Table of contents
- What is customer segmentation?
- What are the benefits of customer segmentation?
- How to segment your customer base?
- Step 1: Examine Current Customers:
- Step 2: Study Customers’ Companies:
- Step 3: Combine the two:
- Step 4: Adapt your copywriting to each segment:
- Step 5: Collect data, analyze, reiterate:
- Interesting Example of Customer Segmentation:
- Final Thoughts
Customer segmentation is both simple and complex to grasp. And yet, it’s one of the most important issues for all your B2B prospecting activities.
What is customer segmentation? What are the benefits of good customer segmentation? How do you segment your customers?
In this article, I’ll answer all these questions, with some bonus examples of customer segmentation that work!
What is customer segmentation?
Customer segmentation is a methodology that involves dividing your customer pool into different sub-groups, called segments.
This segmentation is based on segmentation criteria such as demographic, intent-based, or account-based.
While the principle of customer segmentation is similar in B2B and B2C, the method will differ significantly from one to the other:
- in B2C, customer volumes are often much higher, and segmentation criteria almost always concern the lead.
- in B2B, volumes are much smaller, and the criteria may also concern the account (=company).
In both cases, it’s your segmentation strategy that determines the quality of your segmentation, and thus the success of the rest of the process.
What are the benefits of customer segmentation?
Good customer segmentation is essential to any sales or marketing strategy. This is because it allows you to benefit from a number of elements:
- Better ROI: you send your prospecting messages to the right customers – those who convert. Your messages are more targeted and personalized, and therefore more engaging. You save time = you save money. All these benefits contribute to an increase in ROI.
- Increased MRR and ARR: a better return on investment, but not only. Because you save time, you contact more people, and those people convert more. This automatically increases your monthly and annual revenues, for the same workload.
- Better image: targeting errors are common in B2B prospecting. Wrongly targeted customers don’t just waste your time, they convey a bad brand experience. A harmful side-effect for your branding strategy!
As you can see, segmenting your customers isn’t just important. It’s become an obligation, especially in a competitive environment.
How to segment your customer base?
So now you know what customer segmentation is and -like all forms of segmentation, why you need it so badly.
Let’s dive right into the nitty-gritty of how to actually go about your customer segmentation.
But, instead of just giving you the generic “segment by demographic, then psychographic criteria” nonsense, how about we take a real-life example in how we, La Growth Machine, segment our own client base? 😉
Let’s roll 👉
Step 1: Examine Current Customers:
This is kind of a no-brainer, if you don’t know what to look for, start with what you have; in this case who’s already with you.
The idea is to identify their pain points, and what value your product/service brings to them. For this, you must first know and understand your own value proposition. This is the basis for all that follows, so make sure you put time and effort into it.
So, if you look at LGM, as an example, our core value proposition is simple: Automating your multichannel prospecting so you can focus on closing deals.
We found that this one sentence appeals to quite a few profiles, let’s take our main three:
- Growth experts (marketers, hackers, etc.).
Each of these profiles has different values, needs, and most importantly, values our product differently. You can’t take any shortcuts when it comes to segmentation.
Step 2: Study Customers’ Companies:
So now you have your personas, a typical (fictitious) profile for each and every one of your customer segments.
But wait, what about where they work?
If you, like us, work in the B2B industry, you have to look at your final customer’s company.. This is because one, they’re your actual customer, and two, it says a lot about your customer. Pain points vary greatly depending on the persona’s company details.
So how do you segment your customer’s companies? You got two types of characteristics to look for:
- Prerequisites: Attributes that you have to find in a company for it to be qualified.
- Sorters: Characteristics that you can use to group multiple companies into one standard profile.
In LGM’s case, here’s our Prerequisites:
- B2B: Pretty self-explanatory, we can’t address a B2C audience simply because of the limitations we put on each outbound channel within LGM. Plus, it wouldn’t make sense for a an individual to use LGM, the ROI juste isn’t quite there.
- Substantial adressable market: If you’re addressing a niche market, automation in general won’t work for you. I’d suggest not to burn through the 100 leads you got with automation. Spend the time to really build personable relationships.
- A digital audience: LGM is a SaaS, and our main channels of contact are LinkedIn and Email. If your market is Healthcare or Blue Collar workers, I doubt you’ll find them there.
- Business model: Does our lead work at an agency? A business? A CSR company? etc.
- Industry: Again, pretty self-explanatory, you want to have a preset group of people that belong to the same industry so you can showcase them to the next lead. “This company from the same industry you’re in has great results with us, why not repeat their success?”
- Size: Is it a startup? A scale-up? How many salespeople? How many recruiters? In this case, size does matter.
Step 3: Combine the two:
If you’ve been paying attention, you can kind of grasp that we’re starting to have differentiating characteristics here. And if you’ve done your homework correctly, you can start to visualize what strategy goes for each segment! 💪
That said, we want to be thorough! And how we do that is by fusing both segmentations from the previous steps into one -albeit intricate, complete matrix.
Here’s what that looks like for La Growth Machine:
These are but three examples of our persona types. Adapt this document to your own audiences. As you grow, you’ll develop more and more columns and your matrix will grow!
Step 4: Adapt your copywriting to each segment:
Ultimately, segmentation is about targeting the right person, at the right time, with the right message.
Since we’ve already gone through the first two, only now can we switch gears to your copywriting. Because if you think you can send precise, targeted messages without laser-precise segmentation, you’re living in a dream world.
Let’s take the case of LGM’s target personae:
- Salespeople: We’ll simply focus on the time-saving portion of our core value proposition. Then, we’ll add on specific features that we know will soothe their pain points. E.g. Multi-channel inbox, CRM sync, etc.
- Growth Hackers: With highly technical profiles such as these, we’ll emphasize our Custom Sequence Builder and our Zapier integration so that they can have their most integrated strategies.
- Recruiters: These profiles are tricky, because they’re the least technical, so they’re quite reluctant to use a tool such as ours. For them, we’ll try to steer the conversation toward our integrated LinkedIn search, our personal email enrichment features, and the multitude of multi-channel sequence templates they can choose from.
Again, these are mere examples off the top of my head. Make sure you adapt your copywriting to your own target audience!
Should you need more guidance when it comes to copywriting, I highly suggest our copywriting strategy guide. You’ll find everything you need over there! 🙂
Step 5: Collect data, analyze, reiterate:
And now, the cherry on top of this customer segmentation cake: Data -the thing everybody loves. 🙃
We may hate on data, delay its analysis until December every year, or downright not care for it at all, but one thing remains true: Without it, you’re just shooting in the dark.
- Obsess over metrics: Click-through rates, conversion rates, you name it. These little numbers tell you a story – what works, what flops, and what makes your customers tick.
- Customer feedback is Gold: Data doesn’t have to be numbers on a sheet. Listen to your customers and cherish your Support team! Shoutout to our own support team, which is considered to be the best -not only by us, but by the community as well:
- Making a sale is just the beginning: Closed a deal? Great. But that’s just the start. Foster a relationship based on trust and honesty with your customers. That’s the real goldmine.
- Reiterate like there’s no tomorrow: Take all this information and go back to the drawing board. New segments emerge, old ones get a makeover, and our messaging gets sharper.
That’s how you -or at least we at LGM, stay ahead of the game. Segment, target, collect, analyze, and reiterate.
It’s a never-ending dance, but boy, do we love the rhythm!
Remember, segmentation isn’t set in stone. It’s a strategy that has to evolve as your product and customer base does. So keep your ear to the ground, keep collecting that data, and never stop refining your segments.
Interesting Example of Customer Segmentation:
To bookend this guide, I thought I’d share with you a real-life example from our own client base.
For privacy reasons, I won’t be able to share the exact copywriting or other sensitive information in this campaign.
Here’s what you should know:
- The campaign was run on LinkedIn and Email to fully utilize the mutli-channel power of LGM.
- All leads search and import was done on LinkedIn Sales Navigator.
- All screenshots are fictitious and are to be taken as an example.
That said, I’ll try my best to give you what you need to take out of this example!
Example 1 – Recruiting Agency:
This example is for a Recruiting Agency looking to find an Information System Manager for a Big Software Company.
Here’s how they went about their targeting:
- Step 1 – List company competitors on the Account section of Sales Nav:
- Step 2 – Find leads on the Leads view of Sales Nav:
Expert Tip 🧠
Here on top of the Company (Account) filters, the recruiter added some Lead information such as 1-5 years in current position because that’s usually when IS managers would be looking to change jobs.
The position itself requires a certain number of years of experience because we’re talking about a big software company that requires that kind of expertise.
- Step 3 – Upload search results into LGM:
These criteria landed around 100 potential candidates, which our client uploaded into LGM directly from Sales Navigator. This is a great number, and I wouldn’t suggest one more person to be added to the campaign because any more would render the campaign impersonal and defeat the purpose of what we covered throughout this article. Follow the linked article ⬆️ to learn how to import leads seamlessly into LGM.
- Step 4 – The sequence:
As you can see, it’s a multi-channel campaign with a focus on Email for lengthy messages or to share sensitive information and a fallback on LinkedIn for shorter exchanges and in case of no reply. Let’s cover the main pillars of copywriting.
- Step 5 – LinkedIn Note:
Always add a note to your LinkedIn connection request, though you’ll get a lower acceptance rate, you’ll get more qualified calls. This is simply because the people who do accept you know why you’re trying to connect with them.
This is especially good for recruiting because then you know that every candidate who accepts your request is interested.
Short, straightforward, elegant in its simplicity.
- Step 6 – LinkedIn Voice Message:
This is a great way to get through to your candidates! Once they receive a voice message, they can’t help but open it! So not only will you be sure that they heard what you have to say but it also adds a personal note to your approach and they’ll never question that it’s automated!
P.S.: I purposefully left the message in a more conversational, familiar tone that matches the spoken aspect of the Voice note. Read the linked article to learn the best practices to use and how to automate it all thanks to LGM! 😉
- Step 7 – Email:
The recruiter tries to primarily reach out via personal email because when you talk recruiting, you can’t reach out to the candidate on their professional email, that’ll just get them in trouble, among other drawbacks.
- Step 8 – Email Follow-Up:
This is the last attempt to get the lead to reply to you.
As you can see, the recruiter doesn’t simply regurgitate the same info about the company. They simply ask what’s blocking the candidate back and try to find common ground with them.
That’s it for this example. Keep in mind that if you don’t find the candidate’s personal email, you can repurpose the emails as LinkedIn messages but make sure to:
- Make them shorter.
- Have a friendlier approach to your copywriting.
- If you have any big documents to share, try to ask for their personal email.
For the more curious among you, here are the results of this campaign -they got a 34% reply rate with 8 qualified candidates for their clients. That’s huge!
BONUS Example – Prospecting
Let’s go back to basics and check out a good old sales prospecting campaign example from one of our Scale-up clients!
Our client is a Fundraising Company looking for new customers (companies) who:
- Newly founded
- Open to fundraising
- Data Software
And within those companies, we simply want to reach Management (CXOs):
This search yields around 130 leads, of which our client selected 105 that exactly match their criteria.
Here’s the sequence:
What I found particularly interesting about this campaign is the copywriting. They do cold outreach with an extremely straightforward, no-nonsense approach, you’ll see what I mean! 👇
- LinkedIn/Email 1st Message:
- LinkedIn/Email Follow-Up:
For privacy reasons, I can’t add the follow-up messages they included. But they basically go on to explain their added value and how they run their programs.
- Email Break-Up:
However, the last email -which is also their last touchpoint, is also interesting to look at:
Like I said, direct, short, no beating around the bush! They simply ask when would be a good time to get back to the lead.
And as promised, here are the results. We don’t yet have the “Won” (Signed) rate since the campaign is still kind of new and deals are in negotiation. However, having a 36% reply rate is already promising enough!
All in all, customer segmentation is a continuous process, not a strategy set in stone. I’ve gone through the ins and outs of this process, and even thrown in some real-life examples from our own client base to get you started!
So, make sure to keep your segments small, your messages relevant to those segments, and your strategies flexible!
Happy segmenting! 🙂