Here’s how to drive better results by upping your segmenting game.
Even if you’ve developed marketing and sales strategies that focus specifically on small and midsize businesses (SMBs), segmentation that treats all SMBs as a single segment can lead to sub-optimal results.
Depending on how you count, there are up to 27 million SMBs in the United States. They come in all shapes and sizes, and span a huge variety of sectors and industries. This means that they face a range of different business challenges, and exhibit disparate buying journeys with different buying behaviors. SMB owners are very busy people, and they only have interest and time for companies (and content) that address their specific concerns. Treating all of them the same with respect to sales, marketing, and support diminishes your relevance to all but the small handful who may respond to a one-size-fits-all approach.
Here are some do’s and don’ts to help you segment your SMB market more effectively.
Segment by size
Whether your definition of the SMB market goes up to 100, 500, or 1,000 employees, size is the most important way to segment for most companies. A 3-person firm has different challenges, opportunities, and buying behaviors than a 30-person firm, which in turn is quite different from a 300-employee firm. As a general rule, the smaller the business (<25 employees), the more the emphasis will be on sales and marketing. Larger businesses will be more focused on issues around HR, culture, and scale. But segmenting by size or other demographics alone is insufficient. See below (re: don’t rely on demographics).
Strongly consider segmenting by industry
The larger the SMB, the more they will be drawn to industry-specific solutions and content. There’s also a link between industry and size that argues for considering both. A 200-person law firm will have higher revenues and different needs than a 200-employee manufacturing business.
Customize your approach to segmentation
Several years ago, we created a magazine for a company in the HR space. Together with the client, we determined that a one-size-fits-all approach wasn’t going to cut it. At the same time, a different magazine for 10 different industries wasn’t practical. Our solution was a customized segmentation that resulted in two editions: a “main street” version for retail and hospitality, plus a “knowledge worker” version for professional services and similar office-based businesses.
Rely on demographics
Sure, size and industry are important. But sometimes behavior is more meaningful. For example, a 100-person, 20-year-old company that is not growing will look at CRM solutions differently than a 25-person, 3-year-old company that has been doubling its revenues each year. The latter is more likely to be interested in more robust content and a product that offers a wider set of features. The former will generally have a higher CLV, and therefore warrant more of a focus on their relationship with your company through your sales channel. These preferences would not be apparent simply by looking at demographics.
Here’s an example from Salesforce that allows SMBs to choose based on needs and goals, which are closely correlated with behaviors:
- Ignore customer lifetime value (CLV)
Practically speaking, the higher the CLV, the stronger the ROI from segmenting. It’s well worth the effort to identify existing customer segments with high CLV and target “lookalike” prospects that are similar. Nurture these relationships with increased emphasis in your marketing budget, tailored messaging, and more frequent communications.
Once you’ve determined the best B2SMB segmentation for your company and your customers, make sure it’s manifested in every way in which you go to market, including:
Most B2SMB companies segment their sales channel by company size. Some would benefit by going a step further and developing industry specialties among their sales teams to address the specific needs of industry segments, particularly for larger SMBs.
If you are not doing it already, segmenting with feature and pricing bundles is a simple and effective way to create different offerings for different segments.
Content that includes best practices and customer stories for different segments is a must for most B2SMB companies. But make sure it’s easy to find. Here is a great example from GoDaddy of segmenting content by industry.
It’s a best practice to have a suite of newsletters segmented by industry or topic. You can also create dynamic newsletters that deliver content based on interests or segment.
Segmenting is powerful. While limited to email and not specific to SMBs, this data from MailChimp shows the impact that effective segmentation can have. I hope these ideas help you take your B2SMB segmentation, and your results, a few steps further.
Do you want to get more results from your content? Set up a call with me and I’ll show you how.