Your sales team sells to anyone who will listen. Enterprise. SMB. Healthcare. Finance. E-commerce.
Win rate is 15%. Sales cycle is 6 months. Nobody knows who your ideal customer is.
This happens because most companies try to sell to everyone instead of focusing on specific, valuable segments.
Good GTM strategy isn't selling to everyone. It's identifying your highest-value segments and going deep.
Here's the framework for market segmentation that drives focused GTM and higher win rates.
The Market Segmentation Framework
Goal: Divide total addressable market into distinct segments, prioritize the most valuable ones
Segmentation dimensions:
- Firmographic (company size, industry, revenue)
- Behavioral (how they use product, usage patterns)
- Needs-based (what problems they're solving)
- Psychographic (values, priorities, buying criteria)
Output: 3-5 prioritized segments with specific GTM strategies
The Segmentation Process
Step 1: Analyze Current Customer Base
Gather data on all customers:
Firmographics:
- Company size (employees, revenue)
- Industry/vertical
- Geography
- Company stage (startup, growth, enterprise)
Behavioral:
- Product usage (DAU/MAU, features used)
- Contract size (ACV)
- Expansion rate
- Retention rate
Acquisition:
- Customer acquisition cost (CAC)
- Sales cycle length
- Win rate
- Channel they came from
Example data:
| Customer | Employees | Industry | ACV | Retention | CAC | Sales Cycle |
|---|---|---|---|---|---|---|
| Company A | 500 | SaaS | $50K | 95% | $15K | 90 days |
| Company B | 50 | Healthcare | $10K | 60% | $8K | 120 days |
| Company C | 2,000 | Finance | $150K | 98% | $40K | 180 days |
| Company D | 200 | SaaS | $30K | 90% | $10K | 60 days |
Collect for 100+ customers (or all customers if <100)
Step 2: Cluster Analysis
Look for natural groupings:
Cluster customers by:
- Similar firmographics (e.g., all mid-market SaaS)
- Similar behavior (e.g., all power users)
- Similar economics (e.g., all high LTV:CAC)
Example clustering:
Cluster 1: Mid-Market SaaS
- 200-1,000 employees
- SaaS/technology industry
- $25K-$75K ACV
- 90%+ retention
- $8K-$15K CAC
- 60-90 day sales cycle
Cluster 2: Enterprise Finance
- 1,000+ employees
- Financial services industry
- $100K+ ACV
- 95%+ retention
- $30K-$50K CAC
- 120-180 day sales cycle
Cluster 3: SMB (All Industries)
- 10-200 employees
- Mixed industries
- $5K-$20K ACV
- 60-70% retention
- $5K-$10K CAC
- 30-60 day sales cycle
These clusters become your segments.
Step 3: Calculate Segment Economics
For each segment, calculate:
Lifetime Value (LTV): LTV = Average ACV × (1 / Churn Rate)
Example (Mid-Market SaaS):
- Average ACV: $40K
- Churn rate: 10% (retention: 90%)
- LTV: $40K × (1/0.10) = $400K
LTV:CAC Ratio: LTV:CAC = LTV / CAC
Example:
- LTV: $400K
- CAC: $12K
- LTV:CAC: 33:1 (excellent!)
Payback Period: Payback = CAC / (ACV × Gross Margin)
Example:
- CAC: $12K
- ACV: $40K
- Gross Margin: 80%
- Payback: $12K / ($40K × 0.8) = 0.4 years (5 months)
Segment comparison:
| Segment | Avg ACV | LTV | CAC | LTV:CAC | Payback | Win Rate |
|---|---|---|---|---|---|---|
| Mid-Market SaaS | $40K | $400K | $12K | 33:1 | 5 mo | 35% |
| Enterprise Finance | $150K | $1.5M | $40K | 38:1 | 3 mo | 25% |
| SMB Mixed | $10K | $33K | $8K | 4:1 | 10 mo | 20% |
Insights:
- Mid-Market SaaS: Best LTV:CAC, good win rate, fast payback
- Enterprise Finance: Highest LTV, great economics, lower win rate (harder to close)
- SMB: Lowest LTV:CAC, slowest payback, lowest win rate
Step 4: Prioritize Segments
Score each segment on:
Market Attractiveness (1-10):
- Market size (TAM)
- Growth rate
- Competition intensity
Competitive Position (1-10):
- Win rate vs. competitors
- Product-market fit
- Brand strength in segment
Economics (1-10):
- LTV:CAC ratio
- Payback period
- Gross margin
Strategic Fit (1-10):
- Aligns with company vision
- Referenceable customers
- Expansion potential
Example scoring:
| Segment | Market | Competitive | Economics | Strategic | Total |
|---|---|---|---|---|---|
| Mid-Market SaaS | 9 | 8 | 10 | 9 | 36 |
| Enterprise Finance | 7 | 6 | 9 | 7 | 29 |
| SMB Mixed | 8 | 5 | 4 | 4 | 21 |
Prioritization:
- Primary segment: Mid-Market SaaS (score: 36)
- Secondary segment: Enterprise Finance (score: 29)
- Tertiary segment: SMB Mixed (score: 21)
Focus 70% of GTM resources on primary segment.
Segment-Specific GTM Strategies
Primary Segment: Mid-Market SaaS (70% of resources)
ICP (Ideal Customer Profile):
- 200-1,000 employees
- B2B SaaS company
- $10M-$100M revenue
- Product-led or sales-led GTM
- 5-20 person marketing team
Value proposition: "Launch products 10x faster—purpose-built for B2B SaaS marketing teams"
Messaging:
- Speed and efficiency (time savings)
- Built for product launches (not generic PM)
- Proven with other SaaS companies
Sales approach:
- Demo → Trial → Close (30-60 days)
- Mid-market AE (not enterprise)
- Focus on PMM buyer persona
Marketing channels:
- Product Marketing Alliance community
- SaaStr content marketing
- LinkedIn thought leadership
- G2/Capterra reviews (peer influence)
Content:
- SaaS-specific case studies
- Product launch frameworks
- GTM templates
Pricing:
- Pro tier ($299/month) as target
- Annual contracts
- 10-25 user seats
Success: 50% of new ARR from this segment
Secondary Segment: Enterprise Finance (20% of resources)
ICP:
- 1,000+ employees
- Financial services (banks, fintech, insurance)
- $100M+ revenue
- Regulated industry
- Compliance requirements
Value proposition: "Enterprise-grade GTM platform with security and compliance for financial services"
Messaging:
- Security and compliance (SOC2, GDPR)
- Enterprise features (SSO, SAML, audit logs)
- Proven in regulated industries
Sales approach:
- Enterprise sales process (120-180 days)
- Multi-stakeholder (IT, Security, Marketing)
- Proof of concept (POC) required
Marketing:
- Industry events (FinTech conferences)
- Analyst relations (Gartner, Forrester)
- Account-based marketing (ABM)
- CISO-focused content
Content:
- Financial services case studies
- Security & compliance guides
- ROI calculators for large teams
Pricing:
- Enterprise tier (custom, starts $500/month)
- Annual or multi-year contracts
- Custom integrations
Success: 35% of new ARR from this segment
Tertiary Segment: SMB (10% of resources)
ICP:
- 10-200 employees
- Mixed industries
- <$10M revenue
- Small marketing team (1-3 people)
Value proposition: "Affordable product launch tool for small marketing teams"
Approach:
- Self-serve (trial → paid, no sales touch)
- Product-led growth
- Freemium model
Marketing:
- Content marketing (SEO, blog)
- Free tools and templates
- Community (Slack group)
Pricing:
- Starter tier ($99/month)
- Monthly contracts
- Self-serve upgrade
Success: 15% of new ARR (mostly self-serve)
Allocate resources based on segment priority.
How to Communicate Segments Internally
Sales ICP Document
For each segment, create:
IDEAL CUSTOMER PROFILE: Mid-Market SaaS
Company Characteristics:
- Employees: 200-1,000
- Revenue: $10M-$100M
- Industry: B2B SaaS
- Stage: Series B-D
Buyer Persona:
- Title: VP Marketing, PMM Director
- Reports to: CMO or CPO
- Team size: 5-20 marketers
- Pain: Launching 10+ products/year in chaos
Technographic:
- Uses: Salesforce, HubSpot, Slack
- Tech stack: Modern SaaS tools
- Security: Basic (not enterprise requirements)
Qualifying Questions:
- How many products do you launch per year? (Target: 10+)
- How big is your marketing team? (Target: 5-20)
- What tools do you use to coordinate launches? (Look for: spreadsheets, Asana, Monday)
Disqualifying Signals:
- <5 product launches per year (not enough volume)
- Enterprise security requirements (wrong tier)
- <$10M revenue (too small, should go SMB)
Where to Find Them:
- Product Marketing Alliance Slack
- SaaStr events
- LinkedIn (PMM titles at SaaS companies)
- G2 review sites
Expected Economics:
- ACV: $25K-$75K
- Sales cycle: 60-90 days
- Win rate: 35%
- CAC: $8K-$15K
Share with all sales reps.
Marketing Segment Brief
For demand gen team:
SEGMENT STRATEGY: Mid-Market SaaS
Target: 70% of marketing spend
ICP:
- 200-1,000 employees, B2B SaaS, $10M-$100M revenue
Channels (prioritized):
- Product Marketing Alliance (community)
- LinkedIn (thought leadership)
- Content marketing (SEO)
- G2/Capterra (reviews)
- SaaStr (events, content)
Content:
- Case studies (SaaS companies)
- Templates (product launch playbooks)
- Guides (GTM frameworks)
- Webinars (tactical, how-to)
Messaging:
- Primary: "Launch products 10x faster"
- Secondary: "Purpose-built for SaaS GTM teams"
- Proof: TechCorp case study (3x more launches)
Campaign Examples:
- LinkedIn campaign: "How B2B SaaS Teams Launch Products"
- Content: "The Complete SaaS Product Launch Playbook"
- Webinar: "How to Launch 20+ Products Per Year"
Success Metrics:
- MQLs from segment: 500/month
- Cost per MQL: <$150
- MQL→SQL: >30%
Guides all demand gen campaigns.
Common Segmentation Mistakes
Mistake 1: Too many segments
You define 10 different segments
Problem: Diluted focus, can't serve any well
Fix: 1-3 segments max (1 primary, 1-2 secondary)
Mistake 2: Segment by demographics only
"Small business" or "Enterprise"
Problem: Too broad, not actionable
Fix: Combine firmographic + behavioral + needs-based
Mistake 3: No economic analysis
You pick segments based on gut, not LTV:CAC
Problem: Pursue unprofitable segments
Fix: Calculate LTV, CAC, payback for each segment
Mistake 4: Not communicating to teams
Sales doesn't know who to target
Problem: Scattered efforts, low win rates
Fix: Clear ICP docs for sales, marketing, CS
Mistake 5: Set-and-forget
You define segments once, never revisit
Problem: Market changes, segments become stale
Fix: Review segments annually, adjust based on data
Quick Start: Segment Your Market in 3 Weeks
Week 1: Data Collection
- Gather customer data (firmographics, ACV, retention, CAC)
- Interview sales (who do we win/lose with?)
- Interview customers (why did they buy?)
Week 2: Analysis
- Cluster customers into natural groups
- Calculate economics (LTV, CAC, payback)
- Score segments (market, competitive, economics, strategic)
Week 3: Document and Socialize
- Create ICP docs for each segment
- Present to sales and marketing
- Create segment-specific GTM strategies
Deliverable: 3 prioritized segments with ICP docs and GTM strategies
Impact: 20-30% improvement in win rate (focus on best-fit customers)
The Uncomfortable Truth
Most companies try to sell to everyone and win with no one.
They:
- Have no clear ICP
- Sales targets anyone
- Marketing messages to "teams" (vague)
- Low win rates (20%)
What works:
- Analyze customer data (firmographics, economics)
- Cluster into segments (natural groupings)
- Prioritize 1-3 segments (not 10)
- Calculate economics (LTV:CAC, payback)
- Focus GTM (70% on primary segment)
The best segmentation strategies:
- Data-driven (based on actual customer economics)
- Prioritized (1 primary, 1-2 secondary)
- Specific ICPs (sales knows exactly who to target)
- Segment-specific GTM (messaging, channels, pricing)
- Reviewed annually (adjust based on learnings)
If your sales team can't describe your ideal customer in 30 seconds, you don't have clear segmentation.
Analyze data. Cluster customers. Focus GTM.