Business market segmentation has some main variables which are used to separate the market. It’s not much different from dealing with personal segmentation, more commonly just referred to as segmentation but focused on consumers. It is a little more difficult to sort out. As you look at this list, you will note that there are similar points with personal (consumer) and business segmentation – with the exception of operational practices and business type.
- Location – Which country and the region does the business operate, and how many offices do they have?
- Business Type – What industry are they in? Do they have a staff? What size are they? What types of products do they sell? What type of technology do they use? Who owns it and what are they like?
- Operational Practices – Who makes the buying decisions in the company? Are they loyal to a particular brand? How fast do they make their buying decisions?
- Culture – Some businesses are early adopters of new technologies, and some are slower. How do they make decisions? Do they make decisions with emotions or data? Are they innovators?
- Goals – What are their overall business goals in terms of growth, marketing and so forth? Do they want people to be loyal to them?
Knowing these segments is different from knowing how to apply the segmentation to build relationships and increase sales. Once you divide the market into similar groups, you can get started with the education of the market to boost sales and conversions. Here are three things to keep in mind.
Segmentation Improves Business Decisions
Proper segmentation can improve customer acquisition, retention, response rates and more. It will help you evaluate the customer in a new way, including understanding the costs that will be incurred to market to them versus the potential earnings possible.
Segmentation Helps Identify the Best Customers
When you have the market divided, you’ll be able to determine exactly which portion of the market consists of your best and most promising customers. This can help you avoid wasting time with people who will never convert.
Segmentation Can Help Determine the Best Way to Market to Them
When you segment your market you can learn a lot about them, which will enable you to create marketing messages that are more targeted. Even though it’s all the same “market,” there are huge differences within each segment of the market. This makes it imperative to use different methods to send them information that is tailored to their demographic. When you make segmentation decisions you need to know why you’re grouping them together. Ensure that you have some sort of marketing decision to make based on that segment before you go forward. Determine the cost of resources, including time involved in your decisions. Using business segmentation to help drive marketing decisions will inform your choices, and will allow you to gain a huge competitive advantage over your competition.