“A well-designed segmentation strategy can become a source of competitive advantage, and a cornerstone for building a brand and a business.”
~ Ben Cohen, American Marketing Association
Public speakers often warm up their audience and secure buy-in for their message by asking a question that highlights a shared commonality. The goal is to get people to raise hands or nod heads as they think, ‘me too.’ A good segmenting strategy achieves the same audience buy-in, but with your marketing messages. Essentially the people in your customer segments are together because they have some common characteristics, and these characteristics should enable you to craft distinctive marketing messages that resonate with them on a remarkably personal level. At first, this may seem like a tall order, but if you have a solid segmentation strategy in place, fully scaled personal messages are totally doable. In this blog, we’ll equip you with everything you need to know in order to develop and implement a B2B segmenting strategy that enables you to:
- Optimize sales and marketing efforts
- Invest resources in reaching the best targets
- Produce relevant messages for different customer types
Step One: Start With Your Data
The ongoing success of your segmenting strategy is wholly dependent upon the overall quality of your data. Clean, complete and enriched data enables you to segment your target markets with both confidence and laser precision. To ensure the data for your segments is ready for use, you should create a centralized source of truth by connecting data sources, such as your marketing automation platform (MAP), customer relationship management system (CRM) and any other tools in your martech stack that are gathering, storing and using customer data. In addition, you will need a way to view customer data now and over time, which you can easily do by adding a data dashboard to your stack.
Step Two: Do Some Data Digging
Once you have prepped your data for use, it’s time to dive deep into the details and begin looking for commonalities. In this step, you will want to focus on the attributes and characteristics of your best customers and create a ranked list based on their contribution to your company’s bottom line. For example, let’s say there are 1,000 customers in your database, and within that number, you identify 200 (based on past purchases) who are responsible for more than 70 percent of your sales. These are your best customers and your mission as a marketer is to find more people just like them. Using your data dashboard, you can begin comparing data within this group, such as purchase amounts, products/services purchased, titles, addresses, etc. These data points will become the foundation for defining your segments. In addition, this exercise will likely reveal information you want and need, but don’t have yet. If this occurs, consider filling in the blanks by purchasing data from a good third party data provider.
Step Three: Choose a Segmenting Approach
There are a variety of ways to divide the customers in your database into smaller groups or segments, but there are two main approaches: macro segmenting and micro segmenting.
Macro Segmenting is a quick and simple approach in which you put customers into broad general categories based on firmographics, such as industry size and revenue. A macro approach is segmenting in its most basic form and it is ideal for marketers with limited campaign budgets. However, just because it is basic, that doesn’t mean you can’t glean valuable insights from it that will inform your messaging and spending on future campaigns. Lastly, many marketers take a macro approach to segmenting with regards to top of funnel activity, and transition to a micro segmenting approach as prospects progress down the funnel towards a purchase.
Micro Segmenting, as the name implies, puts customers into smaller and smaller categories based on a variety of common variables that include everything from firmographics and geography to purchase habits and past interactions and behaviors. Companies intent on practicing Account Based Marketing (ABM) use a micro-segmenting approach. Developing micro segments requires time, research and care; however, most B2Bs find the extra effort worth every penny. When developing micro segments, it is not uncommon to distil a list of hundreds of prospects down to just a handful of people, who share the most in common with your best customers. Developing micro segments within your database for customers and prospects invariably produces a number of actionable insights that are easier to glean since the numbers are relatively small to process and compare. Micro segments are also ideal for performing a variety of A/B tests on all sorts of marketing campaigns, including those being developed for macro segments.
Be sure to check out Part Two of 6 Steps to a Stellar B2B Segmentation Strategy, where we will cover the final three steps you need to take in order to segment your markets with laser precision.