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Firmographic Segmentation
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Behavioral Segmentation
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Psychographic Segmentation
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Needs-Based Segmentation
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ABM Segmentation
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Here’s what else to consider
Market segmentation is the process of dividing a large and heterogeneous market into smaller and more hom*ogeneous groups of customers who share similar needs, preferences, or characteristics. It is a crucial step for any business that wants to develop a focused and effective marketing strategy that targets the right prospects and delivers value to them. However, market segmentation is not a one-size-fits-all approach, especially for B2B businesses that operate in complex and dynamic environments. In this article, we will explore some of the most effective B2B market segmentation strategies that can help you identify and reach your ideal customers.
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- Sacha C. Research Consultant, NeuroLeadership Institute | Neuroscience and strategy for business growth.
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- Hugo Letartre Search Fund | INSEAD MBA
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- Chiranjit Paul Centralized Delegation Organizational Management Strategist | MBA | IIM Kozhikode
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1 Firmographic Segmentation
Firmographic segmentation is the most common and widely used method of B2B market segmentation. It involves grouping businesses based on their demographic and organizational attributes, such as industry, size, location, revenue, structure, and ownership. Firmographic segmentation is useful for identifying and targeting potential customers that have similar characteristics and needs, as well as for segmenting existing customers based on their value and profitability. However, firmographic segmentation alone may not be enough to capture the nuances and variations within each segment, as different businesses within the same category may have different goals, challenges, and behaviors.
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- Chiranjit Paul Centralized Delegation Organizational Management Strategist | MBA | IIM Kozhikode
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In my consulting journey, I've often emphasized the importance of understanding a company's DNA. Firmographic segmentation is akin to this. While working with a tech startup, we segmented potential clients based on their size and industry. This allowed us to tailor our pitch, resonating with each segment's unique challenges and aspirations. But remember, while two firms might share an industry, their internal goals can vastly differ.
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- Vincent Jong CPO at Dealfront 🚀 Author of Product-Led Sales 📙
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Firmographic Segmentation is often the first thing people think about when defining segments, but it's also one that comes with many flaws. Industry categories for example, one of the most commonly used selectors, bundle completely different companies into one. The category software might include a company in consumer finance, in healthcare technology, and a CRM. Another common selector, employee size, has its own issues. One 200 people company can look very different from the next. What gives better results is to look at what companies actually sell, to whom, and what their org structure looks like. There are tools that allow you to do this but the most commonly used ones unfortunately do not.
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In my experience when I was one of the Top 3% performers on the biggest freelancing website as a B2B marketeer, Firmographic segmentation is the most successful segmentation way especially if your strategy is based on lead generation, automation and mass email marketing as it’s easily segment your target market and audience, I would only increase adding target professions or titles after successfully extract the desired list.
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- Edmond Kombat Lawyer| Entrepreneur| Transformative Leader| Harvard MPA 2024
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User feedback and ongoing innovation are excellent methods for B2B market segmentation. In my practical experience, user experience and customer behavior patterns serve as valuable indicators for segmenting customers, alongside their purchasing capacity. Nevertheless, it is noteworthy that nearly all customers tend to be responsive to a brand that provides them with functional, emotional, and social satisfaction.
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- Miranda Caldwell, MBA Business skills for specialty coffee. Helping you learn how to steer your business and career toward your idea of growth.
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Firmographic Segmentation can be useful if:- It's used as an initial filter of a deeper segmentation (i.e. making sure you're looking only at potential customers who could afford your products and services, for example).- The results are analyzed to show connections between attributes. This doesn't just help with the segmentation, you can get insight into these businesses at a macro level.- A target is identified before performing the segmentation exercise. This will clearly reflect back to you your assumptions and where they're right or wrong.
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2 Behavioral Segmentation
Behavioral segmentation is the process of grouping businesses based on their actions and responses to your products, services, or marketing campaigns. It can include criteria such as purchase history, usage frequency, loyalty, satisfaction, engagement, and feedback. Behavioral segmentation can help you understand how your customers perceive and interact with your offerings, as well as what motivates them to buy or not buy from you. It can also help you tailor your marketing messages and offers to suit the specific needs and preferences of each segment, as well as to increase retention and loyalty.
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- Sacha C. Research Consultant, NeuroLeadership Institute | Neuroscience and strategy for business growth.
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Behavioral indicators often translate to buying signals in the B2B space. For example, a company that frequently attends industry webinars might be keen on staying updated, positioning them as a potential early adopter. Combine historical purchase data with real-time behavioral insights to craft compelling narratives.
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See AlsoWhat is B2B Marketing? Strategy Guide for 2024The Three Main Approaches to Segmentation - B2B International USAThe 4 Pillars of B2B Marketing: The Lifecycle of a B2B CampaignA Guide to B2B Customer SegmentationFunny
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Behavioral segmentation is the process of sorting and grouping customers based on the behaviors they exhibit. These behaviors include the types of products and content they consume, and the cadence of their interactions with an app, website, or business.The benefits of behavioral segmentation include:1. Personalization: It helps you understand what channels they frequent and what type of messaging they respond to, so you can boost your conversions.2. Budget allocation: you know which segments spend the most and how they spend, you can better allocate your efforts to target them.3. Forecasting: you can identify trends and more effectively plan for the future.
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- Chiranjit Paul Centralized Delegation Organizational Management Strategist | MBA | IIM Kozhikode
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Actions often speak louder than words, especially in B2B marketing. During a campaign for a software solution, we analyzed potential clients based on their past software purchases. This behavioral insight allowed us to predict which companies might be open to a change or an upgrade, optimizing our outreach efforts.
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- Mukesh Jangid Helping Businesses Achieve 3x Growth with Strategic Consulting | Result-Driven Business Consultant | Personal Brand Strategist | I can help you to scale higher!
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Behavioral segmentation is like having a personal shopper for your marketing. It's as if your customers are telling you, 'I like this, I click on that, and I engage here.' So why not give them exactly what they want, just like a personal shopper selects the perfect outfit? With behavioral segmentation, your marketing becomes as tailored and delightful as a custom-made suit, and your customers will love the fitWhy it's so effective:- Precision Targeting- Real-Time Insights- Personalization- Customer Journey MappingHow to Implement:- Data Collection- Identify Behavioral Patterns- Segment Creation- Content and Messaging- Automation and TriggersCreate marketing campaigns that engage, convert, and retain B2B customers effectively
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- Arun Panangatt Senior Asset Manager @ Qatar Free Zones Authority | Asset Performance Management | Real Estate
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In the business-to-business domain, the complexities of behavioral segmentation are amplified. Factors such as varied motivations among multiple decision-makers, protracted sales cycles, and sector-specific buying habits complicate the process. Limited data availability due to fewer clients, contractual constraints, and stricter regulatory environments further add to the challenge. The emphasis on relationship management and custom solutions for key accounts often restricts the resources available for segmentation initiatives. These unique hurdles necessitate a more nuanced strategy for effective B2B behavioral segmentation.
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3 Psychographic Segmentation
Psychographic segmentation is the process of grouping businesses based on their psychological and cultural factors, such as values, beliefs, attitudes, personality, goals, and challenges. It can help you gain a deeper insight into the mindset and emotions of your customers, as well as what drives their decision-making process. Psychographic segmentation can help you create more personalized and relevant marketing content and campaigns that resonate with your customers and appeal to their aspirations and pain points. It can also help you differentiate yourself from your competitors and build trust and rapport with your customers.
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- Chiranjit Paul Centralized Delegation Organizational Management Strategist | MBA | IIM Kozhikode
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Beyond the surface-level data lies the intricate web of a company's values and beliefs. Once, while strategizing for a green tech firm, we targeted companies emphasizing sustainability. By aligning with their core values, our client's solutions became not just a product but a part of the targeted companies' mission.
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- Sacha C. Research Consultant, NeuroLeadership Institute | Neuroscience and strategy for business growth.
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While traditionally a B2C strategy, psychographic segmentation has found its footing in B2B. By understanding the culture of an organization or the core values driving a business, you can tailor your value proposition to resonate more deeply.
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- Mukesh Jangid Helping Businesses Achieve 3x Growth with Strategic Consulting | Result-Driven Business Consultant | Personal Brand Strategist | I can help you to scale higher!
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Psychographic segmentation is like unlocking the secret to your B2B customers' hearts. It's not just about what they do; it's about why they do it. Imagine tailoring your marketing so precisely that it feels like you're speaking their language, sharing their dreams, and standing by their values. With psychographic segmentation, your marketing becomes a trusted friend, not just a sales pitch!Why it's so effective?- Deeper Understanding- Emotional Connection- Content Relevance- Brand LoyaltyHow to Implement:- Market Research- Identify Psychographic Factors- Segment Creation- Content and Messaging- Channel Selection- Engagement and Feedback- Measure and Refine- Cross-Sell and Upsell
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- Puneet Dang 🎯Founder and CEO of EDZER | LinkedIn Profile in Top 1% | ✌🏻Helping Students and Freshers in getting Jobs | 📑 Building World’s Largest Interview Prep platform | Guest Speaker at Colleges | 25000+ Students Trained
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Psychographic segmentation offers a lens into the deeper motivations and values guiding businesses, paving the way for profoundly personalized marketing. By tapping into these intangible factors, companies can craft content that genuinely resonates and differentiates them in the market. Example: A B2B consulting firm identifies a segment valuing sustainable business practices. They then design campaigns emphasizing their eco-friendly strategies, appealing directly to those core values.
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- Joseph Nunez Minister Of Business, PA | Licensed Sales - Investments - Real Estate - Political Consulting
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Some ways to get started are by simply walking your market leaving your office and going door to door. Checking the pulse of the neighborhoods you are targeting. Checking the pulse on the competitors in the market.Qualifying buyers thru open ended questions. This should work if your a people person and have the right mindset.
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4 Needs-Based Segmentation
Needs-based segmentation is the process of grouping businesses based on their specific problems or desires that your products or services can solve or fulfill. It can help you identify the most important and urgent needs of your customers, as well as how they perceive and evaluate your value proposition. Needs-based segmentation can help you align your products or services with your customers' expectations and priorities, as well as to communicate your benefits and advantages clearly and convincingly. It can also help you innovate and improve your offerings to meet the changing and emerging needs of your customers.
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- Chiranjit Paul Centralized Delegation Organizational Management Strategist | MBA | IIM Kozhikode
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Every company has unique pain points. In a project for a logistics firm, we identified companies struggling with supply chain disruptions. By addressing this specific need with our client's robust logistics solutions, we were able to position them as the go-to solution for these companies.
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- Serkan Ferah 👾 Building Native Gamification APIs ▪️ Product Geek ▪️ Founder 🧠 Thinks a lot about: Product Design, Engagement and Growth
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Currently working on our GTM for my startup Native and we decided to use need-based segmentation:👉 It creates a better positioning framework for new products to understand the market and iterate quicker👉 Allows teams to be able to hone in on specific problems and clarify value proposition👉 Help build more engaged relationships with each segment as you understand their problems better
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- Puneet Dang 🎯Founder and CEO of EDZER | LinkedIn Profile in Top 1% | ✌🏻Helping Students and Freshers in getting Jobs | 📑 Building World’s Largest Interview Prep platform | Guest Speaker at Colleges | 25000+ Students Trained
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Needs-based segmentation zeroes in on the precise problems and desires businesses face, enabling alignment of offerings directly with customer expectations. By addressing these specific needs, companies can not only convey their value effectively but also adapt innovatively to evolving demands.Example: A cloud storage provider identifies a business segment requiring secure data access across global teams. They then promote features ensuring seamless, secure international collaboration, directly addressing this need.
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- Mukesh Jangid Helping Businesses Achieve 3x Growth with Strategic Consulting | Result-Driven Business Consultant | Personal Brand Strategist | I can help you to scale higher!
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Needs-based segmentation is like a tailor-made suit for your B2B customers. It's about understanding their unique measurements, style preferences, and dressing them for success. You wouldn't sell a tuxedo to someone heading for the beach, would you? With needs-based segmentation, you're the bespoke clothier of solutions, ensuring your customers always look their best in the business world!Why it's so effective:- Relevance- Problem-Solving Approach- Personalization- Customer RetentionHow to Implement:- Customer Research- Segmentation Criteria- Segment Creation- Content and Messaging- Channel Selection- Personalization- Measurement and Optimization
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- Vincent Jong CPO at Dealfront 🚀 Author of Product-Led Sales 📙
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Needs-based segmentation is especially important if your company serves multiple use cases or even products. A customer that comes in with needs that match Use Case A will need to be treated very differently from a customer with needs that match Use Case B in all parts of the customer journey. However needs-based segmentation by itself is not sufficient to understand your market. It would still need to be combined with other types of segmentation to define a more actionable segment that you can use to for example drive more demand for your solution.
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5 ABM Segmentation
ABM segmentation is the process of treating each individual account or customer as a separate market segment and designing a customized and targeted marketing strategy for them. It is a highly focused and personalized approach that requires a deep understanding of your customers' needs, goals, challenges, and opportunities, as well as a close collaboration between your sales and marketing teams. ABM segmentation can help you increase your conversion rates and revenue, as well as to build long-term and loyal relationships with your customers. However, ABM segmentation is also resource-intensive and time-consuming, and may not be suitable for every business or customer.
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- Chiranjit Paul Centralized Delegation Organizational Management Strategist | MBA | IIM Kozhikode
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Account-Based Marketing (ABM) is like crafting a bespoke suit for each client. For a high-end analytics tool, we identified and targeted specific enterprises, tailoring our approach for each. This hyper-personalized strategy led to deeper engagements and higher conversion rates. However, it's essential to ensure that the resources invested in ABM yield a positive ROI.
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IMO to conduct Account-Based Marketing (ABM) segmentation involves a strategic approach combined with a channel fulfillment approach. Start by aligning with sales teams to identify high-value target accounts. Then, analyze data and insights to categorize accounts based on criteria such as industry, company size, revenue potential, and buying intent. Create tailored marketing strategies and content for each segment, ensuring personalized engagement to drive effective communication and conversions with key accounts.
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- Mukesh Jangid Helping Businesses Achieve 3x Growth with Strategic Consulting | Result-Driven Business Consultant | Personal Brand Strategist | I can help you to scale higher!
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ABM segmentation is like having a personalized concierge service for your most important clients. It's about treating each account as a VIP, knowing their preferences, and curating an unforgettable experience. In the world of B2B, ABM is your golden ticket to delivering 5-star service and building lasting partnerships, one account at a time!Why it's so effective?- Precision Targeting- Personalization- Alignment with Sales- ROI MaximizationHow to Implement:- Identify Target Accounts- Deep Account Research- Segmentation Criteria- Segment Creation- Content and Messaging- Channel Selection- Personalized Touchpoints- Scalability
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- Adam Turinas Recovering healthtech entrepreneur and self-confessed ABM nerd
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In ABM, segmentation and more specifically, how you select accounts is critical.If you get it wrong, you will focus your marketing on the wrong accounts.There are three steps to define your best-fit customer segments and accounts:1. Determine accounts with best market for fo you based on revenue potential, likely sales cycle, geography, and other firmographics like tech stack.2. Develop a more nuanced set of filters, such alignment with your business objectives, and cultural values and fit with makes you special (e.g. innovation-orientation).3. Use intent data to determine who may be in-market for what you do.
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Hyper personalization in marketing has a long-standing track record. While it may entail a higher cost per account compared to broad marketing strategies, the likelihood of securing high-value accounts is substantially increased. Additionally, the expenditure per account is easily traceable, adding a layer of transparency. When executed strategically, ABM can be a cost-effective approach.Guerrilla ABM Success in Germany:We found success using guerrilla ABM in the German market, where major firms are often located in small towns. We strategically placed physical ad banners exclusively in the town housing the client's headquarters. This targeted approach ensured precise audience reach at a fraction of the cost.
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6 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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- Hugo Letartre Search Fund | INSEAD MBA
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One effective B2B market segmentation is Customer Tiering. This method segments customers based on their value to the business, such as their revenue or potential for growth. By prioritizing high-value customers, businesses can focus their marketing efforts on the customers most likely to drive revenue and growth.
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- Sacha C. Research Consultant, NeuroLeadership Institute | Neuroscience and strategy for business growth.
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It's important to stay updated with emerging segmentation strategies. For instance, technographic segmentation – categorizing based on a firm's tech stack – is gaining traction. Always be on the lookout for innovative ways to understand your audience better, ensuring your solutions stay relevant and sought-after.
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- Branko Glad Your Brand's Personal Trainer - Expert Guidance for Ambitious Marketers | Ex-Google, Meta, CEO, Startup Founder, Goldman Sachs
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As I mostly consult startups that are bootstrapping, the most important thing is to be as specific as possible about the niche market your product/service is serving. The greater the specificity, the more cost-effective and efficient your marketing and sales efforts become. For example: although your product may be well-suited to a wide array of industries, I recommend concentrating on the industry where you've experienced the most significant success. Additionally, narrow your focus to specific customer or buying segments within that customer and meticulously examine all the attributes delineated in the article (firmographic, behavioral, psychographics, etc.) and construct your target market based on this information. You’ve got this!!
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I believe it's a sound approach to establish segmentation based on product type, ticket size, and sales cycle. When dealing with high-value products and extended sales cycles, the qualification process becomes vitally important. In these scenarios, we often find it necessary to implement an Account-Based Marketing and Sales Approach, which demands a tailored strategy that can be time-intensive for both sales and marketing efforts.In the case of the mid-market segment, it's important to closely monitor industry trends and buyer behaviour within that specific industry and then adapt the segmentation accordingly.Conversely, for smaller segments, the primary strategy should revolve around reaching a broader audience.
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- Chiranjit Paul Centralized Delegation Organizational Management Strategist | MBA | IIM Kozhikode
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In the dynamic world of B2B marketing, staying static means falling behind. I've always believed in the power of continuous learning. With the rise of AI and machine learning, the future might hold even more refined segmentation strategies, allowing businesses to target potential clients with unprecedented precision.
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