Marketing segmentation 2018: Industry vs account

One area that up until recently had been resisting this change, with a staunch degree of commitment, was segmentation. I mean, how exactly could this stalwart change? Segmentation is all about demographics, grouping people or companies together by a range of different attributes.

Business-to-Business (B2B) organisations may segment their audience by revenue size, number of employees or geographical location. The most popular way to segment, without a shadow of a doubt, is by industry.

Why is industry used so overwhelmingly by B2Bs? There are a few reasons I can think of:

1. Many businesses are established to answer a specific industry need. For example, if you’re a medical device manufacturer – the moment you set the business up your primary segmentation strategy has already been set in stone.
2. Many companies have found a niche which niftily filters out the competition. By taking a generic product or service and customising it for a particular industry, a specific positioning strategy is designed which enables them to compete with fewer organisations within the market.
3. It provides quite an organic opportunity to scale things. If you win one company within a market, deliver a great product or service, and do a case study – this reflects well with other companies in the market. You have a proven track record in working with businesses like theirs – you’ve answered one of the most fundamental questions in B2B marketing: have you done it before? Have you done it before for a business like mine? I can’t stress how important that sentiment still is today and I can’t see the situation changing anytime soon.

I said at the beginning of this post, quite deliberately, that segmentation had been resisting this change. Purposeful use of past tense there. Things are changing and for marketing segmentation 2018 is set to be a rollercoaster year. Industry has a new pretender to its crown as the sire of segmentation: the account.

Some of you may have immediately thought at that point: eh? We’ve always targeted accounts. That would be correct. Most B2B organisations with a sales manager worth his salt will execute some of the practices associated with key account management (KAM). Ultimately, it’s all about getting to know companies, building specific plans for each of them, then targeting a number of them for onboarding cross-sell opportunities. Great stuff. What about marketing though? In my experience, 99% of the time a typical marketing team in a typical B2B organisation will provide ‘air cover’ by marketing to all and sundry within a vertical market. This, combined with a hope and a prayer from the relevant account manager that their premium prospects may, by chance, pick up on this magnificent marketing at some point in the not too distant future is where it’s at for many, many businesses.

Some smart marketing people have now realised that because this is B2B, and onboarding new accounts in this space can be worth hundreds of thousands – if not millions – of pounds, getting by on a hope and a prayer may not be the optimal way to execute. This has led to an emerging number of keen marketing pros jumping on board the account-based segmentation approach.

So what is account-based segmentation? Well it’s exactly what it says on the tin. Companies are isolated and segmented based on well, the company. There’s a holistic appraisal between sales and marketing of the kinds of companies that are a good fit, and companies where it is felt that they can ‘win’ become part of a segmented list: premier prospects and customers if you will.

Perhaps because it’s me, and I’ve always been a little off, I see this much like the dating game. In dating, you can either play the numbers game – which in today’s world involves downloading a script to automatically swipe right on tinder for everyone and copy and pasting the same generic intro line, or you can play specifics. You can find the person you like the look of, think about a cool intro line, and build out a relationship from that if it’s a good fit.

In B2B marketing terms, we’re either addressing all companies within a market with the same message on the hope that one matches their individual circumstances, or we’re only going after companies we strongly suggest will be a good fit for us in terms of product, positioning and pedigree.

Which should you use?

Ultimately, this comes down to a number of factors. As always in a blog post, if it comes down to a number of factors, it’s probably best explained in a table (gotta love tables right?).

Up until recently, the typical downstream size for account-based targeting was a lot higher. This was because the technology needed to support account-based marketing was expensive and inaccessible to businesses who didn’t have £250k-plus deals to chew on. In the last few months, account-based marketing software has come down in price by a factor of 10. Which means that businesses with smaller deals can get an incredible return from any spend in this area.

So there you have it. If you’re a B2B organisation with decent deals to dig your teeth into, and you have a sales team that’s chomping at the bit to deliver numbers off the back of their key accounts, then why not get into detail on an account-based target list. It’s marketing segmentation 2018 style and it may just set you off on an exciting journey to business development euphoria off the back of wider account-based marketing mastery.