Behavioral segmentation divides customers according to their behavior patterns when they interact with a company. If you’ve segmented your business-to-business (B2B) customers in this way, you are already way ahead of many of your competitors. When it comes to segmentation, or really any type of customer knowledge, any thoughtful approach is better than none.

But there is a level that goes beyond most behavioral segmentation approaches. For a little additional effort, we’ll show you how you can achieve deeper and more practical insights. And you don’t have to throw out your behavioral analysis!

The Advantages and Limitations of Behavioral Segmentation

Most of the behavioral segmentations that we review segment customers based on their past purchase behavior and degree of loyalty. “Competitive Loyalists,” “Repeat Purchasers,” “High Potential Up-and-Comers” and the like are typical segment names that often come out of behavioral segmentation studies.

Knowing that a customer is in one of these behavioral segments allows sales reps to know what type of sales environment they are going into. It may even help marketing and sales teams to target better. For example, too much time spent with Competitive Loyalists might endanger the organization’s growth goals.

But most behavioral approaches are based on what a customer has done in the past and not why they have done those things. This can be like trying to drive a car by looking in the rearview mirror only.

Why Needs-Based Segmentation Leads Directly To a Customer Action Plan

Needs-based segmentation divides customers into groups based on the benefits they are seeking when they make a purchase. It describes why they behave the way they do.

B2B needs-based segmentation should be done at a company, not an individual buyer level. This eliminates “personality-based” segmentation approaches that can be confusing and overly complicated because different stakeholders at the same company may fall into different segments.

A company-level needs-based approach identifies an entire company with one — and only one — segment. This is simpler to execute on, but still very powerful. It is also logical because individual stakeholders in that company must support the company’s overall needs or they won’t be there for long.

The main question to ask yourselves in determining a needs-based segmentation is: “what are the different ways that our customers are trying to differentiate their companies from competitors?” Under this approach, we’ll often see segments emerge with names like “Efficiency Seekers,” “Customer Intimates” and “Innovators.” These describe the different ways that companies are trying to uniquely position themselves in their markets.

Knowing a company’s needs-based segment enables you to put together a plan for how you are going to get them to behave in the future to reach mutual goals (e.g., buy from you instead of from competitor’s, or continue their loyal behavior towards your company, etc.)

The customers’ needs-based segment tells you what you should and shouldn’t talk about in marketing and sales dialogue. For example, “Customer Intimates” might not want to hear about ways to make their operation more efficient, especially if they perceive that streamlining will make their customers feel shortchanged.

The Advantages of Combining the Two Approaches

We said earlier that you don’t have to throw out your behavioral analysis to use needs-based segmentation. The combined approach enables you to have more robust strategies.

Overlaying needs-based segmentation to work with your behavioral approach can take your targeting to the next level. For instance, the behavioral “Competitor Loyalist” that you are avoiding might actually be a good prospect if you know that they are a needs-based “Efficiency Seeker” and you have something new to offer that matches their needs.

Needs-Based Approaches Are Easier To Execute Than Most Think

Companies utilize behavioral segmentation more often than a needs-based approach, because it is perceived as easier to execute. Behavioral data such as purchasing history is readily available. So the actual process of segmenting individual customer accounts can be done more easily than determining the needs-based motivations of those same customers.

However, needs-based segmentation approaches can be conceived and customers can be “tagged” almost as easily if you involve the sales force in the process, as described here and here. And any level of effort to establish a needs-based approach is worth it because of its greater degree of helpfulness in unlocking more of each customer’s business.

When faced with choosing between a behavioral and a needs-based segmentation approach, we always advocate the latter. In matters regarding customers, knowing “why they do what they do” usually matters more than knowing “what they have done.”

But if you can do both, even better. To go back to our driving analogy, adding a needs-based segmentation to your customer behavioral analysis illuminates both the rearview and the front view. This is a huge advantage, especially when operating against competitors that may not be segmenting at all.