The key differences between B2C & B2B Sales Market Segmentation

The key differences between B2C & B2B Sales Market Segmentation

A word of caution, this topic can be very tricky as there are various schools of thought around what is a segment and how to segment, with Marketing Segmentation being the most well known in business circles. However, for the purposes of this article, I want to focus on an area that is less well known but equally important – Sales Market Segmentation with a particular emphasis on B2B sales.

At Barrett, we do a lot of work with B2B sales and marketing teams in helping them define their sales market segments so they are very clear about how they want to work with each segment and why customers should choose them, leading to creating compelling value propositions. It’s very important that business have clearly defined sales market segments so their sales efforts and marketing efforts are very targeted.

Once B2B teams have defined their sales market segments they can then identify specific types of buyers within these segments – what we call Micro Segments.

Getting your sales market segmentation right is critical to getting the right traction fast because having a ‘splat’ strategy (going after everything that moves) in B2B sales is just as bad as trying to reach everyone and anyone in a B2C strategy because everyone ends up ‘spinning their wheels’. As Michael Porter, the grandfather of strategy says ‘Good strategy is what you leave out’.

The most common issue with B2B sales market segmentation

The most common issue we come across is that our B2B clients are using customer personas – the type of individual they want to sell too – as their starting point when it comes to Sales Market Segmentation. This creates confusion in the sales teams as they are told to focus on individuals to sell to when they are actually selling to businesses that usually have a range of individuals within them. Let me explain further.

The area of customer segmentation is tricky for everyone because it has traditionally relied upon traditional B2C marketing. Here is an explanation that hopefully goes some way to helping you and your business get this right for the right reasons.

Traditional marketing and B2C personas

Traditional marketing segmentation is focused on demographics – the social and economic factors of people – and is based on B2C marketing where you have huge groups of people you need to narrow down to get engagement with, usually using advertising strategies as a way to ignite interest – a one-to-many strategy that is much more cost effective. This is why we do individual personas in this space.

Focussing on B2C personas means that defining each persona is relatively uncomplicated as we are dealing with a type of person.

In the 1970/80s, B2C marketing noticed that certain types of people collected around brands i.e. people who drank Budweiser smoked a certain brand of cigarette and liked certain sporting events for example. This is where the sponsorship of events, usually sporting events started to take off. Brands like Nike started sponsoring athletes, and Rebook sponsored events. We can see this now with the likes of Red Bull and many others.

This information added a whole new layer to basic demographics and is super useful in B2C sales and marketing.

Segments and B2B Marketing and Sales

In B2B sales we are still talking to people; however, they are now representing businesses, not necessarily their own interests (as in B2C). It is true that some people will choose specific well-known brands to work with to save face and create a ‘safe bet’ based on the perceived reputation of that company; however, the people are now aiming to work with and make sales with are looking to solve business problems and realise business opportunities. Therefore B2B sales and marketing teams and their clients and prospects have to think about what is in the interest of the company.

We are no longer talking to people who are ‘married with 3 kids and a dog’ we are talking to and engaging with people who are doing business which adds a whole new level of complexity.

We are now talking to a group of people about the positives and negatives of business; looking at ways to improve performance or guard themselves against risks. The stakes are higher for B2B clients because more people are involved.

What we need to do in B2B sales is to have a more narrow approach to sales market segmentation and then to layer that out from there as it relates to different stakeholders.

For example in B2B sales we need to break down markets into specific segments, then into sub and micro segments, then into types of businesses and stakeholders in these businesses. Sales teams need to know the differences here as this can affect who and how they approach different types of clients and thus affect sales productivity and performance outcomes.

B2B Segment Case Study

For instance, one of our clients sells a certain type of building product into the building and construction market (market) across commercial and multi-residential high-rise markets as well as into the new home builder markets (segments). There are a myriad of sub and micro-segments within each of these segments. Let’s look at New Home Builders as a Segment: there are high, medium, and small volume home builders, and architect design builders.

Within each of these sub-segments there can be micro-segments depending on what you are selling. In this case, they discovered that their sales teams were going with the same value proposition to all of the new home building sub-segments and getting nowhere.

Instead of adopting the traditional B2C persona approach of trying to define individuals first, we defined each business and what these types of businesses really valued and what they would be looking for from a supplier. As it turns out, 3 out of the 4 sub-segments valued very different things even though our client company was selling the same product. It was how they placed themselves in the context of their clients and what they valued that was key to building viable and valuable ongoing relationships that allowed our client to make more and better sales. We even discovered that in one of the 4 sub-segments there was only a specific micro-segment that our client was able to sell to.

This affected how this client’s sales and marketing teams went about engaging with these subs segments, how they marketed to them and how they sold. While there was an overarching value proposition ‘Why Us’, there were specific value propositions created for each sub-segment; however, this doesn’t always have to be the case.

Within that we were able to go deeper to think about the different kinds of roles we needed to engage with within these sub-segments from GMs, procurement, designers, construction managers, site supervisors and tradies in the high volume home builders’ teams all the way through to the owner builder whose doing it all. Each of these roles can have differing priorities and issues to address which is why we need to think business and role first before the traditional sociodemographic persona.

This is why B2B sales segmentation takes more time and more work to define. However, once defined sales teams are very clear about who they need to sell to, how and specifically ‘Why us’.

Finally, whatever ‘bell’ we are ringing it must be clear and customer facing, or we risk confusing everyone, buyers and sellers alike and that’s no good for anyone.

Remember everybody lives by selling something.

Related topics

Less IS More when it comes to Sales Planning & Market Segmentation
The difference between Sales and Marketing Segmentation