In simple terms, if you want to grow your business, you need to keep the clients you have, sell more to them, find new clients, and grow those new accounts too. Sounds easy, but we all know how much work this takes. And as if that weren’t enough, to be truly successful you also need a sound knowledge of those customers.
So, how to achieve this? The business-to-business (B2B) landscape is constantly evolving and although its key principles remain largely the same, what we are seeing is that modern B2B markets increasingly reflect consumer markets, with customers progressing up to 70% through their buyer journey before they even engage a sales rep.
As a B2B marketer, the need to adapt to the customer-centric digital market goes hand in hand with the need to acquire better customer knowledge, and the solution to this is market segmentation.
Segmentation: you talking to me?
Segmentation – or rather, excellent segmentation – is the key to success in B2B marketing. The term ‘market segmentation’ was first coined in 1956 by Wendell R. Smith to describe the process of dividing your data into subgroups based upon shared characteristics, traits, facts or actions.
Now we are in an era of proliferating intelligence, with comprehensive databases giving us richer, and more trustworthy, data than ever before, which in turn means we can deliver more personalised and segmented campaigns. The insights gained about these subgroups then inform our communication strategy.
Knowing your customers, knowing how they differ, and having a clear proposition that pushes their buttons – that’s what separates good marketing from exceptional campaigns.
The benefits to be gained from segmentation are clear: you can boost revenues by selling the right things to the right people at the time they are likely to need it most and save marketing costs (segmented campaigns have much higher proven ROI giving you better results for less spend).
Segmentation ultimately leads to conversation, in the course of which prospects and customers engage with you and give you information you may otherwise not know, which, in turn, can help inform your product development strategy, say, or reveal potentially lucrative areas for expansion.
So, how best to segment?
The rule of four (and more)
There are four widely known and accepted forms of segmentation -demographic, geographic, psychographic and behavioural.
In B2B of course, we have the added complication that buying and decision-making units can sometimes comprise up to seven people, so to market effectively you need to understand the group as well as the company as a whole – this is known as firmographic segmentation.
At bcm we know how complex B2B marketing can be. Not only do we need to align multiple members of a decision-making unit on their buying journey by tailoring our messages to the individuals, but the actual buying timeline is ordinarily much longer than in business to consumer (B2C) marketing too. And unlike B2C, impulse purchases are much less likely.
It is perhaps this that has led traditional marketers to believe that B2B buyers are more rational and less emotional than B2C buyers. This is where bcm thinks very differently.
Rationale and emotion in B2B marketing are juxtaposed. We believe B2B marketing is, in many ways, B2C x 7 – on average, seven individuals in a unit, all with varying emotional triggers and buying behaviours like anyone else.
And therefore, whilst firmographics will tell you about the company and demographics may give you some profiling information, such as gender, age and geography, we believe that psychographic and behavioural segmentation are also key to understanding the B2B prospect and customer – and, indeed, understand them on a more granular level than ever before.
Psychographics pertain to beliefs, values and reasons for being and the psychological aspects that influence consumer purchase behaviour such as lifestyle, social status, opinions and activities.
Behavioural segmentation is how someone interacts with your business and combining these two approaches ultimately enables you to map a prospect on a buying timeline and to understand how purchase-ready they are as you take them from unaware to aware, through to becoming a customer and then, hopefully, an advocate for your brand.
Simpler, quicker, cheaper
Sounds complex and costly and time-consuming? It can be. This is why many companies choose to work with a specialist B2B marketing agency to get this segmentation right and then distil the insight into relevant, timely and engaging communication, benefiting at the same time from the agency’s access to and knowledge of marketing technology that makes the process simpler, more cost-effective, and quicker.
Doing B2B marketing properly means knowing your customer better than your competition does. Get that right and there can be no doubt that you will reap the rewards.