Are you looking for ways to improve your marketing strategy and increase sales? It’s time to seriously consider utilizing the power of firmographics!
What do you mean by firmographics, you might ask? What are examples of firmographics and firmographic segmentation?
This detailed guide will help you learn all you need to know about this topic, so dig in!
What Are Firmographics?
Firmographics are descriptive characteristics of businesses that are used to divide them into meaningful market categories. In simple terms, they are what demographics are to people, but for corporations and organizations.
Market segments are defined by B2B companies using firmographics. These market segments, in turn, aid sales, and marketing by offering a more in-depth insight into the target market, resulting in enhanced efficacy for both.
Businesses can target their sales and marketing communications on the companies that are most likely to engage with their messaging and acquire the products or services being offered by grouping organizations with similar firmographics together.
Firmographics provide insight into who is buying certain items, who isn’t buying those products, and a better knowledge of B2B clients and the market in general to marketing teams.
However, before using firmographics for market segmentation, make sure you have a correct definition of the word “firm.”
Governmental and non-profit organizations, as well as major companies, law firms, independent contractors, and tiny retail stores, are all examples of businesses.
Firms can be freestanding entities engaged in a specific area of activity, minor sections of bigger corporations, or whole corporations.
Firmographics vs. demographics
Ideal client profiles are created using both firmographics and demographics.
Demographics are used to segment customers, whereas firmographics are utilized to target other firms that represent prospective clients.
In a nutshell, demographics is concerned with individuals, whereas firmographics is concerned with businesses.
The following is a list of demographic data:
- Gender
- Age
- Profession
- Income
- Status and structure of the family (married/single, children/no children, etc.)
And here is a firmographic example:
- Industry
- Location
- Size
- Structure or status
- Performance
Firmographic data in detail
Firmographics define businesses over a wide range of dimensions and characteristics. The most prevalent data used in firmographic market segmentation are:
Industry
Segmenting markets by industry type is a logical way to do so. To put it another way, it makes logical sense to group businesses that provide comparable goods and services together.
Firmographic segmentation helps firms to tailor their sales and marketing efforts to the requirements and interests of each specific sector by grouping enterprises in the same industry together.
This is a far more effective strategy than merely sending mass messages to businesses in various industries and hoping that something sticks.
Rather than establishing communication with many businesses across all industries, a corporation can focus its efforts, boosting the likelihood of more sales.
Size
Different communication and message techniques will resonate with companies of various sizes.
For example, marketing materials that are most effective when aimed at a small business won’t be as effective when directed at a huge corporation.
Markets can be segmented based on the size of the enterprises that make up the market, allowing for more targeted marketing and sales activities.
The revenue and the number of workers are the most common measures of a company’s size. Companies are then further categorized into categories based on these two criteria:
- Micro-companies
- Small businesses
- Medium-sized businesses
- Large corporations
Location
Because giving relevant, regionally specific information in marketing and sales communications might enhance the efficiency of the messaging, location is a useful feature to consider during firmographic market segmentation.
Perhaps the interests of a certain firm are influenced by, for example, the weather at a certain location. If this is the case, it should be factored into the messaging sent to the company.
Segmenting a market based on the geographical location of the companies that make up the market also helps companies to see which geographical regions they are succeeding in and which need more attention.
As a result, organizations are categorized based on factors such as city, state, area, and so on.
Yes, e-commerce is fast expanding, with e-retail sales estimated to account for 22% of all retail sales globally by 2023, so it’s easy to underestimate the value of this data.
However, geographic location should not be seen as a hazy variable in segmentation. For many businesses, the possibility of a sale is still determined by proximity to the consumer.
Status or Structure
Firmographic data such as status or structure refers to the relationship between companies or the legal standing of an organization. Individual businesses, for example, might be classified as:
- Businesses that operate on their own
- Subsidiaries – smaller enterprises that are part of a bigger corporation
- Entities that stand alone
- Corporations with a limited liability
- Partnerships
- Privately held businesses
- Companies that are owned by the public
You can dramatically improve the success of your sales and marketing activities if you know which kind of business your product or service is most valuable to.
Performance
In firmographic segmentation, the performance variable refers to a firm’s features in relation to its business execution over time.
In other words, putting companies together that have been there for a comparable period of time, have seen similar rates of growth or decline, or have had similar profits and losses is a wonderful approach to assure effectiveness in terms of personalized marketing and sales efforts.
You’ll be able to construct your ideal client profiles once you’ve segmented your list using the above-mentioned firmographic data. You’ll select the companies on whom you’ll focus your targeted marketing and sales campaigns using various communication channels for successful sales.
The Purpose of Firmographics
When you define firmographics and segment the market based on them, it allows you to:
- Reveal business insight
Firmographics assist firms get business insights into B2B target markets by answering often asked questions like:
What are the geographical locations of the companies in this target market? How many people do they have on staff? What is the worth of each company?
These are just a handful of the many business insights that may be uncovered by using firmographics.
- Categorize companies by industry
Firmographics allow B2B companies to classify companies in their target markets based on their industry type.
Tech businesses, for example, will have distinct characteristics than educational institutions or government agencies. As a result, these companies should be advertised and sold in a different way.
- Optimize marketing strategies
A company’s marketing strategy can be successful if it promotes an adequately focused and personalized message that corresponds with the pain issues of each market group.
Marketers strive for the strategic trifecta of sending the right message to the right people at the right time, and firmographic data will help them accomplish that aim.
- Avoid lost opportunities
Optimizing marketing techniques and employing a data-driven sales strategy decreases the danger of losing out on business possibilities.
- Understand trends in data
Professionals can detect patterns in data by evaluating reporting and analytics from firmographically categorized marketplaces.
These patterns can subsequently be taken into consideration throughout marketing and sales operations, resulting in increased performance.
The Benefits of Firmographics
Firmographic data’s major purpose is to assist firms in segmenting potential B2B consumers into relevant groupings, hence shortening the gap between observation and action.
Marketers, sales teams, and C-suites don’t need to spend time and effort segregating data that categorizes potential clients by size, geography, revenue, or current growth trajectory if they have access to firmographics.
Organizations can profit from segmentation in a variety of ways, including:
1. Improved market targeting
Understanding the physical and market size of potential B2B buyers can help salespeople target them more effectively. The processes from initial contact to sales conversion are dramatically different for smaller firms than they are for large corporations.
While many small and mid-sized businesses want one-size-fits-all solutions to decrease overall complexity, many companies seek custom-built tools and technologies to handle specific concerns.
2. Enhanced customer service
Customer service can be improved by using essential firmographic data on where firms are situated and how their staff is spread geographically.
Consider a manufacturing company that operates solely within a single state: it’s likely that local service providers will be prioritized. Multinational corporations, on the other hand, frequently want on-demand, dispersed digital services.
3. Long-term buying potential
B2B companies who move up the market have the opportunity to get in on the ground floor and benefit from growing conversion volume over time.
Meanwhile, businesses that are downsizing have sales potential as well, but they require a different strategy with services that are both cost-effective in the near term and scalable over time as revenue objectives change.
4. Increase Sales
When all of these elements are considered together, sales will rise.
Your company’s marketing will be more effective, and your sales force will have a better understanding of the desires and requirements of the organizations in your target markets, allowing them to clinch more deals.
Conclusion
Firmographic segmentation is an excellent approach to familiarize yourself with the complexity of your target market.
You can now improve the efficiency of your marketing and sales activities across the board by grouping potential companies together based on similar characteristics.
This type of well-informed business strategy will create a resonance between your messages and your target audiences, resulting in increased ROI across the board.
When you think about it, there is no downside to utilizing firmographics in your marketing strategy, so why not take advantage of it?