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With more and more B2B buyers doing their own research, enterprise sales teams are spending less and less time with potential customers. Gartner estimates that enterprise buyers spend only 5% of the journey with a sales rep.
In fact, meeting with suppliers only takes up 17% of the buyer’s time.
To further complicate matters, Gartner finds 6 to 10 people often involved in the decision-making process. So, while enterprise clients represent a huge potential to generate a high level of revenue, they also represent greater challenges to closing the deal.
To close more deals with enterprise clients, it pays to group your accounts and then craft materials and messages accordingly. This process, known as enterprise customer segmentation, recognizes that many customers may have similar wants and needs. These groups are called enterprise customer segments, and by tailoring your marketing efforts to these segments you can increase conversion rates and increase revenue from your enterprise clients.
In this article, we’ll not only answer the question, of what is an enterprise market segment but we’ll go beyond the meaning of enterprise market segments to dive into how you can segment enterprise customers and the benefits you can expect to reap. You’ll see real-world examples from companies that are doing it right. We’ll also take a quick look at digital tools you can use to market to the enterprise business segments you have identified.
What is Enterprise Customer Segmentation?
Enterprise customer segmentation groups customers by shared characteristics or traits. These traits or characteristics can be related to the products purchased, the industry they occupy, their business model, or even their geographic location or language. Segmentation looks different for different types of businesses. How you create your enterprise customer segments depends on your customer base, your products, and your business model.
Types of Enterprise Customer Segmentation
Not every company segments its enterprise customers in the same way. Here is a look at how three different companies created segments in three very different ways. While the segments and companies are different, they all have success in common.
Segmenting in action – segmenting by customer type
Let’s say you sell to both B2B and B2C customers. The B2B customer journey is quite different than the B2C journey, so it makes sense to break these customers into different segments. Even if they purchase the same products, they have different expectations for customer experience and they also have different order payment and shipping needs. One size does not fit all when selling to different types of customers.
SaltWorks is a major supplier of gourmet and specialty salts to manufacturers, food processors, and individual customers. They used a flexible B2B eCommerce platform to segment their B2C customers from their wholesale retail customers, industrial, and other B2B customers. The person buying a single package of bath salts gets a different customer experience than the buyer for a retail store that just needs a few cases of packaged bath salts. The purchasing agent for the bath products manufacturing company that buys salt by the ton gets a completely different customer experience.
Segmenting by customer type helps you tailor the customer experience to the expectations of different buyers.
Segmenting in action – segmenting by location
Maybe you operate in a highly regulated industry. The product and product formulation that can be sold in any area may vary widely, to remain in compliance. In an offline world, you would create catalogs and brochures specific to a geographic location. But most buyers aren’t doing their product research or buying offline these days. Most purchases, even the most sophisticated, begin with a Google search.
Azelis is a specialty chemical and food ingredients distributor operating in 56 countries. Like all major chemical companies, they faced challenges of changing regulations, sustainability, and supply chain interruptions. They found that by segmenting customers by location, they could offer personalized formulation and product enhancements in a digital setting. Through their Americas e-Lab, customers can connect with team members to solve problems, confident it will be appropriate to their regulatory framework.
In addition, Azelis offers a customer portal where customers can find high-quality technical information on products and formulation.
It’s a place to order samples, get quotes, as well as obtain information about existing orders.
Both the customer portal and the e-Lab experience customize the offerings by geographic segment, to ensure customers remain in regulatory compliance and are only ever offered products appropriate to their region.
Segmenting in action – segmenting by product
If you sell different products to different customers, it makes sense to segment by the type of product sold. Because different products fill different needs and solve different problems, the customers are different as well. When you segment by product, you’re only sending messaging related to products a customer is inclined to purchase. If you distribute building materials, roofing and flooring contractors both want to know about promotions for plywood or OSB while the roofing contractor has no interest in wood or tile flooring products and the flooring contractor doesn’t care about felt or shingles.
MidwayDental services portions of the American midwest with dental equipment and consumables. At the onset of the COVID-19 pandemic, they experienced a massive growth in demand for personal protection equipment (PPE). Since not all PPE buyers were dental offices, they set up a special website that was tailored just to PPE sales. By creating enterprise customer segments by product, they were able to serve medical offices with PPE and dental offices with dental equipment, supplies, and the PPE they needed. Messaging for dental customers wasn’t wasted on other PPE customers.
If you sell different products in different markets, it makes sense to segment by product sold.
Other Types of Segmentation
Other methods of segmenting customers aren’t as commonly used with enterprise clients. These forms of segmentation are better suited for retail sellers.
Demographic
Demographic segmentation breaks people down by gender, age, and possibly race or education level. Because these characteristics can change as the company buyer changes, they aren’t appropriate for B2B sellers. These segments are heavily used in B2C selling, however.
Psychographic
These segments are based on lifestyle, social status, interests, and opinions. Because these characteristics rarely influence business buying decisions, they are mainly used by B2C sellers.
Benefits of Enterprise Customer Market Segmentation
Breaking your customer base into segments allows you to tailor the message, the timing, and the offer to the audience. By matching the message to the market, you can home in on the messenger, the timing, and the experience. Some segments may respond more favorably to email marketing while others prefer social media marketing messages. You’ll find enterprise customer segmentation benefits your companies in many ways.
Increased brand recognition and relevance
Because your message is more relevant, it’s more likely to be read, recognized, and remembered. This enhances the recognition of the brand. In addition, the more relevant the message, the more likely it is to convert. More conversions drive more revenue and more profit.
Improved customer retention
If you need to control your B2B customer churn, enterprise customer segmentation could be the solution to your problem.
Customer segmentation ensures that the customer journey matches the expectations for the customer experience. As we’ve seen in the samples above, segmenting your B2B and B2C customers allows you to craft messages and journeys that serve both. Segmentation makes a customer feel valued. And a customer that says, “this vendor really cares about me” is less likely to go in search of a new supplier.
By strengthening relationships with customers in various segments, you improve your retention rates.
More effective messaging
Don’t try to sell flooring to roofers or dental equipment to radiologists. Segmenting by product if you sell to multiple markets lets you tailor the value proposition to the audience. Segmenting by customer type lets you highlight features and benefits valued by the customer. Geographic segmentation ensures you only offer products and services available and appropriate to the area.
From landing pages to email marketing campaigns and websites, customer segmentation improves the ability of the message to connect with the receiver.
Price optimization
When your customer segments vary widely, there’s also a chance that the amount they are willing to pay varies widely as well.
With customer segmentation, you can adjust prices based on what a segment is willing to pay. This ensures you never leave money on the table.
How to Segment Enterprise Customers: Step-by-Step Guide
Segmenting your enterprise customers isn’t a complicated process. Once you’ve committed to creating segments, the most difficult task will be to gather and analyze the data. Once you know your customers, creating segments and using technology to make use of those segments will be the easy part. Here is a step-by-step overview of how to create enterprise customer segments.
Gather your data
How well do you know your customers? Gathering data is the first step in creating customer segments. Comb through your customer database and look for common characteristics. Do you have customers that only buy one particular product? Can you group your customers by their industry? Are customers clustered in certain geographic locations? Are all customers enterprise size or do you have customers in the SMB category?
While it may be tempting to look solely at firmographic data such as company size, sales, or the number of employees remember that while this data is helpful, it doesn’t fully reflect the needs, behaviors, or expectations of your customers.
The more information you gather about your customers, the better you will understand their needs. This in-depth understanding is necessary to create meaningful customer segments.
Create segments
Now that you know your customer base, it is time to start sorting them out by common characteristics. It is okay for one customer to reside in multiple segments. For example, a single company might be found in a geographic location segment, an industry segment, and a product purchased segment.
Make sure the segments you select are meaningful for marketing and sales purposes. These segments will be used to inform customer experiences and communications as well as offers, promotions, and other marketing collateral.
Employ technology
Make the most of technology like your eCommerce platform and CRM to put these segments to work. With the right digital tools, you can craft eCommerce customer experiences designed for each segment, and target marketing campaigns and materials directly relevant to that segment.
Leverage technology to the hilt. Digital technology makes it possible to further personalize messages for each segment. For example, your eCommerce website platform should allow you to localize content for language, currency, and shipping options. Create price lists by segment or even customer, to maximize the profit per sale.
If segmenting breaks customers into groups, personalizing is hyper-segmentation – breaking customers into a group of one.
How OroCommerce Can Help You Implement Customer Segmentation in Your Business
OroCommerce includes a powerful segmentation engine right out of the box. There’s no need to extend the application or add functionality. In addition, it includes a native CRM (OroCRM) or you can easily integrate with the CRM of your choice.
Because OroCommerce allows you to manage multiple websites from a single back-end, you can create web experiences tailored to individual segments, brands, or geographic regions. The ability to create unlimited catalogs and price lists means you can display the appropriate products and prices for any segment.
Dunlop, a global player in the protective footwear industry leveraged the segmentation power of OroCommerce to create 12 country-specific websites. Each geographic segment now has greater transparency into stock levels and pricing, reducing the number of phone calls and emails traded with sales reps before an order was placed.
Conversion rates are up 40% and the average order value has increased by 10%. When you appeal to customers based on meaningful segments and make self-serve ordering easy, you reap the rewards. For Dunlop, OroCommerce made it happen.
Is it Art or Science?
Segmenting B2B customers is part art and part science. The art comes from understanding your customers well enough to segment them. The science comes in the data analysis to determine which segments perform the best.
Whatever you call it, just be sure to do it. Get to know your customer database well enough that you can see common characteristics in your customers. Then group your customers into segments. Put the power of digital technology to work in creating messages and experiences that will resonate with each segment.
Companies that use segmentation find they have higher conversion rates and increased order values. In addition, relationships with customers are strengthened.
Frequently Asked Questions
Why segment customers in B2B sales?
Segmenting customers is a beneficial tactic in B2B and B2C sales. It is particularly important in B2B sales where relationships are important. Enterprise customer segmentation tools allow you to identify segments and then create marketing messaging that appeals to the needs of that segment.
What are enterprise customer segmentation tools?
When it comes to segmenting your enterprise customers, rely on your B2B eCommerce platform, your CRM, and to some degree your ERP. By integrating your business system technology, you can rely on one solution as your single source of truth for segments.
What is the key difference between personalization and segmentation?
Segmentation breaks your customers into groups based on common characteristics. Marketing and sales efforts are then based on the characteristics of the group. Personalization, on the other hand, tailors the marketing and sales efforts to the characteristics of the individual, not the segment in which they reside.
How does enterprise market segmentation differ from B2C segmentation?
B2C sellers tend to rely heavily on demographic and psychographic segments for marketing purposes. This is because B2C sales are generally emotional and spur of the moment. B2B sales involve multiple players and have a longer cycle. While the demographics and psychographics of the actual buyer may change through employee turnover, the needs of the company stay the same.
What is customer segmentation analysis?
Customer segmentation analysis compares enterprise customer segments to determine which segments are the most valuable. Some segments may generate more revenue while others generate more profit. Unless you analyze the performance of each segment, you will not know where to focus your efforts.
How long before you start to see results from customer segmentation?
When done properly, you should begin to see results from your segmentation efforts quickly. Open rates, conversion rates, and even average order value may experience a bump.
