Sunday, June 29, 2014

B2B Audience Segmentation Strategies that Work

As companies develop buyer-centric communication, one of most important questions is - how do we effectively group buyers into segments? We perceive that somewhere between the one-size-fits-all dinosaur and the unicorn-like "market of one" exist segmentation strategies that work better than others. But which ones? The secret is discovering self-identifying groups.
 
Great segments are built around groups that have naturally formed and are already connected.
 
For B2B marketers, the most effective audience segmentation strategies are vertical industry (e.g. hospitals, banks, retail), job function (e.g. CFO, head of HR, VP of Analytics), and geography (e.g. location, language, culture). In some cases, communities of interest can also be valuable. Communities of interest evolve around passions and may exist only online.  Examples of communities of interest relevant to B2B marketers may include those interested in security or privacy or a tech company's installed base. These attributes are ones that buyers will not only easily recognize about themselves but tend to be the stimulus for group formation.
 
Using self-identified groups as a primary segmentation strategy has two huge benefits.
  • Content will be more relevant and can be leveraged and streamlined. Self-identifying groups such as the ones described above respond to the same value propositions. They tend to have similar opportunities and/or problems. They will have similar compelling reasons to buy and are served by similar solutions. They tend to have similar business models, organizational structures, and environmental conditions. They share a common vocabulary. They ponder the same questions. They read the same editorial. They understand the same stories; respond to the same examples and analogies. They react to the same warnings. You can create highly relevant, effective, content and sales messages for these groups and that content will work hard.

  • The social network will market and sell for you. People with the attributes described above (vertical industry, job function, geography, communities of interest) are connected in social networks.  They go the same trade shows and recruit each others' executives. They respect the same experts and analysts and use the same suppliers. Social media has revealed to the world what we all know from our own buying experience - people rarely make big decisions by themselves. We seek help and advice from those we trust. We look for stories about how "people like me who have had this problem" have succeeded or failed. We collaborate with like-minded adventurers to try something new.  Imagine your message as a small marble. Throw your marble onto a Kansas wheat field.  Throw another. What are the chances that those two marbles will hit each other? Now imagine throwing your marbles into a shoe box. They bounce into one another with the slightest jolt.  Already connected groups create an echo chamber that can dramatically extend your own outreach effort
 
Consider company size, buying role, and risk profile as secondary audience segmentation strategies.
 
  • Buying role and risk profiles are very useful but used alone are insufficient. Within the overarching audience segmentation strategy, you may want to create sub-segments such as different kinds of buyers and influencers (e.g. financial buyer, technical buyer, decision-maker, researcher, or advisor) or risk profiles (e.g. early adopter, majority, conservative).  Content will be less relevant and you will get virtually no support from the social network. Both of these segmentation strategies are helpful. Buying role helps identify the different objectives and questions that must be answered by content. Risk profile is useful for content tone.  For Early adopters tend to respond well to opportunity-oriented messages ("look how great you can be!") whereas conservative companies tend to respond well to risk-avoidance messages ("look how much pain you won't feel!"). However, unless you are a very large company with brand dominance and a horizontal solution, these strategies are less effective by themselves for winning new business than those described above.

  • Company-size segments help sales but not marketing. Dividing buyers into tiers defined by company size such as enterprise accounts or small and medium sized business (SMB) may be a useful strategy for some business decisions. It informs sales management tasks such as territory definition, quota setting, and sales methodology selection. Company size is also useful for pricing strategies. However, Wal-Mart and GE have little in common other than size and complexity. However, company size provides almost no support for audience messaging.
 
For B2B audience segmentation strategies, your ideal group is the triple crown of vertical, functional role, and geography, or in some cases, communities of interest.  Your particular situation may have some unique requirements.  However, whatever segmentation approach you consider, make sure it passes the litmus test – self-identify as a group that experience similar problems and shares a social network.

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