A Guide to B2B Market Segmentation

Understanding the needs and wants of your client is crucial, and it is at the heart of good marketing. Hence, why segmentation is so important in any marketing strategy. Since not every customer wants or needs the same things, and as a business you want to cater to as many people as possible, segmentation helps identify the unique needs of each customer group. Organizing your customer base into different groups according to similar traits, needs, and behaviors can do wonders for your marketing strategy. Without proper market segmentation, you risk treating every one of your clients the same and miss the chance of providing them with what they genuinely want and need. Considering that today’s business world is full of options, your potential customers would simply move on to somebody else and you would be left with less revenue in the long run.

How do you avoid such a grave mistake? How do you choose the market segmentation that works best? This guide offers a profound explanation of each type of market segmentation to take your business marketing plan to the next level.

B2B Market Segmentation: Traits and Characteristics

First, let us better understand the unique characteristics of B2B market segmentation, which widely differs from B2C. In comparison, B2B market segmentation can be a tad bit more challenging than a B2C segmentation, and so there are some B2B traits that we must take into account:

  1. B2B as a more complex market setting: while B2C focuses on the needs of the individual, in a B2B setting, the market focus is far more complex than that. Running a business is not a one-man show, so identifying a company’s needs may be a challenge. In a company, there are many people involved in a purchase decision. When dealing with multiple agents, the segment will inevitably be much harder to pin down.
  2. B2B as a more rational market setting: there is no ignoring that business-to-business purchases are constructed by logicality. While in most B2C situations the individual client will focus more on what they want, in a B2B situation, a company will pay much more attention to what they need. Their decisions will most likely lean towards a more logical and strategic avenue, as their main goal is to grow and thrive as a company using your helpful services. In that regard, identifying a company’s rational and strategic needs in a B2B setting is a priority.
  3. B2B as a more intimate market setting: the fact that a B2B target audience is fairly smaller than a B2C’s, it makes the customer-seller relationship more personal and intimate, in a way that the other (B2C) cannot. This close relationship, which for the most part is built on years of long-term purchases, can quickly develop mutual feelings of trust and loyalty between the two businesses. The supplier develops a deep understanding of the client’s requirements and a skill set particular to that client’s needs. However, there is a valid need to still pay attention to the changes in the segments that may develop over time. Just because you feel that you already know your clients’ needs due to your long familiarity with them does not mean you should take market segmentation lightly. It is your job to remain relevant as your client’s needs evolve and not lose sight of their segmentation. 
  4. B2B as a slower market setting: as opposed to B2C, selling to a business takes a lot longer. It is a slow process that takes ample time and resources and it evolves into a much deeper and more complex buying cycle. Hence, a segmentation strategy is so valuable because it helps the procedure work as smoothly as possible. It can also help in reducing precious time and ensuring that your client will be more pleased with the eventual outcome.

Four Types of B2B Market Segmentations:

b2b market segmentation
  1. Firmographic Segmentation:

Demographics is a B2C segmentation, while firmographics is a B2B segmentation. Firmographics is a term that refers to the descriptive attributes of an organization, company, or any other type of firm. The typical, commonly used factors examined in firmographics segmentations are industry type, company size/numbers of employees, location, job titles, the structure of a company, annual revenue, and growth rate. 


  • Low cost
  • Higher ROI
  • Easy to research
  • Rarely changes


  • No customized solutions
  • No in-depth understanding
  • Lack of detail

In other words, firmographics is a basic, very easy-to-use market segmentation. Research is low cost and relatively simple to find, as most of this data is posted online. However, it is not a sophisticated segmentation, and it can be risky to rely solely on it. Furthermore, providing in-depth or customized solutions is not easy to do when using this segmentation alone, and it might badly affect your professional services.

  1. Needs-Based Segmentation:

As the name suggests, a needs-based segmentation identifies group clients according to what they usually look for in a product. As mentioned before, in a B2B market setting, it is more important to focus on what the client needs, so it is a compelling type of segmentation for a business-to-business service. 


  • More subjective
  • Easier to customize 
  • Focuses on pain-points


  • Lacks accuracy
  • High levels of data analytics
  • Requires resources

In other words, this segmentation helps you understand your client’s buying motivation, which is one of the crucial things sellers want to know about their customers. With that information in hand, it is easier to develop tailor-made solutions for each client because you know what they truly need. However, it is difficult to identify the needs of different prospects accurately. Most of all, the data collection in this particular segmentation is complex and requires a high level of data analytics.

  1. Behavioral Segmentation:

This segment focuses mainly on your customer’s behavior patterns and how they (usually) act. Therefore, the data that can be gathered from this segmentation is:

–Attitude: what is their attitude towards your services?

–Channels: what sort of channels do your potential clients visit you through?

–Product: what kind of services do they tend to purchase from you?

–Spending: what are their spending habits?

–Tendency: what is their overall purchasing tendency for your services?


  • Personalized approach
  • Builds brand loyalty
  • Easy to identify
  • Cost-effective


  • Behaviour=needs?
  • Unpredictable 
  • Changeable 
  • Limited data

In other words, behavioral segmentation is excellent in identifying your most engaging customers. Showing high levels of engagement and maintaining your relationship with them will eventually lead to brand loyalty. This segmentation method is also very cost-effective because you will know to focus on the clients that will most likely choose to deal with you instead of wasting your resources on a dead end. The problem with this segmentation is how unpredictable and changeable it can be. You might know how a client behaved in the past, but what about the future? The limited data is also a cause of concern because you might know how your clients usually behave, but not why they behave as they do.

  1. Customer Segmentation:

With this method of segmentation, you divide your clients into groups according to their value of leads. In that way, you can split your resources more effectively. For example, in the top tier 1 group, the one with the most valuable leads that brings the most to your company, you can bring forth more resources. Thus, it is a great way to maximize the value of each customer to your business.


  • Effective 
  • Profitable
  • Higher quality revenues


  • Limited insight
  • Unpredictable 

In other words, customer tiering helps you put your resources to better use in a way that will be most cost-effective and profitable for your company. While focusing on better leads, you can gain higher quality revenues to ensure your brand’s growth. The downsides are that this method of segmentation is limited and unpredictable. It relies on the consistency of tier 1 clients to remain valuable, which cannot always be the case. Also, it doesn’t give a complete picture of the individual consumer and their wants and needs.


Market segmentation is a valuable asset to any marketing and globalization strategy. Without it, it is easy to lose sight of your marketing goal, as it will cause you to treat every customer the same. This kind of amateur mistake can cause much harm to a business, and that is why you should avoid it at all costs. When choosing a segmentation that works best for your company, it is essential not to settle for one method only. We highly recommend combining two of these methods to ensure the most satisfying results for your B2B marketing.

Segmentation is one of our many areas of expertise. Xinergy Global can help you build your ideal marketing strategy to ensure the tremendous growth of your brand. For more information regarding our services, don’t hesitate to contact us today.

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