Audience segmentation: why you need it and how to do it in five easy steps

Target groups are strategically identified customer groups who are interested in a specific product or service. They are the foundation on which every business is based.

Research and experience show us that “blanket” advertising or marketing does not work: You cannot sell everything to everyone. Without dividing your prospects into segmented groups, there is no sales growth.

In today’s competitive landscape, many B2B companies are reviewing their strategies. This often includes a more careful segmentation of target groups – both to sell more accurately and to make the marketing budget more efficient.

Therefore, it is important to have a deeper understanding of segmentation and how best to do it in order to generate higher sales.

Mistakes That Lose Sales

Offering goods or services to those who don’t need them is a waste of resources. If you are targeting a large audience, use the “if you are lucky” method.

For example, everyone needs windows, but for B2B marketers, this original broad audience (“everyone”) can be broken down into architects / designers, builders, hardware stores, dealers, and developers. One window could be used for resale, the other for soundproofing and energy saving, the third for interior decoration and so on.

The value of the same product is different for each segment of your target audience. A wide audience needs to be broken down into tighter groups for ads and news to work.

Personalized communication requires segmentation

Once a customer makes a purchase decision, the marketer’s job is to build personal communication with the prospect. The company that knows the customer better … wins.

Salespeople should be able to assign their customers to one of the defined segments based on their basic attributes without the possibility of a customer falling into several segments at the same time.

Segmentation enables marketers to develop ads that take into account the problems, needs, and expectations of each group. You can create proposals with an appropriate mix of products to meet the needs of a particular segment. And they can use special events, promotions, bonuses and discounts based on the behavioral and emotional characteristics of your target audience.

The key value of segmentation is this: Representatives of a key audience are more likely to buy your product or service. When you’re trying to reach a large audience, all of your time is spent guessing what a person would want if you could sell to them.

Audience segmentation parameters

When dividing a business audience into segments, you need to consider the region in which the business is represented. their skills, service level expectations, and product requirements; his motivation; and of course its decision-makers.

Here are examples of possible segmentation criteria. Using them, you can potentially create numerous segments:

  • Industry: niche and place in the market (raw materials, manufacturing, construction, retail, distribution, design, etc.)
  • Geography: location and network size (local player, federal network, global, etc.)
  • Pricing policy: low budget, high end / premium or a mixture of both
  • Product performance: Product mix and services required for execution
  • Company size: number of ongoing projects, sales volume, annual turnover
  • Personnel qualifications: specialist knowledge, experience
  • Skills: production / processing methods, automation systems, etc.
  • Behavioral parameters: degree of urgency and purchase volume
  • Buyer profile: supplier loyalty, risk assessment
  • Procurement steps: selection criteria, motivation to buy
  • Purchasing Committee: main decision maker
  • Beliefs: stereotypes, doubts, objections
  • Company history: new, current or returning customer
  • Cooperation with competitors

Much of this information can be found in public documents and online research, while some statistics are more subjective and rely on focus groups.

In contrast to the consumer market, the segmentation of target groups by companies is carried out less often – every 2-3 years. This is usually enough to make adjustments based on changes in demand.

Five steps to segmenting your target audience

1. Identify all possible criteria

Write down any parameters that can theoretically be applied to your target audience (use some of the ideas in the list above).

2. Perform a customer analysis

Divide the audience into groups:

  • Loyal: satisfied with the cooperation
  • Complicated: intermittent or only periodic demand
  • Potential: Currently working with competitors
  • Impossible: will never buy

3. Compare the data

Create a table for each customer group and segmentation criterion. Below is a possible example of segmenting loyal customers in a company that makes windows.

4. Highlight the audience segments

Select various criteria according to which your target groups differ. Look for options that influence or reject the purchase decision.

Here are some examples of audience segments from the table above:

  • Certified retailers with up to 50 employees. Product quality and service level are more important than the price.
  • Construction company with more than 1000 employees. Fast and inexpensive deliveries are important, similar to hardware stores, but this customer interacts with the end user in a different sales cycle, which means different points of discussion at the point of sale.
  • Window dealers with less than 30 employees. Price matters, dealers are known locally and have limited resources for marketing, training and retention of their sales force.

As you can see, at least three target audience segments were identified in just one industry. It is important to consider the smallest details as something that attracts one customer may push another away.

5. Choose a marketing strategy

Determine the specifics of your advertising campaigns: methods of influencing the audience, capturing and retaining customers, and handling objections based on the needs of the target audience.

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By filtering your target audience, you can achieve your goals faster. It protects your company’s resources by picking out non-targeted customers before the marketing process begins. Why try to sell to an audience that is misled by advertising and doesn’t end up buying anything?

Carpet bombing your audience is an outdated strategy. Businesses today should focus on specific segments to build their reputations and encourage long-term collaboration.

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