Sure, you could sit and sling the same pitch at every prospect on your list, but that’s not very effective. Think of it this way: say you’ve got two prospects for a new service you’ve got lined up. One of them is a fresh contact nobody in your company has ever talked to before. The other one has been a loyal customer for the past five years and just last month told you she was in the market for a service like yours. My question for you is this: would you send the same sales message to both of these prospects?
Of course you wouldn’t. The first prospect is totally cold, and the second one is someone you’ve developed a long-term professional relationship with. These different types of prospects call for a different type of sales and marketing approach.
That’s what we mean when we talk about segmentation. It’s a process where you identify various categories of prospects and decide which ones should be given which type of message. Through this process, you’ll be able to select the most promising prospects and focus special effort on them.
Segmentation is important because it’s unrealistic to expect that you can give every prospect the same level of sales and marketing effort. Prospects with low potential to pay off will get less attention than prospects who are A) more likely to buy, or B) likely to spend considerably if they do buy.
So much for segmentation and why it’s important for you and your business. Let’s talk about a few different methods of segmentation. As you’d expect, there are benefits and drawbacks to every method, and we’ll talk about those as well. We’ll even go into some detail about how advanced prospecting platforms like EasyBusiness can help with the segmentation process.
Types of Segmentation
As you’d expect, there are many segmentation methods. That’s why we’ve narrowed the field a little bit, so we can show you only the most effective methods for you and your business.
Segmentation by Firmographics
Firmographics (think “demographics,” but for businesses) include a wide range of factors relevant to your prospect organizations. These can include things like the size of the company, estimates of revenue, physical location, etc.
The underlying idea here is that businesses with similar firmographics will have similar needs, and therefore similar buying habits. Segmentation by firmographics isn’t a foolproof method (none of them are, after all), but it does allow you to divide fresh prospects into groups of similar buyers.
Segmentation by Industry
This method of segmentation is pretty straightforward. A lot like segmentation by firmographics, the idea here is that businesses in the same industry will face a lot of the same problems, therefore having the same needs and the same buying habits.
Segmentation by industry is another good method for acquiring new prospects and creating a prospect list that reliably has similar needs and buying habits.
As B2B marketers, we all know we have limited time and resources to devote to outbound. So when you reach out to your prospects, you want to make sure they’re the ones most likely to find the value of what you’re offering.
Before I go into tiered segmentation, I just want to say: it’s hard to do well. If you can do it accurately it can be the ideal segmentation method, but the truth is that very few companies can do it well.
With tiered segmentation, you rank your prospects in terms of how much revenue you predict your company can earn from them. If it’s done accurately, it gives you a clear order of prospect priority and lets you determine how much effort it’s worth for you company to acquire a specific company. (If you can reliably predict that company A will earn you twice the revenue that company B would, you’ll be willing to use more resources to pick up company A as a customer.)
The problem with tiered segmentation is that it’s hard to accurately predict how much a specific customer is worth over the long haul. EasyBusiness from Kompass can help our European customers with this process, though. Our Risk class feature allows you insight into a company’s financial standing, including revenue and turnover rates for the last three years. This should make a difficult prediction a little bit easier.
Segmentation by Needs
Segmentation by needs is based on a prediction of what a prospect needs right now, what their problems are, and what priorities they have at the moment. Ideally, you want to be able to come up with a group of prospects whose immediate needs your company can fulfill now.
The problem with segmentation by needs is that it’s very difficult to do well. Keeping an eye on a prospect’s press releases can give you an idea of their priorities. Still, it’s hard to predict a prospect’s level of need for your product or service unless you’ve already acquired them as a customer.
Segmentation by Buying Patterns
If you can understand the buying patterns of the company you’re selling to, you can tailor your approach to them. If you know that some prospects are under a contract with one of your competitors for the next six months, you know they aren’t an immediate high-priority prospect. On the other hand, if a company is undergoing rapid growth, you can assume they’ve got immediate needs for new services.
Segmentation by buying patterns lets you separate out the prospects who have a high potential for buying immediately from the ones who will take more time.
Segmentation by Channel Usage
Last of all, there is segmentation by channel usage. In our rapidly-changing digital era, certain companies and certain individuals will prefer different forms of communication. Some prospects will want to communicate via email, while others will prefer phone contact or contact over LinkedIn. Many startups prefer to do their communication through other means, including services such as Slack.
With segmentation by channel usage, you divide up your prospects according to how they like to be contacted. This is hard to know in advance, but it can pay off if you make it work. Prospects who are contacted in the way they prefer to be contacted will be more likely to look favorably on your business.
An advanced B2B marketing platform like EasyBusiness is helpful in the segmentation process. It’s a systematic tool that allows you to find all the relevant information on a company with one intuitive solution.
Since EasyBusiness allows you to search for new prospects conveniently, it makes an ideal tool for generating a prospect list. And since the powerful EasyBusiness search engine lets you input over 60 search criteria, you’ll be able to segment the list you generate at the same time you’re producing it.
Market segmentation is a crucial and potentially time-consuming business process. With EasyBusiness, you’ll be able to take care of it quickly and easily, allowing you to focus on what matters most—growing your business!