5 Benefits of Great B2B Market Segmentation

The B2B landscape has been constantly evolving for the last decade. Modern B2B markets have started to reflect consumer markets and sales professionals. Those who have traditionally worked on a face-to-face basis with close client relationships are now seeing customers progress 70% through their buyer’s journey before even engaging a sales representative. As a B2B marketer, the need to adapt to the customer-centric digital market is very real. Luckily, there is an answer: Market Segmentation.

Before segmentation solutions, B2B marketers faced a struggle to truly know their target audience. Reliable information on businesses, such as contact numbers, addresses, and annual revenue, was not widely or freely available. Today, comprehensive databases with company details allow B2B marketers to gain richer, more trustworthy, data and, in turn, deliver more personalized, segmented campaigns to their prospects.

What is Market Segmentation?

The term Market Segmentation was first coined in 1956 by Wendell R. Smith. To put it simply, it is the process of dividing your data into subgroups based upon shared characteristics, traits, facts or actions.

The insights gained about these subgroups then inform the communication strategy with which you approach the individuals within each group. This results in more optimized targeting of prospective audiences and the ability to deliver a highly-personalized experience for existing customers.

There are four widely accepted forms of segmentation most commonly used among the consumer markets. They are demographic, geographic, psychographic and behavioral segmentation.

When it comes to B2B markets, of course, things are a little different. Instead of details like the name and age of an individual customer, or their hometown, religion, likes and dislikes, B2B marketers need to know about companies as a whole. This is where firmographic segmentation comes into the picture.

What is Firmographic Segmentation?

Some say, firmographic segmentation is the corporate equivalent of demographic segmentation; firmographics are descriptors that are used to aggregate companies or organizations into meaningful market segments.

Whilst there is any number of firmographic criteria that a B2B marketer could choose to attack, there are seven prominent features of firmographic segmentation that you should pay attention to:

  • Industry
  • Location
  • Company Size
  • Status
  • Performance
  • Executive Title
  • Sales Cycle Stage

According to research carried out by Clearbit, 50% of B2B marketers already use firmographic data to segment their email lists. You can gain access to firmographic data from firms like UpLead, ClearBit, and Datanyze, each of which claims to offer insightful, accurate and reliable business information to help you optimize your B2B marketing process. 

Benefits of Segmenting your B2B Prospects

Improves Business Focus

It was reported by B2B International that almost all B2B markets exhibit a customer distribution pattern that reflects the Pareto Principle or the 80:20 rule; a small number of lucrative clients dominate the sales ledger.

For this reason, it’s imperative that B2B marketers understand which leads are lucrative and require attention of the highest priority, and those that are likely to see a lower return on investment. It’s all about focus and time management to return maximum profits.

Market segmentation avoids wasted time by removing mass-marketing tactics. Segments are highly targeted, chosen for their competitive advantage, and analyzed to determine which methods, channels, and offers will optimize results.

These processes ensure that productivity is maximized and budgets are utilized with extreme efficiency, giving you the clarity to make decisive moves within your market.

Boosts Revenue

Firmographic segmentation for B2B markets delves deep into the structural makeup of a company. And it’s this detailed knowledge of your target market that gives you the tools to serve your segments with the content that they want to engage with.

According to research carried out by McKinsey, only 15% of B2B companies feel they have a total view of their customers and only 19% feel they understand their target segments’ customer journeys. Investing in segmentation and analytics technology is essential for B2B practitioners to meet the demands of their clientele, who operate in an increasingly digital world.

Choosing core segments, researching their needs and understanding the data available to you, gives your business the ability to predict and create highly-engaging content that uses your budget with extreme efficiency. FedEx, in their B2B play, saw a sales increase of 433% after investing in segmentation strategies that overhauled their complex database systems, profiled their target markets, and segmented them based upon location and industry.

Nurtures Product Development

Just like individual consumers, companies are always evolving – whether it be economic or political shifts that impact distribution costs and the taxation of goods, or personnel changes that cause downsizing or growth.

B2B buyers often form long-term relationships with companies, however, this does not mean that B2B markets are static; you need to ensure you do not become complacent when it comes to your marketing efforts. If you’re not careful, in today’s chaotic, non-linear sales funnel, copycat companies with a greater understanding of your target segment can easily swoop in and poach your customers.

Entrepreneur states that one of the biggest opportunities for B2B growth is the ability to bring value through innovation. Market segmentation is a strategic tool that ensures your business and its products, services, or offerings, can evolve at a rate that matches current and prospective client needs. Carrying out segmentation analysis to inform product development will give you the competitive advantage you need to sleep easy.

Optimizes User Experience (UX)

It’s no secret that the B2B landscape has changed drastically over the last decade; the traditional sales funnel is gone, digital content is the new top dog and the average buyer conducts an overwhelming amount of preliminary research before ever contacting a sales rep.

To succeed in 2020, digital is a must! And a fundamental part of any digital experience is top-notch User Experience (UX). UX incorporates the usability, findability, credibility, aesthetics, and value of your digital resources. Poor UX will directly impact your customers’ relationships with your brand, services, and the rate of conversion.

According to Lead Forensics, 73% of B2B sales transactions now involve millennial decision-makers, so, in 2020, digital UX has never been more important. This new wave of B2B buyers prioritize personal research over vendor interaction and aim to interact with sales representatives as little as possible.

Segmentation, based upon the sales cycle stage, for example, allows you to identify the types of information sources that are most likely to be used by your segment during each particular part of their journey. This, in turn, allows you to analyze your resources and optimize UX in these areas to ensure your customer has a great experience when engaging with your content.

Source: Trust Radius

Breaks New Markets

Making sense of your data is a huge part of market segmentation; companies often have masses of unorganized data clogging up their CRM systems. To begin the segmentation process you must cleanse your database. A clean database enables you to find trends and common characteristics that you may otherwise overlook.

It is common for companies to start out with a general knowledge of the areas where they have traditionally found success. For example, a chemical supplies vendor may have an understanding of its verticals within the construction and farming industries. However, upon cleansing and analyzing their data they could discover that a large portion of this data stems from the industrial cleaning industry. With this new information, they can create an additional segment to target.

Segmentation is the key to expansion, arming firms with the directional insights to begin researching competitors, segmenting needs, and putting together a go-to-market plan to break into this arena. Neilsen points to the segmentation success of GuideStar USA in new markets. The online data publisher successfully implemented firmographic segmentation to identify a list of 60,000 new prospects who are most likely to generate “higher than average revenue.” GuideStar also noted that the process created investment in their digital UX and acted as a catalyst for their product development teams. 


In B2B markets, personal relationships have always been paramount. Modern technology may have brought about an influx of changing techniques for marketers, however, understanding the wants, needs and communication preferences of clients is now more critical than ever.

B2B relationships are evolving; going digital does not mean an impersonal approach, but rather the ability to personalize, and target, with precision. Market segmentation allows your B2B business to deliver the best, both online and offline, and keeps your customers satisfied within an ever-changing market.

About the author:

Dominique Daly

Content Marketing Executive at Hurree.

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