Marketers use four types of data: demographic, contextual, behavioural, and firmographic.
Marketing teams seek to obtain, analyse, and apply different datasets depending on many factors, such as business model, market, and campaign type. Regardless of this approach, their end goal is always the same – to increase their company’s bottom line.
Data determines the effectiveness and success of every single aspect of today’s business.
Market segmentation, our topic here, is used for everything from initial product development and marketing personalization to customer retention. It implies grouping prospective customers or clients using various criteria for the same purpose: impeccable targeting.
What is firmographic data market segmentation?
Firmographic target market segmentation means dividing a company’s prospect pool into groups. Companies use firmographic data for that.
Every prospect within one group or segment showcases similar interests, needs, pain points, and preferences that marketers need to cater to specifically.
While B2C companies traditionally use demographic, contextual, and behavioural data to understand individual customers’ needs and wants, firmographic data is reserved for B2B companies. Instead of individual needs, firmographic data shows company attributes.
Benefits of firmographic data market segmentation
The benefits of firmographic data market segmentation are many and multifold.
Sales and marketing are the two aspects of B2B companies that firmographic data directly impacts. In more ways than one, both can benefit from having their prospects neatly organized and divided into groups based on multiple market segmentation variables.
Among all frequently cited perks, the following are considered the most important.
- Significant savings in time and money. For both sales and marketing, structured customer data and a segmented approach allow more simplified and precise targeting. Marketers can custom-tailor campaigns that fit company prospects like a glove, while salespeople can employ effective conversion and retention approaches. That ensures not only customer success but also speedy conversions. Consequently, it guarantees better and more cost-effective budget allocation.
- Enhanced conversion and retention. The more marketing and sales know about prospective companies, the less time and effort they need to convert them into paying clients. For the same reasons, data and segmentation facilitate retention as well. In both cases, firmographics allow them to create personalised experiences.
- Higher ROI and increased bottom line. All of the above contributes to a better bottom line for B2B companies. With savings in time and money and customer success at each touchpoint, B2B companies that use firmographic data market segmentation naturally report an increase in revenues, customer retention rates, and overall ROI. That is, of course, the most significant benefit of using firmographics.
Firmographic segmentation factors and variables
Most B2B companies use between four and seven firmographic segmentation variables.
- Industry. The most crucial factor in firmographic segmentation is industry. Failing to identify which industry a prospect belongs to rarely leads to successful marketing campaigns and conversions. That is the least a B2B company should know about prospective clients and their purchasing needs.
- Location. Location is another crucial variable for hitting the mark in successful marketing. Many B2B companies risk losing their time and money on poor geo-targeting efforts without firmographic segmentation. On the other hand, location-based marketing campaigns increase growth by 86%.
- Company size. Large companies have different needs than small businesses, which is vital for tailoring a B2B approach. Under ‘company size’, segmentation experts imply two sub-variables – a company’s annual revenue and its number of employees. Both of them affect targeting strategies.
- Structure. Depending on their products and services, B2Bs can target individual firms, limited liability corporations (LLCs), public limited companies (PLCs), partnerships, privately held companies, etc. The structure of a prospective company is a valuable factor in determining a B2B approach, too.
Other frequently used variables for firmographic segmentation are company performance, executive title, and sales cycle stage. Typically, the more data, the better. However, too many data variables can lead to excessive atomization and empty market segments with a smaller client base.
Acquiring firmographic data for market segmentation
Firmographic target market segmentation can only be effective if firmographic data is valuable and insightful. B2B companies can acquire high-quality firmographic data from internally managed and external third-party sources.
B2B companies with less extensive client bases can satisfy their target segmentation needs by internally collecting firmographic data through sign-up forms and landing pages. Of course, different B2Bs will have different data collection strategies, depending on their needs.
As for larger B2B companies, external data sources are usually a better solution.
Businesses can access high-quality firmographic data sources through third-party companies specializing in data scraping and ensuring that data is readable. In most cases, B2B companies can use this alternative data as is simply by adding it to their internal systems.
Firmographic target market segmentation is invaluable for marketing and sales professionals, saving precious time and money and helping them improve customer experiences, conversions, retention rates, ROI, and the bottom line.
However, it also helps B2B companies make informed decisions outside their marketing and sales departments. Firmographic data can help them understand their industries better and monitor competitors in oversaturated markets. It can even support their expansion strategies.
Firmographics are a valuable addition to company intelligence in one way or another.
David Tobin did his degree in psychology at the University of Hertfordshire. He is interested in psychology, mental health, and wellness.