B, there is no “one-size-fits-all” when it comes to marketing. Your customers want to feel understood, appreciated and that you care about their specific needs. So, trying to produce content that will appeal to everyone can do more harm than good as it may come across as generic or irrelevant. This can be avoided with audience segmentation.
Audience segmentation is the process of finding strategic subgroups within your target audience, based on shared behaviors, values, locations or characteristics, recognizing that different groups respond differently to marketing. By identifying subgroups within your target, you can focus on audience members who are most likely to complete a desired behavior and tailor your content to more manageable segments.
There are four primary types of segmentation for B2C and B2B companies: Demographic, Geographic, Psychographic and Behavioral.
B2B buyers desire high levels of personalization, at the same level as B2C buyers. A report by Salesforce indicates 83% of business buyers say “being treated like a person, not a number, is very important to winning their business,” which is right in line with the 84% of B2C customers who feel the same way. But B2B companies need to look at audience segmentation through a different microscope than B2C companies.
Why? Because customer motivations, processes and considerations are different.
Differences in B2B Audience Segmentation Compared to B2C
- Target audiences are smaller.
- Products and services are usually more complex.
- Customers often have multiple decision makers.
- Decision makers go through a more rational process.
- Buying cycles are different.
- There are no impulse purchases.
- Relationships matter more.
Rather than details of an individual, B2B businesses need to know about companies as a whole and should consider other types of segmentation based on business characteristics, like:
- Firmographic segmentation which looks at characteristics of businesses like industry, revenue, number of employees, customer type (B2B, B2C, Government), location and where they are in the sales cycle.
- Technographic segmentation which is the classification of customers based on their ownership and usage of technology. What hardware, software, tools and applications are they using? How are they using various systems or platforms?
- Generational and life stage segmentation which groups customers by generation (Silent Generation, Boomers, Generation X, Millennials or Gen Z) or by the stage of life they are in like getting married, having children, having aging parents or ready to retire.
- Transactional segmentation (RFM) which looks at spending patterns to identify your most lucrative customers and group them by behaviors like how recently they made a purchase, how often they purchase and how much they have spent.
- Needs-based segmentation which breaks your audience down by similar needs and/or product benefits, addressing things like problem-solving needs, functional needs, emotional needs and personal values alignment.
Benefits of Segmenting Your B2B Audience
Improves Business Focus
Market segmentation gives you a clearer understanding of what you need to focus on and what to avoid. Segmenting your audience helps you focus on what is important and meaningful by offering clarity, actionable insights, decisiveness, guidance and empathy.
Avoids Wasted Time and Money
Most B2B customers reflect the distribution of the Pareto Principle that roughly 80% of business comes from 20% of customers. Therefore, it is crucial to understand which customers are lucrative and require nurturing versus those who are likely to produce a lower ROI. With audience segmentation, mass marketing tactics can be exchanged for highly targeted, high-return strategies that produce the best results.
When you delve deep into the structure and values of your customers, you gain detailed knowledge that gives you the tools to create content your customers want to engage with. A survey by Mailchimp found that segmented email campaigns had open rates 14.31% higher than non-segmented campaigns. They also saw a 101% increase in clicks over non-segmented campaigns, and noted lower bounce rates, unsubscribes and incidences of spam reporting.
If you don’t know who you are targeting, your marketing efforts could be ineffective in creating a return. By segmenting your target market, you will better understand who your most valuable customers are, and you will stand out from the competition by tailoring your content to your customers’ needs, purchasing habits and decision-making criteria.