Designing and Implementing Customer Segmentation in B2B Industries : Company Perspective

Abstract

Customer segmentation is a widely studied concept, and its theoretical foundations offer clear guidelines on how segmentation should be conducted. However, in a B2B context, customer segmentation is highly complex and challenging. Companies themselves are complex entities, and customer needs and values can differ significantly. These needs are often difficult to interpret, and the situation is further complicated by the fact that the demand is also influenced by the customers’ customers. Therefore, the entire value chain and not just the direct customer relationship must be considered in segmentation. The difficulty of segmentation is further emphasized by the fact that the existing literature mainly focuses on theoretical approaches. Concrete descriptions of how segmentation is actually implemented in companies are rare. The aim of this study was to address these research gaps by bridging the divide between theory and real-world B2B segmentation practices. The research was conducted as a qualitative case study in a Finnish B2B company. The case company's customer segmentation process was examined through participation in internal discussions and observations. In addition, semi-structured interviews were carried out to explore how companies have implemented customer segmentation, what challenges they have faced, and what advice they would give to others. The study was complemented by a literature review that examined the definition, purposes, and challenges of customer segmentation. The interview data were analysed using thematic analysis, which allowed the identification and structuring of key themes. Finally, the collected empirical data were compared to existing literature, enabling a synthesis of theoretical and practical perspectives to address the research questions. The results show that the case company’s customer segmentation process is strongly aligned with the models presented in the literature, thereby validating existing segmentation literature. The case company encountered several of the same challenges identified in both earlier research and interviews with other companies. Notably, however, almost half of the challenges mentioned in the literature were not observed in the case company or among the other interviewed companies. Nevertheless, the study identified potential future challenges for the case company, including market changes, limited customer insight, data quality issues, and internal resistance. The use cases for customer segmentation were largely consistent between the literature and the interviews. Only one use case identified in the literature did not emerge in the interviews, which further supports the credibility of the literature. The case company was found capable of utilizing all identified use cases, although its segmentation framework supports some of them better than others. This research contributes a new empirical perspective to B2B customer segmentation literature by detailing the stages of the segmentation process, the practical challenges involved, and the actual use cases, and offering a concrete framework to support other companies. The study also provides insights for other B2B companies, recommending that they ensure alignment between segmentation and overall strategic objectives, leverage existing customer data, keep segments simple and actionable, and establish a continuous monitoring and updating rhythm for the segments. Future research could follow companies over a longer time period, compare segmentation practices across industries, and incorporate the customer perspective to better understand the long-term impacts, practical effectiveness, and improvements in customer experience resulting from segmentation.