Scroll Top

What Types of Market Segmentation Are Optimal for Your B2B Business?

What Types of Market Segmentation Are Optimal for Your B2B Business?

2 Case Examples Reveal the Complexity of B2B Sales

As a starting point to address the question of what’s optimal, we looked into the types of market segmentation that experts identify as relevant.   We analyzed the search term “types of market segmentation” and refined the search with “types of market segmentation for B2B.” In each case, we surveyed the most popular online resources.

Overall Types of Market Segmentation

For the first approach about general types of market segmentation, 20 popular online sources agree that there are five most common types of market segmentation.   

The five top-tier types identified by 70 to 100% of sources are:

  1. Demographic (identified by 100%)
  2. Psychographic (identified by 100%)
  3. Behavioral (identified by 100%)
  4. Geographic (identified by 100%)
  5. Firmographic (identified by 70%)

Less-frequently identified, lower-tier approaches include these 13:

  • Technographic (identified by 15%)
  • Generational (identified by 15%)
  • Seasonal (identified by 15%)
  • Transactional (identified by 10%)
  • Life stage (identified by 10%)
  • Value (identified by 10%)
  • Intent, Personal, Buyer Journey Stage, Price, Enterprise Market, International Market and Product-Related (each identified by 5%)

These types of market segmentation are suggested without necessarily distinguishing between business to business (B2B) segmentation and business to consumer (B2C) segmentation. 

As shown in the summary chart below, the resources we used were: SurveyMonkey, Yieldify, Lotame, University Lab Partners, Investopedia, Qualtrics, Question Pro, Demandbase, WallStreetMojo, Emeritus, remash, wrike, sixads, Indeed, learn.g2, commerce, instapage, FieldCheck, SurveyLegend and business.Yelp 

What Types of Market Segmentation Are Optimal for Your B2B Business?

What Makes B2B Segmentation Unique

It’s widely recognized that there are important distinctions between B2B segmentation and B2C segmentation. 

The business-to-business decision process is often characterized as complex. 

One source of B2B complexity is that frequently there are multiple decision makers involved from the client organization.  One recent study found that 63% of B2B purchases have more than four people involved.  While a smaller organization might have fewer folks involved, still there are often at least two people involved for significant decisions.  It’s also true that consumer (B2C) decisions can include multiple people, but most experts agree that the B2B market decision making and market segmentation typically includes more decision makers.  We’ll review a firmographics case example later in this article and see that there were five or more decision makers involved in that specific technology example.

Other differences may include a smaller universe of customers in B2B segmentation compared with consumer segmentation, as well as longer decision cycles for many B2B decisions, and more “rational” approaches and decision criteria for B2B.

We see this plays out when we examine the types of market segmentation approaches that are specifically classified for B2B segmentation.

Types of Market Segmentation for B2B

It’s interesting to notice that customer tier by profitability, value and spending rise to the top tier in B2B, along with needs-based.  Sophistication and customer tiering on goal are also frequently identified. Geographic segmentation is identified by only 20% for B2B, and psychographic is also less popular than it is overall.  Jobs to be done (JTBD), intent, key accounts and organization also emerge.  All of this gives plenty of options to consider for the best approach for a business-to-business segmentation.

The four most popular B2B types of market segmentation are:

  1. Firmographic (identified by 95%)
  2. Behavior (identified by 85%)
  3. Needs (identified by 75%)
  4. Customer Tier: focused on value, spending and profitability (identified by 55%)

Five middle tier market segmentation approaches for B2B consist of:

  • Sophistication (identified by 35%)
  • Technographic (identified by 30%)
  • Demographic/buyer person (identified by 25%)
  • Customer tiering: goal (identified by 20%)
  • Geographic (identified by 20%)

Thirteen less popular and thus lower-tier approaches for B2B segmentation include:

  • Job to be done (JBTD) (identified by 10%)
  • Psychographic (identified by 10%)
  • Key accounts (identified by 10%)
  • Intent (identified by 10%)
  • Persona / decision maker (identified by 10%)
  • Organization (10%)
  • Buyer journey (5%)
  • Customer type (5%)
  • Product/service (5%)
  • Business sourcing (5%)
  • Feature usage (5%)
  • Roles (5%)
  • Attitudes (5%)

As shown in the summary chart below, we excluded sources that were duplicative from the first list. In some cases, the same organization had identified specific types of segmentation for B2B, and in that case we included it. These sources were: leadspace, atomicrevenue, sopro, peertopeermarketing, Demandbase, b2binternational, elevationb2b, clearbit, SurveyMonkey, demandscience,, surveysparrow, zoominfo,, openstax, leadsatscale, vainu, adience, resultit and lookinla.

Typically, we find it’s helpful to consider several approaches, and it may be that a hybrid approach that combines more than one approach is the most applicable. 

What Types of Market Segmentation Are Optimal for Your B2B Business?

B2B Market Segmentation with Roles

It can be useful to understand the role different individuals play in their organization’s decision-making process and how they weigh in to select the firm’s suppliers. 

Miller Heiman classically identifies the following roles:

  • technical buyer
  • user buyer
  • champion or coach 
  • economic buyer

Types of Market Segmentation: Technical Buyer

As the name suggests, satisfying the technical buyer is an “ante” or requirement to even be considered. In some cases, there may be true technical differences that set one firm apart, but often, several firms meet the technical buyer’s antes and so the other decision makers weigh in. 

Types of Market Segmentation: User Buyer

The user buyer is the direct user of the product or service. The user buyer is tricky, as they can torpedo a firm’s chances if they feel that the product will be too difficult to use or cause them extra time and cost.  At times, however, the product or service in question will result in a major overhaul or elimination of the current user buyer’s work responsibilities, so there can be an inherent conflict in fully addressing the needs of the user buyer.

As an example, in one large corporation, an automated approach resulted in reducing the wait time for simulations from 30 minutes to five. The engineer complained,

Now I will have to do more work, as you took away the time I usually spend on Instagram while waiting for the simulation to run.”  

Types of Market Segmentation: Champions or Coaches

Champions or coaches help the supplier to navigate the internal landscape, even to the extent of tailoring the decision requirements to favor the firm they are championing.  

We believe that champions are still highly relevant for large, high-trust decisions.  Still, multiple studies suggest that most B2B searches and research processes begin online, and one study claims that 57-70% of B2B byers are through their buying process before contacting sales.

We often see instances of champion or coaches who bring in proven suppliers that they trust to successfully deliver the engagement. 

It’s not unusual that several firms competing for a major contract will have an internal champion, each of whom can vouch for prior direct positive experience with the supplier. 

So, in business to business, having a champion or coach doesn’t assure success as one or more of the competitors will also have a champion. 

One of the companies that I have the privilege to work with in Vistage brought this exact issue up last week as part of an overall assessment of how to improve its win loss ratio.  They couldn’t understand why they didn’t win a recent large assignment, despite having a champion.  The CEO said,

Dylan really wanted us to get the work, and was convinced we were the best option, and our price was very competitive (in fact lower than the competition). Still, we didn’t get the assignment.”  

In this case, the win loss feedback that they had professionally researched revealed that Dylan’s firm was looking for a larger supplier partner, and despite liking the Vistage company, was not convinced it had the bench strength to deliver the service.

All sorts of factors can come into play at this point. 

I can relate to my Vistage member’s experience from my own experience as a women’s business enterprise.  Once, while competing for a large US segmentation assignment at a German-based multinational, we were informed by the US leadership team that we had won based on the scoring criteria of a group of ten.  However, the assignment was not awarded to our firm, Insight to Action.  Instead, the selected partner would be a firm with male executives, with whom the German headquarters team would feel more comfortable.

Types of Market Segmentation: Economic Buyer

The economic buyer has “final say” and budget control.  While it might seem obvious that this is a senior leader such as the CFO or division president, in my experience, these individuals often ratify the recommendations that come from leaders on their teams that they hold accountable to deliver the work. 

While it takes some work, we find there is clear value in the roles-based approach to market segmentation.

Roles can get even more complex to understand in large, non-profit organizations where committees are involved and there is no clear final decision maker or economic buyer.  These situations often have longer timelines and can be very difficult to understand without investment in specialized practices to compete.

Types of Market Segmentation:
Firmographic and Demographic Case Example

In a B2B market segmentation study we led recently for a technology client, the end objective was to develop an overarching messaging approach to use across the product portfolio that would resonate with the target business decision makers. The most promising types of market segmentation needed to first identify the relevant decision-makers.

The starting point of the chosen firmographic and demographic definition of the business-to-business target was “a senior decision-maker at an organization with 5,000 or more employees.”  The target was prioritized based on title, such as Vice President of IT, the CIO (Chief Information Officer), Head of Cloud, the CFO (Chief Financial Officer) or the CTO (Chief Technology Officer).   

Senior titles excluded from the focus were: Head of Infrastructure, Architect, CEO, Partner or Principal and Head of Procurement.    In addition to the senior targets, IT directors also played an important role for decisions on software asset management and cloud spend optimizations.    

Putting this information together, one large customer could easily have five or more decision makers, including several IT directors, the VP of IT, the Head of Cloud, and the CIO.   This is a good example of the typical type of complexity found in market segmentation for large B2B organizations.

These individuals were selected as the target because they have decision-making responsibility over software asset management solutions, software monetization solutions, cloud cost management and optimization solutions, the cloud management platform, IT service management (e.g., ticket and incidence tracking), and IT asset management.

Another part of the firmographic and demographic definition was “industries that are investing in technology.”  The large customer organizations are strongly represented in financial services, health care, manufacturing, insurance, energy and mining, and technology and software.   By comparison, industries that were not as likely to invest were education, retail, entertainment and media. This additional specification may be considered technographic, though it is at the industry level, rather than the firm level.

Another major component of this B2B market segmentation was company revenues and technology spending. Company annual revenues for the 5,000 plus employee ranged from $1 billion to over $10 billion, with a corresponding technology spend ranging from $25 million to over $100 million for 76% of decision makers. In our experience, company revenues and number of employees are some of the more readily-accessible firmographic variables from leveraging online resources.

What Types of Market Segmentation Are Optimal for Your B2B Business?

Combining the firmographics market segmentation approach with the roles approach, for example, we might see the case that the champion is one of the IT directors, and the economic buyer is the CFO.

Types of Market Segmentation:
2-Sided Market Case Example

Another example of types of market segmentation comes from work we did with Colonial Life.  Colonial Life offers voluntary benefits through supplemental insurance to employees through the employer.  Popular products include insurance for disability, critical illness, cancer, accident, life, hospital indemnity, and dental and vision.

The first segmentation dimension assessed the employer customer groups.  With customers in both the private and public sector, and employee counts ranging from 10-49 to as large as 2,500+ as well as salaried and hourly employees, we used a three-tier approach to segment the employer market.  The first market segmentation cut was private vs. public, shown in green in the chart below, followed by employee count shown in yellow, and then salaried vs. hourly shown in white.

The second dimension of this market segmentation was the broker segmentation, shown in blue on the y axis.  In this case, Colonial was best aligned to work with small, regional brokerage firms along with its own brokers and direct sales force.   National brokers were important to reach the 2,500+ employee private employer and the consultants who service public sector employers. 

Colonial has a dedicated team focused on public sector customers to address their unique needs.  Here in Southern California, for instance, one of the Colonial leaders has been focused on this area for over 18 years.

Altogether, these created nine focus intersections or “sweet spots” for Colonial Life.  This is an example of a 2-sided segmentation using firmographics.  More information on this example is available in our article “Customer Segmentation Model for B2B Market.”

What Types of Market Segmentation Are Optimal for Your B2B Business?

Two additional B2B case examples from our work in the printing and media industries give insight into types of market segmentation. In one instance, the relevant B2B segmentation approach taken was to understand the customer’s intent and target audience. In the other example, the organization needed to set aside its existing customer segmentation based on internal measures and include prospects in the segmentation to get to new insights.

The Right Type of Market Segmentation Depends on Your Organization’s Goals

So, what type of market segmentation is best for your B2B organization? Obviously, that depends on the goals of the effort. For instance, is this for direct sales or for new product development?  Hopefully, the business-to-business segmentation case examples found in this post provide inspiration. We suggest exploring several of the proven approaches to find the one that is the best fit for your objectives.   

For additional case examples, visit our Market Segmentation Resources page.  Or dial into an office hour to chat with other executives.