Types of B2B Market Segmentation - Blog - Atomic Revenue

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1. Market segmentation is a pretty well-known exercise for marketing and selling B2C products and services. It involves categorizing your market by characteristics and building one or more strategies to connect with your audience based on certain traits. But what about B2B market segmentation?  B2B market segmentation is as important to growth as it is to B2C.  All businesses ‒ whether B2B or B2C ‒ should leverage segmentation as a means to identify waste and open up new opportunities. It is not just about marketing, it is a method to determine the messaging and missed opportunities; to create a solid, data-driven plan to go after those opportunities, and ultimately, increase revenue production.  For a better understanding of B2B market segmentation, in this blog we’ll discuss: What B2B market segmentation is and why it’s important. The types of B2B market segmentation and how to define the opportunities in each. How to measure outcomes once you utilize market segmentation. What is B2B Market Segmentation & Why is it Important? B2B market segmentation is the exercise of categorizing your target audience and/or buyer personas using various factors such as business type, motivation, location, firmographics, processes, the buyer’s journey, and your internal processes to meet the specific goals of pursuing new opportunities and measuring revenue.  Qualifying your segments and quantifying the outcomes is important as it allows you to measure revenue production (the amount of your investment and how much return you're getting on it) to see how you’re doing overall, where you could do better, and to drive revenue by working the opportunities. Types of B2B Market Segmentation & How to Define the Opportunities in Each There are three main types of B2B market segmentation: External Segmentation, Buyer Journey Segmentation, and Internal Segmentation, and each of these has segments within them. “Customer Needs – the needs you are addressing and solving for your customers (not your products/services).” XYZ Training) Validation ‒ Who is the best provider for this solution? (i.e. ABC Training Reviews) Brand ‒ Who is the brand that may solve my problem? (i.e.  ABC Training Testimonials) Remember, when you market and sell, you are always connecting with a person – not a company – so it is imperative to meet your buyers where they are when they’re ready to connect with you.  Your language and messaging will vary based on the need and where the customer is on their journey.  Internal Market Segmentation Internal market segmentation answers “where is the opportunity in our internal business processes?” Once you define the opportunities, assign quantifiable action steps to align each one. 1. Customer Type Segmentation There are different internal processes for each customer type: Loyal Customers Casual Customers New Customers Inactive Customers Internal processes include your people (internal and external sales reps, shipping and delivery personnel, leadership teams), technology (CRM, automation), and data (KPIs). Therefore, when looking at customer type segmentation, evaluate which internal processes can be improved to turn each opportunity into revenue. For example, do you spend most of your time trying to get new customers instead of nurturing loyal customers and organically selling more? What processes could be improved to make this easier?  How are you moving casual customers to loyal customers? What are you doing to get new customers all the way up the chain to loyal customers? What can you do to target inactive customers to get them to come back? Where are the opportunities? 2. Product/Service Segmentation  This segment is straightforward. Segment your products/services to understand how each is selling. Which products are most important and profitable, and which ones can be focused on later? What product or service segment makes the most sense for each external market segment?

   In Needs-based segmentation

2. “Qualifying your segments and quantifying the outcomes is important as it allows you to measure revenue production (the amount of your investment and how much return you're getting on it) to see how you’re doing overall, where you could do better, and to drive revenue by working the opportunities.” As you go through each one, keep asking, “How much market opportunity is in each segment?”  External B2B Market Segmentation Understand the following five external B2B market segments for your market and determine how much opportunity is in each. Ask, “what is the market potential in each segment, how well are we doing in each, and what can we do better?”  Geography – cities, states, regions, territories. Firmographics (demographics for companies) – company size, annual revenue, number of employees, years in business, etc. Demographics (buyer personas) – education level, average age, position within the company, years with the company, etc. Psychographics – buyer’s values, beliefs, behaviors, motivations, trends. Customer Needs – the needs you are addressing and solving for your customers (not your products/services).  Next, look at where your products and services are in the  Buyer’s Journey. This is also an External Market Segmentation, but one that very few companies use to segment their audience. Buyer Journey B2B Market Segmentation Knowing where most of your target audience is on their buyer journey is important to your messaging and segmentation, as there will be a different message for each step of that journey.   To segment by the buyer journey, start by defining where your customers are in their Buyer Journey.  It’s important to define this for each core customer need your products/services meet.  For example, a security company may serve the need for 1 safety for its employees and customers and 2 access control to restrict who is allowed to enter areas of the company. To analyze this segment, for each need, define which questions a consumer is answering on their journey. Awareness ‒ What information do I need to know about my needs? (i.e. safety in construction) Options ‒ What are my potential options to solve this need? (i.e. safety training, safety equipment) Solutions ‒ Why does this solution work best to solve my need? (i.e. ABC Training vs.

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