This question has resurfaced over the past dozen or more years multiple times. It still seems to confound B2B marketing and sales leaders. A question I get asked often as well. The differences between B2B market segmentation and B2B buyer personas are significant. Misunderstanding the differences has also contributed to mislabeled buyer personas.
B2B versus B2C
As the world of business became more complex in the past 100 years, attempts to segment buyers and customers have become more sophisticated. We have databases to mine, new ways of stratifying, and automation enabling us to target more effectively. The value of segmentation has brought benefits to both B2B businesses and buyers. Helping to sharpen the focus on delivering solutions to perplexing problems.
However, having worked with several organizations recently, I noticed a trend about market segmentation and buyer personas in B2B environments. Which may be hampering ability to be effective with marketing automation. It has to do with approaches. Some are approaching B2B market segmentation with heavy emphasis on B2C market segmentation thinking.
The First Difference
I believe the first difference B2B marketers must grasp is recognizing B2B market segmentation as vastly different from B2C. We have been preconditioned to think of market segmentation in terms of demographics, psychographics, and geography. For B2B markets, these variables can sometimes apply but are rarely revealing. B2B complexity requires different dimensions, which address markets, company, buyers, geography, and product.
Facts versus Behaviors
When it comes to B2B market segmentation, buyer personas can support this effort with deep buyer insights into how buyers think and behave. Where the confusion lies is in mixing factual segmentation oriented intelligence with behavioral variables of buyer personas. I have seen some best-in-class organizations do very sophisticated B2B market segmentation work. Understanding the need to move beyond B2C market segmentation thinking. Integrating basic “firmographics” with sophisticated data classification. Here are some examples of the degree to which they were able to build factual-based segmentation models:
- Geographic clusters
- Units of success measurements
- KSF (Key Success Factors) used by buyers
- Market scope and size
- Industry specific initiatives and objectives
- Product application
- Purchase and decision criteria
- Buying centers
- Decision-making units
There are many more. What is important to recognize is the examples represent facts-based buyer intelligence, which can be gathered from multiple sources. The focus is quantitative oriented. It can include survey data on buying habits and preferences. Where the confusion can happen is buyer personas are crafted from these sources or interviews seeking factual buyer intelligence. This offers little in terms of deep profound insight. And, is not the intended purpose of buyer personas.
A buyer persona is intended to offer insight into buying behaviors. The focus is behavioral and the qualitative. We want to know, for example, how buyers in a certain segment, will behave. Thus, we are seeking the goals, which drives their behaviors. We are looking for the motivations on how and why they make purchase decisions. Attitudes, beliefs, the unarticulated, and other key behavioral variables become important to create a buyer persona. (For help on this, use the Buyer Insight Map™ to help identify six zones of buyer insights, which help in understanding how buying groups and buyers think as well as behave.)
I recently used this quote from a V.P. of Sales to highlight a big insight gap, which exists for CMO’s and CSO’s. I want to use it again for it also shows you what happens when you build buyer personas from facts-based buyer intelligence:
“We are not getting anything new or something we need to know. Knowing our buyer persona is a 40 something years old doesn’t help. We get from marketing so-called insights we have already known for years and they are just figuring out. The fact of, the main initiatives in a data center are x, y, and z is just that, facts. I’m not hearing anything new there. I expect my team to know this.”
Let me illustrate the differences with an example based on real experiences:
Company A is a provider of servers. They learned, through data analysis and surveying of both customers and their sales force, most servers were refreshed automatically in the financial segment. The average length of refreshing was every two years. Multiple data centers averaged 500-600 servers. A planned Refreshment Initiative is very commonly found in the buying center of the Director level for data centers. Two of the key decision criteria’s were price and a full coverage service level agreement. There is a known preference towards brand B and brand C servers.
Let me stop here for a moment. This is a point where I have seen buyer personas created. As you can see this is factual buyer intelligence. It offers no real deep and profound buyer insights into how and why a buyer within a data center will make a purchase decision in your favor. Let us continue:
After on-site qualitative interviews with data centers, which included day-in-the-life experiences, it was uncovered our buyer persona, an archetype named Dave, was driven by several of his business and personal goals. It was important for Dave to not have critical lapses in security breaches. A down server can be an opening to a security breach. Qualitative expertise revealed Dave had an unarticulated goal-directed motivation to not put his career in jeopardy. This also meant how he interacted with his superiors in gaining budget and contract approvals was important to him. There were certain buying process protocols, both formal and informal, which he needed to follow. Company A, aware of these deeper insights, was able to restructure their offering around the concept of preventing security breaches. It redesigned its content and sales conversation strategy as well as proposal submission process. Improving their pipeline close rates by 15%.
The simple graphical representation looks like this:
There is much more to this story. However, it highlights how a company can be informed on strategy. While brand B and brand C continued to target the Refresh Initiative and the criteria’s of price and SLA’s, brand A became more important to their buyer persona’s goals and key motivations. It was exactly the type of deep buyer insights they needed to overcome the preference towards brand B and brand C.
Understanding the key differences between B2B market segmentation and B2B buyer personas allows you to do something very powerful. Put them together as complements. They are meant to inform each other. You get the complete story you need to gain the edge – just like company A did in this case.
(Answers to the related questions, How Many Buyer Personas Do I Need?, Who Should We Interview When Developing Buyer Personas, and Who Should Build Buyer Personas? Marketing or Sales?, can be very helpful. I am available for further help and conversation on how to make optimal use of buyer personas. Please share widely – it will help those wrestling with market segmentation and getting to know their buyers.)