Success in the B2B software landscape hinges on understanding your target audience. The art of segmenting, sizing, and selecting the right market segments is a cornerstone for value creation, especially for small and medium-sized B2B software enterprises where there are limited resources.
Understanding your market
The first step is understanding the market and your company’s position within it. It is a no-brainer and yet we are all often guilty of not spending enough time analysing the market.
Research and analyse the industry
Gain a deep understanding of the vertical market you operate in. Identify the industry's size, growth potential, trends, challenges, and key players. Gather data on customer needs, pain points, and preferences within the industry.
Conduct market segmentation
Divide the market into segments based on relevant criteria. This helps you tailor your marketing and sales strategies to different customer segments. Segments are distinct subsets of the market based on one of the three primary criteria.
- Descriptors (Who buys?)
- Behaviours (How/When they buy?)
- Benefits (Why do they buy? What specific pain points are they tackling?)
B2B market segmentation typically uses “firmographics”(i.e., company size, sector and industry size). You can use one of these three criteria or even mix it up. In the B2B software markets, it is also often acceptable to have a small number of very large customers constituting a segment of their own. The biggest risk we have seen is not that you don’t segment but rather you over-segment. Having too many segments will drain your resources.
Analyse competitive landscape
This is crucial for small and medium-sized B2B software companies to understand their position in the market and strategise accordingly. Here are some steps to conduct a comprehensive analysis:
- Identify competitors: Start by identifying who your competitors are. This includes both direct competitors (those who offer a similar product or service) and indirect competitors (those who offer different solutions but target the same customer pain points). Don’t go too wide in your analysis. If you think you are going too wide ask yourself if the companies you identified as competitors are targeting the same vertical market.
- Product analysis: Understand the products or services your competitors offer. Look at their features, benefits, pricing, and how they are positioned in the market.
- Sales and marketing analysis: Analyse your competitors’ sales tactics and results. Understand their marketing strategies, channels they use, their online presence, content strategy, and customer engagement.
- Customer analysis: Understand your competitors’ target customers. Look at their customer reviews, feedback, and social media interactions to understand their customer satisfaction and loyalty.
- Market trends: Stay updated with market trends. This includes understanding the latest technologies, customer preferences, and regulatory changes that could impact the market.
- Continuous monitoring: The competitive landscape is dynamic and changes frequently. Hence, continuous monitoring is essential.
Remember, the goal of competitive analysis is not to imitate your competitors but to find opportunities to differentiate yourself and identify areas where you can outperform them. Look for gaps or under-served areas that you can focus on. Use this analysis to inform your business strategy, make data-driven decisions, and stay competitive in the market. It’s also worth noting that there are several free and paid tools available online that can aid in gathering and analysing this information. These tools can help automate parts of the process, making it more efficient and less resource-intensive.
Understand your value proposition
Very often, we are guilty of assuming we know what our products offer to the market. Do you, really? We have often come across founders and management teams often talking at length about the product offering but little do they know that the problem does not exist in the same way in the particular market they are targeting or that the competition offers largely the same solution. We would strongly recommend that management teams do a deep dive to determine how your product or service addresses the unique needs and challenges of the market. Highlight the specific benefits, solutions, or value you offer compared to competitors. A lot hangs on how clearly you can communicate your value proposition to your target market.
Know your target audience
It’s also important to understand who your target audience is in addition to your target market. The target audience is the actual individuals within your target customers who will be deciding whether or not to use your product, and the sales effort should be focused on these individuals.
Different segments within our target market can be addressed through tailored campaigns, allowing for specific messaging to resonate with diverse audience groups. Central to every marketing decision lies the significance of your target audience, influencing product development, branding, messaging, language nuances, positioning, and even keyword strategies.
When defining a B2B audience, it's essential to delve into a series of inquiries:
- Which industry do they operate in?
- What specific job functions do they hold?
- What levels of seniority characterise their roles?
- How does the purchasing process unfold within the company?
- Where geographically are they situated?
- Which social media platforms do they favour?
- What challenges or pain points do they encounter?
- What online content captures their interest?
- Which thought leaders or influencers do they follow?
- What sorts of companies do they affiliate with?
Asking these questions aids in creating a comprehensive profile of the target audience, facilitating tailored strategies and initiatives that resonate authentically with each subgroup within the market.
Utilise resources like LinkedIn to research the company’s employees and determine who is most likely the decision-maker for software purchases.
These will often be:
- CEOs & CTOs for smaller companies
- Head of the department your solution operates in
- Procurement or purchasing department
Identify ideal customer profiles
An ICP is a more specific profile of your target audience. It identifies the characteristics of your best customers. An ICP is the description of the perfect customer for your company or product. These people will likely use your product regularly and reap its benefits. While the target audience gives a broad overview of who might be interested in your product, the ICP helps you focus your efforts on those customers who are most likely to find value in your product and become loyal customers. Both are important for effective marketing and sales strategies.
Develop detailed profiles of your ideal customers based on characteristics such as company size, industry segment, revenue, location, decision-making authority, and specific needs that align with your product or service. Common ICP characteristics:
- Budget/revenue/company size: What is the lowest price that a customer would have to pay for your product or service?
- Industry: Are there specific verticals that you work within? Are there verticals that you don’t work with?
- Geography: Do you not sell to a particular region?
- Legality: Are there legal reasons that limit your potential customer base e.g. age, location, or government restrictions?
- Product or service limitations: Do you have a service level agreement (SLA) with your customers to meet a certain response time? If someone needs a response quicker, can you guarantee you’ll be able to meet that demand?
Communicating your value proposition
Craft compelling marketing messages and positioning statements that resonate with your target market. Emphasise how your solution solves their pain points, improves efficiency, reduces costs, or helps them achieve their specific goals. It’s extremely important to position your product that differentiate it from competitors. This is where Battlecards come in handy.
Battlecards are resources designed to help your sales team when they go head-to-head against a particular competitor. They give your sellers the facts, tactics, and materials they need to win competitive deals. It is typically a one-pager visual aid comparing your company’s product, service, features, and/or pricing to one or many competitors. It provides an overview of your competitors and shows how you stack up against them in crucial areas of performance and value. It’s a strategic tool that, when used correctly, can significantly increase your win rates.
Here are some steps small or medium B2B software companies can take to build and use battlecards effectively.
- Pick your categories: Identify the areas where you excel or lag compared to competitors, creating a list of topics for customer-facing battle cards. Be honest and persuasive in highlighting strengths and addressing weaknesses without overwhelming negativity.
- Choose your competitors: List your main competitors and assess their relevance in the buyer's journey. Determine if they warrant a dedicated battle card or should be part of a multi-competitor comparison based on their impact on the sales cycle.
- Do your research: Gather information from various departments within your organisation, such as sales, marketing, competitive intelligence, and customer success, to ensure accuracy and completeness in your battle cards. Conduct thorough research by examining competitors' websites, reviews, social media presence, and customer feedback.
- Highlight key differentiators: Identify what sets your product or service apart from the competition. This could be unique features, superior customer service, competitive pricing, etc.
- Prepare for customer challenges in advance: Outline common customer pain points and how your product can remedy them. This will help your sales reps tailor their solutions to the prospect’s unique needs.
- Update your content regularly: Recognise that the competitive landscape evolves. Continuously update your battle cards to reflect changes in your products, features, and competitors' offerings, ensuring your sales team has the most current and accurate information.
Creating these battle cards is an ongoing project, requiring consistent updates to remain relevant and provide valuable insights to your sales team. Utilising templates can streamline the process and maintain consistency across your documentation, enabling better preparedness to win deals in a competitive market.
Footnotes
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