B2B customer and market segmentation is a critical step for any business aiming to improve sales performance and drive growth. In today’s complex B2B environment, understanding your market and grouping customers by shared needs or traits allows you to focus resources, refine your value proposition, and win more business.
Effective B2B segmentation means looking both inward and outward. Customer segmentation helps you group and serve your existing clients based on shared traits and needs. Market segmentation takes a broader view—mapping the wider market to identify untapped opportunities and prioritise where to focus next. Combining both approaches ensures you’re maximising value from your current base while also targeting the right prospects for future growth.
Below we outline our step-by-step process.
Why B2B Customer and Market Segmentation Matters
Segmentation is more than just a marketing exercise. It is a way to make your business more efficient and effective. By dividing your customers and the broader market into meaningful groups, you can target the right prospects with the right offer, personalise sales and marketing for each segment, allocate resources efficiently, and adapt to changing market conditions.
Unlike B2C, B2B segmentation must account for longer buying cycles, multiple decision-makers, and shifting customer needs. This makes a thoughtful approach essential.
For more on the differences between B2B and B2C segmentation and practical advice on firmographic and needs-based approaches, read our blog.
Step 1: Where We Make Our Money – Analyse Your Current Customer Base
The first step is to understand who you already serve. Start by downloading and cleaning your customer data. This gives you a clear foundation for segmentation. Look for patterns in your customer base by grouping them according to key factors such as:
- Revenue
- Margin
- Products purchased
- Company type
- Geography
- Channel
Adding data such as company size or industry can make your segments more actionable. If using mindset factors in your segmentation, make sure these can be quickly and easily assessed (preferably without needing to engage the customer). The goal is to create groups that you can approach in different ways or with different products.
Step 2: Headroom for Growth – Assess the Broader B2B Market
Once you know your current customer base, it’s time to look outward. Use industry reports and databases to estimate the size of each segment in the wider market. This helps you identify where there is headroom for growth and which segments are underserved. Identify untapped companies in each segment and prioritise those with the most potential. This step ensures you are not just serving your current customers well, but also targeting the best opportunities for expansion.
Sage Pay provides a strong example. They targeted UK SMEs by segmenting based on card payment turnover, vertical-specific pain points, and payment method preferences. Their account-based marketing campaign, which included predictive analytics and localised workshops, created a £1.6 million sales pipeline in nine months and increased SME market share from 6% to 11% in targeted verticals.
Step 3: How We Win – Understand Customer Needs and Competitor Positioning
Segmentation is not just about numbers. It’s about understanding what your customers and prospects really need. Conduct interviews or surveys with a sample of customers and prospects in each segment. Ask questions that get to the heart of their buying decisions and pain points.
Key questions include:
- Why do you buy from us?
- What would make you switch?
- How do you prefer to buy?
- What needs are not being met?
It’s also valuable to interview staff who have left competitors to learn about their strategy and positioning. This gives you a clearer view of the competitive landscape.
Step 4: The Hook – Build Segment-Specific Value Propositions
With your research in hand, you can now develop value propositions for each segment. Focus on the needs and pain points you have identified, not just your products and services. Use tools like the value proposition canvas to help structure your thinking. Keep messages clear and relevant to each segment, and test value propositions with a small group before rolling them out. This step ensures your offer resonates with each group and stands out from the competition.
Step 5: Most Effective Way to Service – Choose the Right Sales Channels
How you reach each segment is just as important as what you offer. Use what you know about customer value, buying behaviour, and competitor approaches to select the best sales channels. Direct sales may suit large clients, while digital channels may work for smaller, price-sensitive segments. Plan changes to minimise disruption for customers. Choosing the right channel can make your sales process more efficient and improve customer satisfaction.
Step 6: Review and Refine Your Segmentation Strategy
Segmentation is not a one-off project. After implementing your B2B segmentation strategy, review the results regularly. Ask yourself:
- Are you reaching the right segments?
- Is your value proposition effective?
- What can be improved?
Customer needs and market conditions change, so your approach should evolve too. Continuous review ensures your segmentation remains relevant and effective.
Conclusion
To succeed with B2B customer and market segmentation, start by grouping your customer base using factors like revenue, margin, geography, and more. Use market data to spot growth opportunities and talk to customers and prospects to understand their needs and how you compare to competitors. Build clear value propositions for each segment, choose the most effective sales channels, and regularly review and refine your approach. This ongoing process ensures your segmentation strategy stays relevant and delivers real results.
If you need support with any aspect of B2B customer or market segmentation, White Space Strategy is here to help. We specialise in market entry strategy, opportunity identification, competitor analysis, and more. Get in touch to discuss how we can support your next move.