6 Steps To Successful B2B Market Segmentation

B2B Market Segmentation (Criteria for segmenting business buyers)

Segmenting and targeting the right customers is critical for success of any lead generation process. As a matter of fact, defining your ideal customer is the starting point of any marketing campaign and initiative.

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Here are the six ways you have to consider when developing your B2B segmentation:

1. Geography: global, national, regional, local

Some companies sell worldwide while other sell locally. This criteria is generally a starting point for creating your B2B segmentation.

Once you decide where your target market is you can go into more details. Things to consider as well as additional variables when considering geographic segmentation are language and culture. For example, you can decide to focus on targeting globally only to the English speaking countries.

2. Company profile: number of employees, revenue size, years in business, industry, credit rating, ownership, technology used.

Depending on the purpose of your market segmentation you can segment your customers based on company profile criteria. Go through the customer profile variables and consider how important and relevant is each to your business. For example, revenue size can be relevant in some cases but not in other cases.

3. Purchasing process: price based purchase, approved vendor process, bid process.

Based on your business strategy and the way you do business you want to consider organizations with certain purchasing process in place.

4. Risk: risk takers, risk averse

The risk variable is important for some products especially when selling brand new products, technology driven products, new industrial equipment, outsourcing solutions and consulting services.

5. Product adoption stage behavior: innovators, early adopters, laggards.

When you are selling new products you want to target the innovators – these are the companies continuously looking for ways to adopt new products, processes and services and find new ways to improve their business. On the other hand other businesses may focus on selling the proven product and service concepts to the laggards.

6. Company organizational structure: centralized (corporate decision making), decentralized (branch decision making).

For selling big ticket items in most cases you need to deal with corporate buyers while in other cases you may want to target local buyers through company branches and local offices.

For new businesses and new products / services it takes a certain degree of experimenting with various segments and combination of segmentation criteria and of course continuous improvement in your lead generation and sales.

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While there is no right way and wrong way in creating customer segmentation in business to business, it takes time, analysis, tracking results, testing and monitoring outcomes and ROI to develop your ideal customer profile.

For existing products and services the process is simpler and faster. You can start with your existing customer base. Based on your sales transactions history you can segment your current customers into various segments and identify effective and profitable market segments.

For example, by performing customer analysis of different segments or using simple RFM analysis you can define the most profitable group of customers and their segmentation criteria. Next the process is straightforward in identifying similar companies in the market.

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