4 Simple Firmographic Segmentation Strategies to Effectively Target Your Audience

Understanding the customer is the key to success.

In order to succeed, marketers must know who their target customer is and design a strategy that caters specifically to them. Otherwise, they're wasting time and money.

With the use of technology, marketers can now identify and target specific segments based on demographics, psychographics, and behavioral variables. Moreover, they're currently using firmographics.

But, what is firmographics?

Firmographics Definition

Firmographics is a term that refers to the descriptive attributes of an organization, company, or any other type of firm. This information can be used to identify potential customers, understand customer behavior, and make marketing and sales decisions.

Firmographics include data on a company's size, industry, location, revenue, and other factors. This data can be gathered from public sources such as annual reports, press releases, and company websites. It can also be gathered through surveys and interviews with company representatives.

Firmographics can be used to segment companies into groups for marketing and sales purposes. For example, companies can be grouped by industry, size, or revenue. This allows businesses to target their marketing and sales efforts more efficiently.

Firmographics is a valuable tool for businesses of all sizes. It can help them identify potential customers and understand customer behavior. Using firmographics can help businesses make better marketing and sales decisions.

What Is Firmographic Segmentation

Firmographic segmentation is the process of dividing customers into groups based on shared company or organization attributes. Firmographic data is gathered and evaluated in the same way as the other forms of segmentation to understand the target audience's needs and wants.

While countless variables can be used, these are typically the commonly used factors of firmographic segmentation:

• Industry Type

• Company Size (number of employees)

• Location

• Job Titles

• Company Structure

• Annual Revenue

• Performance Over Time (growth rate)

Benefits of Firmographic Segmentation

Firmographic data's primary purpose is to assist firms in segmenting potential B2B consumers into meaningful groups.

This is how sales teams and marketers can save time and resources by having access to pre-segmented client data about each potential customer's size, location, or revenue classification.

Here are several reasons using firmographic segmentation is beneficial :

1. Better Resource Allocation

Firmographics can be easily integrated into the marketing process at a low cost, allowing marketers to achieve their marketing objectives without spending much money.

Furthermore, it helps save time too. Marketers need to spend considerable time analyzing the metrics at first. However, adopting firmographics will save them time in the long run by preventing them from wasting hours on unproductive leads. Instead, they'll spend their time and energy on prospects who are better qualified.

2. Better Interaction with Customers

Like any other segmentation approach, firmographic segmentation can also help businesses develop a more tailored strategy for their customers, allowing them to capture their customers' attention.

By creating a more personalized communication and strategy with their customers, companies can engage and interact better with their customers.

3. Higher ROI and Better Targeting

Understanding the firmographic data such as size, structure, and market size of potential B2B buyers can help companies target potential prospects more effectively.

Hence, this will increase companies' sales and revenue.

Firmographic Segmentation Variables

While countless variables can be used, these are typically the commonly used factors of firmographic segmentation:

1. Industry

The industry is one of the most common ways of firmographic segmentation because all the companies naturally operate in at least one industry due to their products or services.

It's feasible to group companies that sell similar goods and services together. This type of grouping enables companies to tailor their strategy to the needs of enterprises in a particular industry.

In the following example, you can see a restaurant management system ad that explicitly targets companies in the restaurant industry.

Since it's a particular product, only businesses in the restaurant industry can use this product. Hence, using firmographic segmentation is crucial to filter out irrelevant industries.

2. Location

Same as an industry, location is another one of the most fundamental and easy ways of firmographic segmentation.

Segmentation based on location allows marketers to categorize companies and organizations based on where they're located. Therefore, companies can be categorized according to variables such as a country, region, state, city, and so on.

Upwork, a marketplace for businesses to hire freelancers, chose New York City to run its marketing campaigns. Since NYC is the home to a countless number of businesses, it's feasible to promote Upwork in there.

The bottom line, companies may see which geographical regions their marketing campaign is most successful in and which places they should devote more time and effort by segmenting the market by their location.

3. Company Size

Company size data shows how big or small the company is. There are two commonly used parameters to measure the company size:

1. Annual Revenue

2. Number of Employees

Company size allows marketers to target the right audience with their campaigns. Obviously, the impact of a marketing campaign targeting small businesses will be different from the impact of the same campaign targeting a large company.

Targeting based on annual revenue is important because marketers want to market to organizations that can afford their offer rather than spending their advertising budget on prospects who can't.

That's why it's important to segment customers according to their size - both by annual revenue and number of employees.

Here is an example from MasterCard that targets small businesses:

Prospective customers can be segmented based on their firm size, which can enable companies to accurately predict their next customer and prevent wasting time chasing down leads that aren't worth their time.

4. Company Structure

Firmographic data such as company structure refers to the relationship between companies or the organization's legal standing. Businesses could be classified as:

• Sole Proprietorship

• Partnership

• Limited Partnership

• Corporation

• Limited Liability Company (LLC)

• Non-Profit Organization

• Cooperative (Co-op)

• Publicly Owned Companies

Companies may dramatically improve the efficacy of their sales and marketing activities if they know which types of businesses their product or service is most valuable to.

In the following example, Google specifically targets Non-Profit Organizations to offer a special deal for them.

Segmenting customers based on structural firmographic variables can help companies tailor their sales and marketing strategies for potential buyers that are likely to purchase their product or service.

The Bottom Line

Firmographic segmentation is a great approach to divide potential customers into groups based on similar characteristics, making the target market more precise and efficient. Instead of a one-size-fits-all approach, businesses will provide potential customers with what they desire, resulting in improved ROI and increased sales.

Firmographic segmentation reveals useful information that can be used to guide and improve business strategies. But companies using firmographic segmentation should keep in mind that firmographic segmentation, like demographic segmentation, is one of the most basic types of segmentation. However, this doesn't minimize the importance of firmographic segmentation.

So, how can a company collect firmographic data to generate firmographic segments relevant to their business and help corporate success?

It all starts with asking the right questions. If you don't know where to start, start asking the following firmographic questions:

• When did the company start its operations?

• How many employees company has?

• How many offices the company has?

• How many employees working in each office?

• What is the annual revenue of the company?

• What is their position in the market?

• Which phase are they in - growth, downsizing, or remaining relatively stable?

• What does their company structure look like - both organizational and hierarchical?

Frequently Asked Questions About Firmographic Segmentation Strategies

How Can Businesses Effectively Identify and Target Their Ideal Customer Profile Using Firmographic Segmentation?

Businesses can effectively identify and target their ideal customer profile by analyzing various firmographic variables such as industry, company size, revenue, location, and organizational structure. By segmenting their target audience based on these criteria, businesses can create tailored marketing messages and offer that resonate with specific groups of customers. To achieve this, businesses should:

• Collect and analyze relevant firmographic data from multiple sources, such as public databases, industry reports, and social media.

• Create detailed customer personas representing different segments of the target audience.

• Develop targeted marketing strategies and campaigns that cater to the unique needs and preferences of each segment.

How Can Firmographic Segmentation Be Used to Improve Marketing Campaigns and Increase ROI?

Firmographic segmentation allows businesses to craft personalized marketing campaigns that resonate with their target audience. By understanding the unique characteristics of each segment, businesses can:

• Develop tailored marketing messages that address the specific pain points and needs of each group.

• Allocate marketing resources more efficiently by focusing on high-value segments.

• Improve customer engagement and conversion rates by delivering relevant content and offers.

• Measure the effectiveness of marketing campaigns by tracking performance metrics for each segment.

What Are Some Common Challenges Businesses Face When Implementing Firmographic Segmentation Strategies?

Some common challenges businesses face when implementing firmographic segmentation strategies include the following:

• Data collection and accuracy: Obtaining accurate and up-to-date firmographic data can be challenging, as information may be scattered across various sources.

• Data integration: Integrating firmographic data with other types of segmentation (e.g., demographic, geographic, behavioral) can be complex and time-consuming.

• Resource allocation: Allocating sufficient resources, including personnel and budget, to develop and execute effective segmentation strategies can be a challenge for many organizations.

• Evolving market conditions: Changes in market conditions, industry trends, and customer preferences may require businesses to constantly update their segmentation strategies.

Are There Any Industry-Specific Considerations Businesses Should Keep in Mind When Developing Their Firmographic Segmentation Strategies?

Yes, industry-specific considerations may impact the choice of firmographic variables and the effectiveness of segmentation strategies. For example:

• In B2B industries, factors like decision-making processes, purchasing cycles, and regulatory compliance may play a significant role in shaping customer behavior.

• In technology-focused industries, the rate of innovation and product lifecycle may demand more frequent updates to segmentation strategies.

• In highly regulated industries, businesses must ensure that their segmentation efforts comply with relevant privacy regulations and ethical guidelines.