B2B eCommerce Segmentation and Why You Need It

 

In B2B Commerce, customer segmentation and personalization is a complex topic. At one end of the spectrum I’ve seen companies who need to be convinced there is any way to segment their market. They’ve used the same 4″ binder for selling to their customers so long you get the occasional “We’ve always done it this way” instead of an explanation. At the other end of the spectrum, a company’s pre-digital-transformation business processes seem to rely exclusively on personal relationships, email, and witchcraft – prices, behavior, and even products are unique for every customer (or so they tell me).

When a small shop commits to a completely out-of-the-box, fully-configured SAAS product, you find one that seems close enough and work with it (or work around it) to get the job done. More frequently, I consult with major players moving to major-league platforms. These platforms have virtually unlimited freedom to configure catalogs, localization, customer segments, and unique pricing per User Group. The net result of this total freedom, of course, is going digital without transforming anything about the business process, or the company’s sustainable competitive advantage.

So if you’re at the ultra-complicated end of the spectrum, here are some ways get thinking about segmentation and personalization:

Unique Catalogs –

Catalogs are structured around two things typically: the category structure that groups products together and the classifying attributes that are shared by all products at a given category level. A great commerce site creates a selling hierarchy that makes it intuitive and fast for a customer to drill down to the products they want to purchase. Don’t underestimate the flexibility you have to customize this selling hierarchy based on geography, seasonal changes, or user group. Essentially, segmentation (and custom catalogs) needs to follow the distinct ways each kind of shopper completes their drill-down and purchase. If the main difference in behavior is average annual spend, segment that way. If the primary distinction is limited to a handful of major customers, you can give each of them a unique catalog. If there is a clear distinction in procurement methods, segment by purchase processes. Like anything else, draw a line in the sand, watch your metrics, and talk to your customers!

Unique Pricing –

When I shop on Amazon, it is pretty simple to compare two identical products based on price and reviews. In the B2B space, life isn’t so simple. That said, there are B2C equivalent best practices for most B2B problems. If pricing differences perfectly follow the distinct catalogs you’ve created, you can manage prices that way. If you have multiple price lists (even one for each customer) you can integrate with your ERP or use hot folders to keep these update. Beyond known pricing differences, however, there may be customers who don’t have a price yet and need to negotiate a quote, customers who have a price but want to re-negotiate a quote, and customers who are purchasing against multiple contracts for the same commodity. Any industry that has embraced negotiated price differences will need to pay special attention to personalization of prices. That requires you to segment user experience related to pricing as well. After all, combining all the options in one experience when it isn’t applicable invites misery and customer missteps. Get this really wrong and you can expect angry phone calls.

Unique Service Levels –

Generally, B2B buyers are less whimsical and (hopefully) drunken-impulse driven in their buying decisions. They are less likely to find you through social media rather than search engine results, and questions of omnichannel experience and conversion funnels are often inapplicable. So while pricing is more complex, buyer behavior is likely simpler in B2B – this leaves you the opportunity segment based service level either explicitly (with a service agreement) or behind the scenes. Segmenting based on opportunity size, customer lifetime value, or average spend can be a powerful was to tailor the digital user experience to the unique level of service you’ll provide. For a corollary in the B2C world, think Amazon Prime or AppleCare. If you have a top 20% of B2B customers that high revenue and high margin, give them the concierge treatment in their eCommerce experience too. If your lowest 20% needs to buy additional support or service, you know what that costs – make a product for it, cross-sell it, and let them choose based on their needs.

No Segmentation, Less Scalability

The most important takeaway is that if you haven’t thought about market segmentation for your B2B eCommerce experience, do it right away! If you are either assuming a one-size-fits all approach or chaotically customizing every transaction, neither are scalable.

 

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