SMEs aren’t all the same – getting beyond firmographics
Firmographics are used by many B2B marketers to segment their prospects, but these don’t allow for the individual characteristics of SMEs to be taken into account.
It’s time for a different approach.
The good news is that, according to Circle Research, 91% of B2B marketers segment their market. The not-so-good news, though, is that 81% of them rely on firmographics. Not so good because firmographics are the business equivalent of demographics. They lump small businesses together by size, location and industry but are blind to the individual characteristics that sets one small business apart from another.
Consider the typical high street. The artisan coffee shop and the pound store next door – they may both be retailers, operating from similar-sized, adjacent premises, but that’s precisely where their similarities end. Their customer bases, operating costs, drivers and values are worlds apart.
We asked ourselves if there’s another, better way of slicing the SME pie.
One segmentation technique is psychographics. This takes the personal and emotional drivers of buyers into account. You know, the human stuff.
We climbed down into the research trenches with Imperial College London to look at the effectiveness of two psychographic segmentation approaches.
The ‘Personal Investment’ approach
We wanted to know whether a small business decisionmaker’s personal investment in the company’s success influences their buying decisions. The study respondents were segmented according to their level of personal investment:
- Very Personally Invested (57% of respondents) – Strong emotional investment and a high personal stake in the business.
- Fairly Invested (30%) – Fair emotional investment.
- Less Invested (13%) – Not particularly emotionally invested in the business.
It came as no surprise that most small business decisionmakers fall into the ‘Very Personally Invested’ category, as they’re very often the owner of the business. For these people, their business is their life, and this has significant implications when it comes to engaging them.
For a start, they are almost twice as likely to want their suppliers to share similar business values – because they’re looking for partners, not just suppliers. They also want to make a personal connection, being four times more likely to value highly the ‘friendliness and personable nature of sales representatives’.
The ‘SUE’ approach
SUE isn’t your new personal segmentation guru, SUE is an acronym that stands for:
- Significance: What could a purchase mean to the customer’s business?
- Urgency: How time-critical is their purchasing need?
- Ease: How simple is it to research and buy the product?
This segmentation model diagnoses the unique factors that drive each purchase and predicts how levels of rationality might rise or fall with each decision.
Purchases with a high SUE score – such as switching accountancy partner or buying a new phone system – lead to a more calculated, analytical decision-making process. Purchases with a low SUE score – like buying office supplies – lead to more emotional decisions. Once you’ve worked out whether your proposition will register a higher or lower SUE score, you can fine-tune your approach to fit.
So, for more scientific purchase processes, you need to:
- De-risk it with trials and demos.
- Lighten the research load with helpful content and tools.
- Support prospects online, over the phone and in person.
And for less critical investments, you need to:
- Get creative with your communications – it’s okay to entertain!
- Make personal connections with buyers at every touchpoint.
- Be the easiest to buy from.
Some of this may sound obvious, but it’s amazing just how often people can cruise past common sense, and how helpful it can be to have a smarter model to hand for thinking small.