What statement best describes segmenting business-to-business (b2b) markets?
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To get maximum value from your marketing budget, get to the heart of your customers’ shopping motivations by splitting your market into subgroups – then you’ll be in a stronger position to serve your customers’ unique needs. Show
According to research from SALESmanago, 77% of marketing ROI comes from segmented, targeted and triggered campaigns. So, if your marketing campaigns are falling flat, do more market research to understand what makes your customers tick across each segment. One of the reasons market segmentation techniques drive more revenue for your business is because they can help you deliver personalized customer experiences. That’s why the best personalization tools let you segment your audience so you can:
In this blog, I’ll walk you through the four main types of market segmentation: And I’ll also cover: What is market segmentation?Market segmentation is a technique you can use to divide your customer base into subgroups based on shared characteristics, such as age, income, hobbies and location. The aim of segmentation is to tailor marketing efforts to your ideal customer profile (ICP), i.e. the customers most likely to buy your product or service. For example, a customer at an organic food shop is likely to have some or all of these characteristics:
Rather than wasting your budget on campaigns that target a broad section of the market, use messaging that resonates with a market segment made up of customers with those attributes. You should also consider which channels are likely to drive the highest engagement. For this hypothetical organic food shop, a Pinterest campaign marketing products with sustainable ingredients would be a strategic way to appeal to potential customers. Why Pinterest and not another social channel? Well, not only do 9 out of 10 Pinners browse the social media platform for purchase inspiration, it’s also used by up to of Millennial women and 40% of Millennial men. Why is a market segmentation strategy important?According to Bain and Company, businesses that tailor strategies to customer segments generate yearly profit growth of 15% vs 5% for businesses that don’t. In short, market segmentation can drive significant growth. Segmentation techniques are major profit drivers because they help you define your target market and qualify customers as users of your product or service. You can then provide the personalization that 73% of shoppers now expect from brands – sending the right message, through the right channel, at the right time. Market segmentation also helps you to:
4 Key market segmentation types & examples1. Demographic segmentation: The whoWidely used by D2C ecommerce brands, demographic segmentation is one of the most simple yet effective kinds of segmentation. You can use demographic segmentation to split your audience and create customer personas based on objective information, such as:
For example, if you segment your audience based on your customers’ income, you can target them with products that fall within the constraints of their budget. If you’re a small business or new to ecommerce, this is a straightforward type of segmentation with three key advantages:
Luxury goods manufacturer Montblanc worked with Yieldify to present a selection of offers across their website. They lifted conversions by 118% with a Father’s Day deal offering a free gift to customers spending over £200 – a threshold that took the spending expectations of Montblanc’s target audience into account. 2. Psychographic segmentation: The whyPsychographic segmentation is the process of grouping people together based on similar personal values, political opinions, aspirations and psychological characteristics. For example, you can group customers according to their:
Because these characteristics are subjective, psychographic is a harder segment to identify – but it’s also the most valuable. The best places to gather data for psychographic segmentation are through your audience analytic tools and social media, but you should also use surveys, interviews and focus groups to strengthen your customer understanding in this segment. Through psychographic segmentation, you can get a deep insight into your customers’ likes, dislikes, needs, wants and loves. You can then create marketing campaigns that resonate with their psychographic profile. Yieldify’s personalization technology helps you create on-site experiences that capture more psychographic information about your customers. For example, Heidi, a leading online travel agency, collected information about their customers’ preferred skiing style with layered lead capture experiences. 3. Geographic segmentation: The whereGeographic segmentation is the process of grouping customers based on where they live and where they shop. People who live in the same city, state or zip code typically have similar needs, mindsets and cultural preferences. The real advantage of geographic segmentation is it provides an insight into what your customers’ location says about a number of geo-specific variables, such as their:
As with all market segmentation methods, you’ll need to analyze your data to understand how each factor influences your customers’ shopping behavior. For example, people living in colder climates are likely to be in the market for winter clothing and home heating appliances. You can also use geographic segmentation to solve practical problems. With Yieldify, global fashion brand Nautica used geo-targeting to show different customers when they could guarantee Christmas delivery. Customers in rural areas had to order earlier than urban areas, so Nautica’s delivery countdown timers adapted according to the customer’s location. 4. Behavioral segmentation: The howBehavioral segmentation is the process of grouping customers based on common behaviors they exhibit when they interact with your brand. For this type of segmentation, you can group your audience based on their:
Gather this objective data through your website analytics and you can identify patterns in your customers’ behavior that help predict how they’ll interact with your brand in the future. Then you can leverage this hypothesis to provide personalized recommendations that address your customers needs. For example, Spotify provides its users with curated daily mixes based on the types of genres and artists they’ve listened to previously. At Yieldify, we use behavioral segmentation to deliver highly relevant and targeted campaigns based on behaviors including:
For example, Petal & Pup tailor their email lead generation messaging for visitors arriving from Facebook. Other types of market segmentation with examplesDemographic, psychographic, geographic, and behavioral are the four pillars of market segmentation, but consider using these four extra types to enhance your marketing efforts. Technographic segmentationTechnographic segmentation groups people based on the technology they use and how they interact with it. For example, you could segment early adopters of new tech and target them when you launch a new product to market. Alternatively, you could present customers with deals depending on what device they use to shop online. For example, you could show Apple products to consumers who use Safari. Generational and life stage segmentationGenerational segmentation expands on demographic segmentation by grouping customers based on their generation – Boomers, Gen Z, Millennials, etc. You can also segment customers by factors including marital status, home ownership and number of children. For example, Bank of America successfully incorporated life stage segmentation in their digital marketing strategy. They invited customers using their Family Life Banking program to specify their life stage circumstances when they signed up. From there, they directed customers to a microsite designed specifically for that segment. Transactional segmentationUsing transactional segmentation you can group customers based on their previous purchase interactions with your brand, including:
Firmographic SegmentationMost of the market segments I’ve discussed focus on D2C brands, but firmographic segmentation is a tool B2B companies use to create more impactful marketing campaigns. Firmographic segmentation is the process of analyzing and classifying B2B customers based on shared company characteristics, and is similar to how D2C marketers use demographic segmentation. Use these 7 factors to create firmographic customer segments:
8 Benefits of Market Segmentation1. Better ROI from marketingAccording to research from SALESmanago, 77% of marketing ROI comes from segmented, targeted and triggered campaigns. 2. Set your omnichannel strategyThe deep insights you glean from a strong market segmentation process will help you set an omnichannel strategy that better addresses your customers’ needs. For example, if a high percentage of your customers are from Gen Z, tailor your messaging across all channels to speak to their cultural and social reference points. 3. Build customer loyaltyMarket segmentation helps you qualify customers of your product or service and serve them with more personalized marketing campaigns that speak to their unique needs. A good market segmentation strategy will help you: What is segmentation in B2B market?What is B2B market segmentation? B2B market segmentation focuses on finding unique audience segments by examining common characteristics. By understanding similar traits, needs and behaviours, marketing can better connect with potential customers. This allows teams to focus on the most important segments.
What are some ways companies can segment B2B markets?The 5 Most Popular Methods of Segmentation for B2B. Segmenting Customers Based on Firmographics. ... . Segmenting Customers Based on Tiering. ... . Segmenting Customers Based on Needs.. When B2B marketers divide the market based on the characteristics of customers what type of segmentation are they using?Firmographic segmentation is the process of analyzing and classifying B2B customers based on shared company characteristics, and is similar to how D2C marketers use demographic segmentation. Use these 7 factors to create firmographic customer segments: Industry.
How B2C segmentation is different from B2B segmentation?A B2B target audience is smaller than a B2C target audience. In B2C sales the target market can include millions of potential customers, whereas a small number of B2B clients can generate 80% or more of sales. In the B2B process, a few clients can make a huge difference.
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