B2B Market Segmentation: Your Ultimate Guide

b2b market segmentation

Splitting your business customers into different groups is really important for success. By dividing your target customers based on what they need and want, you can better tailor your products, services, and marketing to each specific group. This is called market segmentation in the business-to-business (B2B) world. In this guide, you’ll learn all about why B2B market segmentation matters and the best ways to do it for your B2B company. Let’s dive in.

The significance of B2B market segmentation

B2B market segmentation means dividing your total potential customer base into distinct groups that share similar characteristics. 

The most common way to create these segments is by looking at company details like size, industry, and location. However, you can also group customers based on the technologies they use, their level of interest in your products/services, the roles of the decision-makers involved, or where they are in the buying process. You can even combine these different methods.

Why is B2B market segmentation significant?

Properly segmenting your B2B market is crucial for winning new business consistently, rather than wasting time and resources on companies that are unlikely to purchase from you. Instead of taking a shotgun approach, segmentation allows you to send targeted marketing and sales communications to each unique audience group, increasing engagement and conversions.

In the short term, you’ll see improvements like more emails opened, more clicks, and more time spent on your website. But the real value comes over the long run. As time passes, segmentation gives you a clearer picture of your different audience groups and their specific needs. This insight helps you enhance product development, differentiate your brand, build customer loyalty, retain more customers, and ultimately boost revenue.

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What are the differences between B2B segmentation and B2C

There are several key differences between B2C and B2B market segmentation. In short, B2B purchasing involves more decision-makers, a more complex and non-linear evaluation process, and an extended sales cycle – but this prolonged engagement also provides opportunities to really get to know your customers.

  • Multiple decision-makers: In B2B sales, you typically deal with several decision-makers at the customer’s company, rather than just one individual consumer. Gartner studies show that around 6-10 team members are usually involved in a B2B purchase decision, each with their own goals and challenges to address.
  • Multi-step buying process: While the basic customer journey (awareness, evaluation, purchase, loyalty) applies to both B2B and B2C, B2B sales have some added complexities. These deals often require internal approvals and budgeting – it’s not as straightforward as an individual making an online purchase. The B2B buying process is also frequently non-linear, with back-and-forth discussions.
  • Longer buying cycle: Due to the multiple stakeholders involved, the sales cycle for securing a new B2B customer is much longer than that of B2C, sometimes spanning several months. However, this extended timeline allows you to deepen the relationship and better understand the customer’s unique needs. 

How to segment your B2B market

Step 1: Break your total addressable market (TAM) into a target market

Divide the total number of potential customers into a specific group you want to focus on. Your total number of potential customers represents the overall opportunity to make money from your product or service. This includes all the customers who could benefit from your solution if they started using it. Instead of trying to reach all of them randomly, you should identify a particular group of customers to concentrate your marketing efforts on. This group is called the target market.

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To determine your target market, you need to define your ideal customer profile (ICP) characteristics. What industry do you want to target? What size of organization is most suitable? These characteristics will provide a broad overview and will help you begin the B2B market segmentation process.

Step 2: Identify your target account list (TAL)

The list of accounts in your target market is often too big to handle, so you need to create a smaller list called the target account list (TAL). You may already have a list of important accounts you want to sell to. You can start by using these accounts to build your initial TAL and then add more accounts later that represent the best opportunities for your business.

Here are three ways to expand and refine your TAL:

  • Further define your ideal customer: Think about who your best customer is. It’s okay to have a favorite customer, and you don’t have to tell anyone else. 
  • Use predictive analytics tools: There are tools that analyze your customer relationship management (CRM) data to identify companies that are likely to be your best opportunities based on your past results. 
  • Utilize behavior-based targeting tools: These tools rely on solid quantitative data, but unlike predictive analytics, they don’t necessarily need to come from your CRM. 

Step 3: Segment and prioritize your audiences

Divide your target accounts into different groups of prospects or existing customers that match specific marketing strategies. This is called B2B audience segmentation, and it helps you prioritize your efforts.

There are several useful methods for segmentation: firmographic, technographic, intent, persona, and journey stage. By using one or a combination of these approaches, you can concentrate on specific audiences within your target accounts. These are the companies that are most valuable and worth pursuing.

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How Atom8 B2B can help you excel in B2B market segmentation

Atom8 B2B Edition – BigCommerce Wholesale app streamlines your B2B sales funnel, enabling you to excel in market segmentation. The software makes it easy to send personalized marketing messages to different groups of customers. 

With this application from Grit Global, marketers can plan and run marketing campaigns across various channels like email, social media, and more, all from one simple app. The best part is that marketers can customize their marketing messages and channels for each customer group based on the latest customer information. This helps ensure the right marketing reaches the right audiences for better results.

Moreover, its automated quoting process ensures swift response times and enhances customer satisfaction. Moreover, intelligent sales staff assignments will help you optimize resource allocation to ensure efficient handling of inquiries. The hands-free company approval process eliminates manual intervention, facilitating seamless onboarding of new clients. 

In Conclusion

Market segmentation is an ongoing process that requires continuous refinement and adaptation to changing market dynamics. Regularly review and update your segmentation strategies to ensure they remain relevant and aligned with your business objectives.

If you need assistance in implementing B2B market segmentation or want to explore how our solutions can support your efforts, don’t hesitate to contact us.

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