Market segmentation can be a deeply involved, often complex exercise for business-to-business marketing but offers tremendous rewards if pursued in detail. For some SMEs (small to medium enterprises), it is an often-overlooked aspect of successfully growing the business. As stakeholders start and ramp up their business, often with a necessary “take all comers” approach, dividing their customer base into distinct segments, looking at their strengths and weaknesses, can get lost in the day-to-day course of driving the business forward. But taking the time to analyze and understand which customers may genuinely fit your organization over the long haul can pay huge dividends.
At the highest level, business market segments include commercial enterprises, institutions, and government. Beyond that, sources generally agree and describe a market segment as a group of existing or potential customers with a common characteristic that explains or helps predict their response to a supplier’s marketing efforts. By dividing your current and potential customers amongst these characteristics, you can understand their needs more fully and tailor a marketing strategy to address them specifically. These more targeted marketing strategies could involve each aspect of your business’ 4 Ps (product, price, place, and promotion) and offer tremendous advantages over a more generalized approach.
Getting to know your customers’ needs and buying habits more fully
As any B2B marketer knows, becoming an indispensable resource for your customers is an ideal outcome. If your business is in the service sector, you want to attract and retain relationship buyers who value your service, knowledge, experience and seek long-term partnerships. For business product marketers, you desire those same relationships where price and discounts are tertiary considerations.
By carefully breaking down your customers into their relevant segments, you begin to understand their needs and how your organization can meet them more thoroughly. You may get to know each user, decision-makers, influencer, and gatekeeper in their buying process. What motivates them to say yes, or no? What are they looking for in a resource such as yours? How might you improve your products or services to fit their needs better and desired outcomes? Like any other personal relationship in your life, getting to know the other party’s needs can create a more lasting bond.
A more focused value proposition
As you segment your market and deepen your understanding of each customer type’s needs, your offering can become more focused and individualized. Instead of a “one size fits all” approach, you may realize that serving a particular market segment best means customizing your product or service.
A thorough needs analysis of each customer type may reveal fundamental aspects of your business such as lead time, hours of operation, unit discounts, and more that, if addressed, might open the door to more opportunities. At its extreme, market segmentation can lead to Account-Based Marketing, the most individualized approach to segmentation, wherein each customer is treated as a distinct segment, with a thorough understanding of their needs, and a set of products or services that are uniquely tailored to meet those needs.
More easily allocate business resources
As your business deepens its understanding of each market segment from a macro (NAICS-code) or micro (purchasing process and personnel) level, the resources required to succeed within that segment become more apparent and accountable. You may uncover that a particular target segment is accustomed to services priced or packaged in a specific manner. Can you meet those requirements? Is it practical and profitable to do so?
By segmenting their customer base, a business marketer may find that a dedicated, key account team is necessary for larger accounts in a particular industry to remain competitive and attractive. Do you have the personnel or resources to accommodate such a requirement?
Segmenting is a road to business-to-business marketing success
In every way imaginable for the business-to-business marketer, understanding your customers and their needs more fully can only help you succeed. Market segmentation is the way. Just like customer journey mapping, it deepens your knowledge of your customers’ needs. And informs your business on how to serve them in a more specific and ultimately more useful way. If you would like to begin or deepen your market segmentation process, we can assist you. Contact us at connect@methoddigitalmarketing.com. We’ll help put together a marketing strategy that will serve your customer relationships more thoroughly and help you grow your business.
