"How do I find more customers?" Here's how every SaaS start-up can map out its market and find more customers.
A common go-to-market strategy is the beachhead, whether building a new product, entering a new market, or repositioning.
With its routes with US military hero Dwight Eisenhower, this approach is based on finding the right fit for your resource, strengths, and weaknesses and securing this before moving forward.
Today, we're showing how market segmentation helps a business find the "right" buyers and how you can run a segmentation exercise.
Let's go!
Market segmentation is best described by its originator, Wendell Smith:
Market segmentation is dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors who might require separate products or marketing mixes
Dividing a market into separate groups enables SaaS providers to see buyers and users in segments with similar needs or behaviors.
Each group is targeted with a marketing strategy that serves them directly.
While much marketing literature talks about four main types of market segmentation (demographic, psychographic, geographic, and behavioral), I'd suggest you look at the market to segment it into groups of customers based on:
1. Demographic Segmentation: This divides the market based on demographic data such as industry, company size, location, and decision-makers' job titles.
2. Firmographic Segmentation: This focuses on company characteristics such as industry type, annual revenue, number of employees, and geographic location.
3. Behavioral Segmentation: This groups ideal customers based on behavioral patterns, product and service usage, buying preferences, and decision-making processes.
4. Needs-Based Segmentation: Based on the specific needs, pain points, and goals of different customer groups.
5. Usage Segmentation: A segment including customers based on how they use the software, such as frequency of use, features utilized, or level of engagement.
6. Psychographic Segmentation: This means cutting up the market based on psychological variables such as attitudes, values, and motivations.
7. Geographic Segmentation: The final market segmentation strategy is geographical, looking at location, region, or country.
While there are seven types of market segmentation above, these sometimes don't cover the bases you want.
That's where Dr. Else van der Berg's market segmentation levels come in.
These are:
Market segmentation and positioning exercise interlink.
With positioning, you are looking at:
Inherently, you will need to create some form of market segmentation report to demonstrate which segments you're positioning for. This often ties into developing your ideal customer profile(s).
Think of the ideal customer profile as the perfect buyer of your software. They know you, they know the value, and they have a brilliant customer experience.
Running a market analysis to find your TAM is step one.
From there, you want to find your SAM. Market segmentation will feed market research to build 3-5 "bets" on which segment could be the ideal customer.
You'll then interview and test each segment. Your positioning, product, and resource will determine how you grade each segment.
One of the easiest market segmentation tools is the market segmentation spreadsheet.
Product-market-fit and SaaS product marketing expert Maja Voje has written extensively on grading your market segments via this spreadsheet.
Image courtesy of gtmstrategist.com/resource
This exercise allows you to focus on one ideal customer and nail that before considering any others. Market segmentation is the bedrock of growth.
There are plenty of variations in the process of market segmentation, but I like to go through this:
With your marketing segmentation live, you can feed your marketing team with the information they need to run highly effective, targeted marketing.
That's the dream of B2B marketers. Valuable insights and target segmentation are vital ingredients to a marketing plan.
That's because, from your segmentation analysis, you'll develop an ideal customer profile and associated buyer personas.
These guiding documents are used to build marketing strategies.
The most obvious illustration is with targeting. Whether it's building an account list for ABM or building adverts on Google or LinkedIn, you can leverage the segmentation.
From there, you'll enable your marketers to divide your product, collateral, and messaging into what is most relevant to each segment.
Going a step further, you can integrate this data into your HubSpot CRM for a constant reminder of the segment this contact and company sits within.
Lastly, it will help you target your marketing efforts better, as relevance is crucial in 2025 and beyond.
That's a valid question. After all, the bigger the audience, the better opportunity. Wrong.
Your software has been developed to solve several challenges. Those challenges come from users. Users come from buyers. It makes sense to know who those buyers are and what makes them tick.
When you understand your segment better, your marketing improves. When your marketing improves, you make better decisions. Two paths often come:
Whatever the path, you need to analyze your market. With market segmentation in B2B, you can:
The next step to getting product market fit with your segments defined is building your ideal customer profiles and segments.
To help you do that, we've created a free ideal customer profile and buyer persona template + guide pack in PowerPoint.
Click here to download your free ideal customer and persona PowerPoint templates and guide.
Stay tuned for more advice in our SaaS marketing for leaders series of guides. If you need help, you can talk to me anytime here.