Six B2B Targeting Methods Based on Customer Segmentation

b2b target market

Why should you target a specific type of customer and how is it done?
Six methods to help you differentiate yourself from the competition and increase sales internationally.

When it comes to international markets, which are getting more and more competitive over time, including the B2B software ones, one of the key principles of a marketing strategy is to focus.

There are many different aspects to a focused strategy. One of them is choosing to specialize in a defined segment of customers.

Why should you focus on a specific type of customer?

Many companies believe they have a unique B2B software solution, but the truth of the matter is in most cases there are many competitors who possess the same solution, not to mention some of them are well-known global companies with huge marketing budgets, tones of references, and in most cases broader solutions.

Marketing strategy is meant to identify your competitive advantage to get you the easier, quicker and most profitable sales. In order to do that you will need to stand out and compete with the global corporate monsters as well as smaller local businesses, which possess highly suitable solutions to their local market.

So how is it done?

No, not by using a creative logo, a stunning website or a bigger exhibition stand.
While all of the above wouldn’t hurt, it is essential to first come up with a marketing strategy. And for that, you will need to define your competitive advantage.

Competitive advantage is obtained, among other ways, by specializing in a specific niche of customers and providing this niche with its custom-made solution.

Take a look at the CRM field for example – this field contains hundreds of competing
companies, both domestic and global. Even if you have a solid product, that uses a SaaS model and has its own innovative technology, what are the chances you will win clients’ attention and get them to buy this product?

However, if you decide to target the hospitality industry for example, and develop a unique CRM solution designed specifically for this industry, while providing for the unique needs of its customers, you will fend off at least 90% of your competitors, which will leave you with a strong chance of standing out from other competitors’ generic solutions, and reach a higher closing rate percentage.

How do you categorize customers into different groups?

This process is called Segmentation – dividing a market of potential customers into groups or segments. Here are several ideas for customer segmentation which could help you with your targeting strategy:

  1.  Company size – the size of a company is usually determined based on its annual revenue or number of employees. It is common to separate Enterprise clients from SMB (Small and Midsize Business) clients. Enterprise customers are characterized as having a yearly revenue exceeding a billion dollars or having more than a thousand employees, whereas SMB customers are all of the businesses which haven’t reached that level yet. You can find out more about the difference between selling to Enterprise customers and SMB customers in the article “Software Enterprise Sales – Tips for Successful Preparation”. Precision is key here: the definition of SMB could potentially be too broad, thus resulting in greater exposure to competition. However, defining companies that have 50-250 employees as the target customers is much more accurate.
  2. Industry – each company is free to choose its own industry in which it will specialize: retail, finance, education, manufacturing, healthcare etc. If this definition is still too broad, you can always subcategorize it. For instance, a company within the education software field could limit itself to target only elementary schools and high schools without attempting to compete in the higher education market.
  3.  Technographics – segmenting and grouping customers based on the technologies and software that they use to run their organization (technographics). For example, the Database Performance Monitoring solution of a company called AimBetter, is intended for organizations with Microsoft SQL Server databases, thus the target audience is preset. Another example of this type of segmentation is a software which is programmed to be used as an extension of a specific technology. For example, an addon which can be used only with a Salesforce database.
  4.  User type – a company can choose to define its target audience based on the
    existence of a certain user type. For example: a company that owns a procurement management software would undoubtedly turn to organizations possessing this type of function. A recruiting software company would define customers as companies that have an HR recruitment function. There could also be an example for the exact opposite: a company which owns a Database Performance Monitoring tool could turn to organizations without a professional DBA despite specializing in the DBA field.
  5.   Regulation – the existence or nonexistence of regulation could also be a customer segmentation criterion. There are two possible scenarios, the first of which is if you don’t support a required standard, your target audience could be defined as the exception: industries or countries which don’t require the standard to be followed. The second of which is such existence of a standard could potentially be the defining criterion for customers. For example, a cyber security product protecting privacy or that is related to data security in any way could be affected by the existence of a regulation in terms of customer segmentation; if the product supports HIPPA (Health Insurance Portability and Accountability Act) it could lead to segmenting customers in the healthcare industry.
  6.  Domestic versus international – according to the product features and your field, you could potentially segment customers by the level of the company’s international spread: a company with a single branch versus a company with global activity in many territories. If we go back to the hospitality industry CRM example, your competitive advantage may be more prominent at global hotel chains.

As previously mentioned, this list isn’t limited to its contents and there could be added criteria to the segmentation process based on your product, industry and competition.

What do you do if a single characteristic segmentation isn’t enough?

In this case you could combine more than one parameter. For example: organizations with 250-500 employees from the retail industry.

If you have more segmentation suggestions, you are welcome to share your ideas with us!

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Beam Global, a marketing consultancy and strategic planning firm headed by Ori Ainy, advises B2B high-tech and software companies and startups on international marketing, sales, and business development and provides sales execution services. Beam (illuminate) in Beam Global refers to companies, which, even if they are small and unknown, can compete with large international companies by gaining global exposure and by projecting an image of up-and-coming professional big-league players that have the potential to lead in their field.

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