Segmentation for Growth in B2B: Why Do Segmentation?

Segmentation is a great tool to better understand your customers and identify untapped growth opportunities.

In B2B, this is especially relevant because you are dealing with business customers with their own unique clients and business approaches.

Whether you provide physical products or services, you need to understand your clients to continue to enjoy their business, grow your relationship, and acquire further opportunities. This is a key initiative that will allow businesses to move to the next level in the operation.

Over the next three blogs, we will bring you some insights from various segmentation projects we have worked on with our marketing consulting team here at Mezzanine Growth.

In today’s blog, I want to focus only on the “Why”. Why do you need to embark on this type of work?

Here are some key questions to ask yourself:

Where are the opportunities?

• Which customers do you need to target for growth? What do they want to hear from you to give you more business?
• Do you need to deepen existing relationships – if so which ones? Or do you need to acquire new customers – where and how?
• How do you target prospect customers? What do you know about them that will help you tell them what they want to hear?
• Which customers are profitable? Why? Do you have other customers that could grow into that kind of relationship with you?

How customer-centric is your organization? How well do you know your customer?

• Can you market a targeted suite of your products or services to customers who actually need it rather than marketing everything to everyone?
• Do you know your customers well enough to define a series of unique groups based on their needs?
• Can you communicate with your customers differently based on these unique identifiers?
• Are your unique profiles based on their transactional behaviour with you, or do you know more about them as customers? (e.g. Do you look at your clients based on how many products they purchase from you?)

Are you looking to make changes to the products and services offered or to current processes?

• Do you know how your customers will react?
• Will this be applicable and helpful to all of them? Or just some of them?
• What do they want/need to know to make decisions?
• What should you communicate to them? How?

Many companies look at revenue-based segmentation: your top revenue generating clients form a particular profile or segment. You should treat your top clients differently – they buy enough from you to deserve that kind of attention. But those who do not do much business with you may do a lot of business elsewhere. They may be big to other vendors or small but growing steadily. Segmentation, to be meaningful, needs to be based on who your clients are, not who they are to you. I will discuss the details of doing the segmentation work in my next blog.

If you don't know the answers to most of the questions above, then you may not know enough about your customers. If you communicate with all your customers the same way, many will not pay attention, because the messages are not relevant to them. This leads to loss of loyalty, loss of advocates, and shallower relationships.

The beginnings of segmentation always start with looking at the relationship your customers have with you. But that is only the beginning.

Meanwhile – have you done segmentation work within your company before? Why did you do it? What were the results?