What is Segmentation?

Segmentation is dividing a market into groups of companies or buyers that share traits which predict how they buy, so each group gets the list, message, offer and sales motion that fits it.

At a glance

• In B2B, segments are groups of organizations, not individual consumers.
• Common bases are firmographics, technographics, behavior, needs, account value and buying intent.
• The two classic B2B frameworks are Wind and Cardozo’s macro and micro segmentation (1974) and Bonoma and Shapiro’s nested approach (1983).
• Segments come first, then the ICP, then buyer personas.

How B2B segmentation works

Yoram Wind and Richard Cardozo split the job into two stages. Macro segmentation sorts companies by what you can see from outside: industry, size, revenue and location. Micro segmentation sorts them by how the buying group behaves: its criteria, its attitude to risk and its purchasing rules. The second stage needs real research, which is why many teams stop at the first.

Thomas Bonoma and Benson Shapiro’s nested approach goes from the outer layers, cheap to observe, to the inner ones, harder to collect and more predictive:

1. Firmographics: industry, company size, location.
2. Operating variables: the technology in use and how the company uses products like yours.
3. Purchasing approach: how buying is organized, existing vendors and buying criteria.
4. Situational factors: urgency, the specific use and order size.
5. Personal characteristics: the risk tolerance and loyalty of the people deciding.

You go only as deep as the market’s economics justify.

A segmentation example

Example (illustrative): a company selling telematics to trucking fleets starts with firmographics, fleets of 10 to 100 trucks. It adds an operating variable, fleets still on paper logs or an older device, and a situational one, a compliance deadline coming up. That gives three segments, each with its own list, opener and offer, instead of one pitch to every carrier.

A common test before any segment gets budget: can you measure it, is it big enough, can you reach it, does it respond differently from the others, and can your team actually run a program for it?

Common segmentation mistakes

• Stopping at firmographics. Two companies of the same size and industry can have opposite priorities. Size gets you to the right room, not the deal.
• Too many segments. Each one splits the budget, the content and the team’s attention. Fewer, better-served segments beat seven thin ones.
• Segments sales doesn’t recognize. If reps can’t see the segments in the accounts they work, the model gets ignored.
• Forgetting timing. John Dawes of the Ehrenberg-Bass Institute, writing for the LinkedIn B2B Institute in 2021, estimated only about 5% of business buyers are in market in a given quarter. A good segment is still mostly not buying today.
• Never revisiting. Check segments against new win and loss data on a schedule.

How segmentation shows up in a revenue system

Segments only matter once they’re in the data: a field on every account, a list per segment, and reporting that splits win rate and cycle length by segment. That’s the account data we build and keep current through our datasets work.

Terms that sit next to segmentation

Segmentation is usually built from firmographic filtering and technographic data, and narrows a total addressable market into the part you can win. The best segment becomes your ICP, and the most valuable accounts in it often get an account-based marketing program.