Marketing
This goes without saying that understanding the customer is the key to success for any business.
For any business to succeed, marketers should exactly know who their target audience is and conceptualize a strategy that caters especially to them.
With various tools and technologies in the market, businesses can now easily identify and target particular segments based on psychographics, demographics and behavioural variables. This is where firmographics come into play.
What is Firmographics?
In simple words, Firmographic segmentation is the classification of business-to-business customers based on the shared organization or company attributes. Firmographics data is collected and assessed in the same manner as other forms of segmentation to accurately identify the target audience and their needs and wants.
There could be numerous variables, however, these are typically the most common factors of firmographic segmentation:
Benefits of Firmographic Segmentation
The primary purpose of Firmographic data is to help companies segment their potential B2B customers into proper groups.
It helps marketing and sales teams to save time and effort and device good marketing campaigns by having access to pre-segmented client data with details such as customer’s size, revenue classification and location.
Here are the reasons for using firmographic segmentation:
1. Helps In Resource Allocation
Firmographic can streamline marketing activities as it can be integrated at low costs and can help the business to achieve its marketing objectives without spending much money.
Earlier marketers used to spend a lot of time analyzing various business metrics and devising plans to meet them. With firmographics, a lot of time is saved as businesses know which lead to pursue and which not to. With the right data, efforts and strategies are more focused, precise and personalized.
2. Better Communication
Firmographic segmentation helps businesses bring tailored strategies for their customers. This has helped businesses capture their customers’ attention and have better success with their brand communication. This has helped businesses better interact and engage with their customers.
3. Better ROI
With accurate data about a company’s size, market size and structure, B2B buyers can help companies target potential customers more effectively. Therefore increasing companies’ sales and revenue.
Firmographic Segmentation Variables
Mentioned below are the most commonly used variables for firmographic segmentation:
1. Industry
Industry categorization is the most common way to segment data as all the companies in the world fall under or operate at least one industry, naturally due to their products and services.
It is easy to group companies that sell comparable goods and services together. This allows marketers to tailor their strategies to the needs of enterprises in a specific industry.
2. Location
Just like the previous segmentation, industry, location is another, most fundamental and easy variable for firmographic segmentation.
Location segmentation allows marketers to categorize organizations and companies on the basis of their location. Hence, companies can be categorized according to variables such as region, country, state, city and so on.
Companies can judge which locations are working for them and which are not. They can also evaluate which places need more time and effort, just by segmenting the market by their location.
3. Size
This data tells us how big or small the company is. The two most common parameters can be used to determine the company size.
Company size is a parameter that allows marketers to target precise audiences. For example, the marketing campaign targeted to small businesses will have a different impact when the same marketing campaign is targeted to a large business.
Annual revenue is also an important parameter to set targeting. This is because marketers want to target organizations that can afford what they are offering rather than spending their marketing budget on those who can’t.
This is why it’s essential to segment companies with respect to the number of employees and annual revenue.
4. Structure
Company structure data relates to the relationship between organizations or a company’s legal standing.
Businesses could be classified as:
Companies may significantly improve their sales and marketing activities if they know which types of businesses their services and products are useful for.
Conclusion
Firmographic segmentation is a great strategy to segregate your potential customers into groups based on similar characteristics, making the target audience more exact and efficient. Firmographic segmentation unveils important information that can be used to improve and direct new business strategies.
Questions that you need to ask when starting with firmographic segmentation.
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