Firmographic segmentation is a method used in B2B marketing that helps you adapt marketing and sales strategies to better meet the needs of each business group.
This approach is similar to other types of market segmentation such as:
Here’s how it works.
Firmographic Segmentation Meaning and Definition
To start, let’s define firmographic segmentation.
Firmographic segmentation is a method you can use in business-to-business (B2B) marketing to categorize companies into groups based on shared firm-related characteristics.
What Is Firmographic Data?
Firmographic data refers to descriptive attributes of organizations that can be used to categorize them for targeted marketing, sales, and business analysis.
Here are some key types of firmographic data.
1. Industry
Industry classification is a fundamental piece of firmographic data that describes what sector a company operates in.
Common industry classifications include technology, healthcare, finance, manufacturing, and education.
Understanding an industry helps you customize your products or services to meet sector-specific regulations, trends, and demands. For example, tech companies may require the latest in software innovations, whereas healthcare might focus on compliance and patient confidentiality.
2. Company Size
Company size can be measured in terms of the number of employees or total revenue. This type of firmographic segmentation helps in understanding the scale of a company and its potential business needs and challenges.
Small businesses might prioritize different features in a product or service compared to multinational corporations. For example, smaller companies might seek cost efficiency and ease of use, while larger enterprises may need scalability and integration capabilities.
3. Revenue
Revenue data gives insight into the financial scale of a company. It can help in predicting a company’s purchasing power and in customizing sales pitches to match their budget.
For example, you can approach companies with higher revenue with premium products and comprehensive service packages, while smaller entities might be shown more basic, affordable options.
4. Number of Employees
Similar to company size, the number of employees gives an indication of the company’s operational scale. It helps in understanding how complex the organizational structure might be and what kind of solutions might be necessary.
For example, a company with thousands of employees might need enterprise-level human resource management systems.
5. Geographic Location
The physical location of a company is crucial for many strategic decisions. Geographic data can influence product offers, marketing campaigns, ads, and sales strategies due to differences in culture, language, economic conditions, and legal environments.
You can use geographic segmentation to target specific regional markets or to comply with local regulations.
6. Market Share
Understanding a company’s market share can provide insights into its competitive position and industry influence.
For example, you can target companies with a high market share with advanced competitive products and services designed to help them maintain or enhance their market position.
7. Growth Rate
The growth rate of a company is an indicator of its expansion and scale of operations over time.
Fast-growing companies might be more receptive to new technologies and innovative solutions to support their expansion, whereas more stable businesses might focus on efficiency and cost reduction.
8. Ownership Type
Ownership structure—whether a company is publicly traded, privately held, a family business, or a non-profit—affects many aspects of its operations and decision-making processes.
Public companies might require transparency and compliance solutions due to regulatory scrutiny, while private companies might prioritize confidentiality and control.
Firmographic Segmentation Examples
Here are a few examples of how popular businesses might use firmographic segmentation.
Salesforce
Industry: Salesforce targets various industries with its CRM software, such as healthcare, finance, manufacturing, and retail. By understanding the unique needs and challenges of each industry, Salesforce can offer customized solutions that address specific pain points, such as compliance in healthcare or customer retention in retail.
Company Size: Salesforce segments its offers into different plans like Essentials, Professional, and Enterprise, designed for small businesses, mid-sized companies, and large enterprises, respectively. This segmentation allows them to address the varying complexities and budgets of different sized companies.
HubSpot
Growth Rate: HubSpot offers scalable solutions that cater to businesses at different stages of growth. For startups, they might focus on lead generation and marketing automation tools, whereas for rapidly growing companies, they offer more advanced services like sales enablement and customer service software.
Revenue: HubSpot uses revenue information to segment its market and adapt its pricing and services accordingly. Smaller companies with lower revenue might be more interested in cost-effective, basic marketing tools, while larger corporations with higher revenue can be targeted with full-service packages that include additional features and dedicated support.
IBM
Geographic Location: IBM tailors its offerings based on the region, considering local business practices, legal requirements, and cultural nuances. For instance, data security products are emphasized in regions with strict data protection laws, such as the European Union.
Industry: IBM segments its technology and consulting services across industries like telecommunications, automotive, and government. Each sector receives specialized products and services designed to meet industry-specific requirements, such as blockchain for supply chain in manufacturing or AI solutions for customer service in telecom.
Xerox
Company Size: Xerox offers different models of printers and copiers for businesses of varying sizes. Small businesses might be targeted with compact, cost-efficient models, while large enterprises might be offered multifunctional devices that can handle a higher volume of prints and additional functionalities like security or network integration.
Ownership Type: Xerox also segments its clients based on whether they are public or private entities. Public companies or government agencies might need different procurement processes and product requirements than private companies, which affects both sales strategies and products they offer.
Adobe
Industry: Adobe segments its products like Adobe Creative Cloud and Adobe Marketing Cloud for industries that rely heavily on digital content, such as creative production agencies, media companies, and educational institutions. Each industry receives tools that fit their specific content creation and marketing needs.
Revenue: Adobe also differentiates its offeris based on the revenue size of businesses, providing more comprehensive solutions with advanced features and integrations for larger companies, which have bigger budgets and more complex needs.
Cisco
Company Size: Cisco provides networking and cybersecurity solutions that vary based on the size of the company. For smaller businesses, Cisco offers simpler, more cost-effective networking hardware and cloud-managed IT solutions, while larger enterprises might need complex, integrated security systems and enterprise-grade routers and switches.
Geographic Location: Cisco tailors its products to meet the regulatory requirements specific to different regions, such as GDPR compliance in Europe or cybersecurity mandates in the United States.
How to Do Firmographic Segmentation (With an Example)
Let’s take a practical example to illustrate how you might perform firmographic segmentation.
Suppose you run a company that provides cloud-based project management software.
Here’s how you could use firmographic segmentation to target potential business customers.
Step 1: Define Your Goals
Determine what you want to achieve with your segmentation.
In this case, your objective might be to expand your customer base by identifying and targeting businesses that can benefit most from your software.
Step 2: Gather Firmographic Data
Collect relevant firmographic data that will help you segment potential customers effectively.
For this product, useful data might include:
- Industry: Technology, construction, marketing, etc.
- Company Size: Number of employees or annual revenue.
- Geographic Location: Where the companies are located.
- Technology Adoption: Early adopters, late majority, etc.
Step 3: Segment Your Market
Divide the market into segments based on the collected data.
For example:
- By Industry: You might find that tech companies and marketing agencies are more likely to need project management tools for their digital projects.
- By Company Size: Small to medium enterprises (SMEs) might prefer a basic, cost-effective solution, while large corporations could be looking for more complex features like integration capabilities with other enterprise software.
- By Location: Companies in urban areas or tech hubs might be more receptive to adopting new technologies compared to those in rural areas.
- By Technology Adoption: Targeting early adopters who are more likely to try new solutions.
Step 4: Customize Marketing and Product Offers
Create marketing campaigns and product packages that appeal to the specific needs of each segment.
For example:
- Tech Industry: Highlight features like integration with other tech tools and high scalability.
- Marketing Agencies: Emphasize collaboration features, real-time updates, and ease of use.
- SMEs: Offer cost-effective packages that are easy to deploy and manage.
- Early Adopters: Introduce them to the latest features and maybe offer beta versions of new tools.
Step 5: Execute and Monitor
Launch your targeted campaigns and monitor their effectiveness. Track metrics such as engagement, conversion rates, and customer feedback to see how well your segmentation is working.
Step 6: Refine and Iterate
Based on the results and feedback, refine your segments and strategies.
Firmographic data can change as companies grow, relocate, or shift industries, so it’s important to update your data periodically and adjust your segments and strategies accordingly.
Final Thoughts on Firmographic Segmentation
Using the systematic approach I’ve outlined in this article allows you to target potential customers more precisely, which can lead to higher conversion rates, better customer satisfaction, and increased revenue for your business.
If you need any help with executing it, feel free to reach out – Udonis is an online advertising agency with tons of experience in creating customized marketing campaigns for specific market segments.
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