How firmographic segmentation strategies target audiences more effectively

All good marketing teams know that the key to engagement is understanding the customer. 

The next important step is designing a marketing strategy that caters to that customer efficiently — in other words, one that optimizes the business’s time, money, and resources. 

The good news is, technology makes that goal easier because it helps marketers identify and target specific customer segments, which are defined by certain attributes and more likely to engage with the brand and convert. 

There are six main types of customer segment: geographic, demographic, behavioral, technographic, psychographic, and firmographic. 

In this post, we’re going to focus on firmographic segmentation. We’ll discuss the definition of firmographic, and then we’ll look at some of the benefits of incorporating firmographic variables into content personalization and marketing strategies. 

Firmographics defined

The term “firmographic” refers to descriptive attributes that can be applied to an organization, company, or any other type of firm. These attributes can help a brand identify potential customers and understand their behavior, and then use that insight to enhance its marketing and sales strategy for its target audience.

Firmographic data, therefore, includes information relating to a company's size, industry, location, revenue, and so on. This data can be gathered from public sources such as annual reports, press releases, and company websites, but can also come from surveys and interviews with company representatives. There are also plenty of software tools that can help firms identify firmographic data — even when that data involves anonymous users.

What is firmographic segmentation?

Firmographic segmentation takes place in much the same way as other methods of customer segmentation. Once the relevant data are collected, brands can sort their customer-companies into firmographically defined groups or segments, and then use that segmentation to target their marketing and sales efforts more efficiently.

While there are numerous firmographic variables to consider, the most commonly used include:

• Industry

• Company size (number of employees)

• Company type (customer, former customer, prospect, partner, etc.) 

• Location

• Job titles

• Company legal structure (corporation, partnership, sole proprietorship, etc.)

• Annual revenue

• Performance over time (growth rate)

The benefits of firmographic segmentation

The typical application of firmographic segmentation is in B2B contexts, where brand teams can use meaningful customer groups to refine and personalize their content for a target market. With that in mind, sales teams and marketers can save time by having access to pre-segmented client data about each potential customer's size, location, or revenue bracket.

Here are some of the key benefits of filmographic segmentation to the wider marketing strategy.

Better resource allocation

Firmographics can be integrated into marketing strategies fairly easily, and at low cost, which helps marketers achieve their objectives without breaking the budget.

There are time-saving benefits too. Marketers typically need to spend considerable time analyzing raw data and complex metrics in order to generate leads. A firmographic segmentation strategy, on the other hand, will save time in the long run by preventing them from wasting hours on low-potential segments or low-priority leads. Instead, they'll be able to identify potentially valuable prospects, and target their marketing efforts, and content, more effectively.

Better interaction with customers

Like any other segmentation approach, firmographic segmentation can help businesses facilitate more personalized communication with their customers, which ultimately results in better engagement and interaction.

For example, when a company segments existing customers on their website, they can use that segmentation to implement updates to messaging and hide irrelevant pages in order to ensure that those customers see only high-value content that’s relevant to them.

Higher ROI and better targeting

By developing a better understanding of firmographic data, such as size, structure, and market size of potential B2B buyers, companies can identify and target their most valuable prospects more effectively. Not only does this increase potential sales and revenue, but it drives down the cost of pursuing leads and so boosts ROI. 

Firmographic segmentation variables

There’s obviously no fixed number of variables that brands could use in firmographic segmentation, but let’s take a look at some of the most common.

Industry

All companies naturally operate in at least one industry, and so that attribute is a common firmographic segmentation variable. Brands may tailor content to the restaurant industry, for example, by advertising specific types of payment device with features for tipping and bill-splitting — while naturally filtering out companies not in the industry. 

Location

Segmentation based on location allows marketers to categorize companies and organizations based on where they're located. This variable may include country, region, state, city, and so on.

For example, a company that runs an online marketplace for freelancers may choose to run marketing campaigns in New York City because the city has such a high concentration of businesses. 

Company size

A marketing campaign targeting small businesses will differ from a campaign targeting a large company. It makes sense for brands to target customers that can afford the products or services that they’re selling — rather than spending their advertising budget on prospects that can’t or won’t purchase from them. 

There are two common metrics for company size: annual revenue and number of employees. Marketing teams should seek to collect this data and use it to assign companies to the relevant segments. 

Company structure

Company structure refers to the way that a company’s activities and departments are organized in order to achieve its business goals. Companies typically fall into one of the following structure classifications:

• Sole Proprietorship

• Partnership

• Limited Partnership

• Corporation

• Limited Liability Company (LLC)

• Non-Profit Organization

• Cooperative (Co-op)

• Publicly Owned Companies

Certain company structures, and the business activities associated with them, are often useful segmentation data points, and help brands boost the efficacy of personalization efforts.

The challenges of firmographic segmentation

Common challenges that brands face when implementing firmographic segmentation strategies include:

• Data collection and accuracy: Obtaining accurate and up-to-date firmographic data can be challenging, especially if the relevant data is scattered across multiple sources.

• Data integration: Integrating firmographic data with other types of segmentation (demographic, geographic, behavioral, etc.) can be time consuming and add complexity to the wider segmentation process. 

• Resource allocation: Many organizations struggle to allocate sufficient personnel and finances to the development and execution of their firmographic segmentation strategies.

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

Industry-specific firmographic segmentation factors

Industry-specific factors may impact a brand’s choice of variables when implementing firmographic segmentation in their marketing and sales strategies. Consider the following examples.  

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

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

• High regulation: In highly regulated industries, such as banking and finance, businesses must ensure that their segmentation efforts comply with relevant privacy regulations and ethical guidelines.

Bottom line

Firmographic segmentation is a way for brands to provide corporate customers with tailored digital experiences that are more personalized and more engaging — and, at the same time, make life easier for brands by making marketing efforts more efficient, and increasing the likelihood of conversions. 

Contentful makes customer segmentation easy with a suite of personalization features available with the Contentful Platform. To find out more, explore our definitive personalization tool, Contentful Personalization or get in touch with the sales team to discuss options. 

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