These B2B customer segmentation examples highlight why companies should make customer segmentation a priority in 2021.
Understanding the Need for Customer Segmentation Examples
According to Insight to Action’s year-end survey, customer segmentation ranks third, after brand strategy and growth strategy. Additionally, there were nearly 2.5 times as many Google searches for the term “customer journey” as there were for “customer segmentation” in the past year.
Customer segmentation is frequently associated with mobile marketing, email marketing and app marketing, particularly for B2C (business to consumer). Highly sophisticated data analytics, including machine learning, enable targeted outreach based on behaviors and other variables. In addition to customers, brands will also segment prospects using proxies if they do not have the same data, targeting “lookalikes” of the most desirable segments.
In the B2B world, customer segmentation practices vary considerably. There is complexity surrounding decision makers in B2B. Often, one account will have multiple customers at the same organization. Within a typical B2B purchase decision, Gartner has estimated six to ten decision-makers, “each armed with four to five pieces of independent information.”
Customer Segmentation Examples for B2B
As a first customer segmentation example, selecting a brand strategy agency like Insight to Action may be a decision made as a team led by a CEO, division president or vice president, marketing executive, and/or insights or market research executive. Additional influencers can include sales executives, research and development executives and also the board of directors.
Many customer segmentation examples that we’ve seen in B2B focus on the entire organization or account and do not consider the decision makers within that organization. Some best practices call for B2B firms to deliver the right content to the individual buyer at the time they need it, using a “content playlist.” However, this level of targeted messaging is not a practice we’ve seen in application at B2B firms.
Common variables used to segment B2B customer organizations include:
- The Firm’s Current Sales in Dollars and Units, and profit with the customer (if they are currently a customer)
- Customer Total Revenues (total, not sales with your organization)
- Customer’s Growth
- Customer’s Employees (see Colonial example below)
- Customer’s Industry/Product Code
- Customer’s Financial Structure and Ownership (Public or Private, Municipal, State or Federal or International Organization, Nonprofit, etc.) (see Colonial example below)
- Customer’s Geography and number of locations/branches
A second customer segmentation example for B2B is Colonial Life. Colonial used two of the three more common variables, including company financial structure and ownership, number of employees and they also added a unique variable: employee type (salaried vs. hourly). Employee type is relevant for supplemental insurance.
A third customer segmentation example for B2B is soil amendment brand Holganix. Holganix had 14 different market segments, primarily in B2B and one B2C. The Insight to Action segmentation for Holganix included the following variables:
- Size, profitability, growth
- Needs of the segment (for soil amendment)
- Channel strategy to reach the segment
- Fit with Holganix vs. competitors
- Attractiveness of the segment, including pricing, cost to serve
In both the Colonial and Holganix examples, Insight to Action conducted primary interviews with prospects and customers, along with analyzing standard secondary data. Uncovering an actionable customer segmentation takes time, investment and a willingness to challenge the status quo. Using off-the-shelf variables (like customer’s revenues and number of employees) without customization or tailoring will fall short of these examples of customized B2B customer segmentation.
Looking ahead, market trends show more remote decision makers at B2B organizations. It will be interesting to see how B2B customer segmentation evolves. We’re already hearing about sales executives using new methods to build relationships without in-person meetings.