Targeting the Whole Category in B2B SaaS

The 95-5 rule from Professor John Dawes tells us that only 5% of businesses in your category is in-market (ready to buy in this quarter).

So, your ads should remind people about your brand and its connection to their needs, even if they're not thinking about buying at the moment.

This helps increase increase the buyers’ purchase propensity - the chances that they'll choose your brand when they are ready to buy. (when they move to the green circle in the illustration below).

But here's the thing, only the penetration in-category will grow the brand (and secure future cash flow).

Sadly, I see many companies wasting money and thus losing market share by targeting out-category, irrelevant people who aren't going to buy ever.

In B2C, it's okay to advertise to a broad audience because there aren't that many people who are not in the category. But in B2B, not everyone is a potential buyer, and only a small fraction of those people are in your specific market.

The Importance of Targeting In-Category

Sure, more reach usually means more brand growth. Increasing share of voice leads to growth for brands. But it only works if you're reaching the right people. The relationship between share of voice and share of market is breaking down when not focusing on in-category buyers.

But even the best creative fails if it reaches the wrong audience.

Targeting is just one piece of the puzzle. The Excess Share of Voice (ESOV) depends also on the quality of the creative and media choices (viability and attention). But targeting is actually the easiest to get right because you can have several leading indicators to know if you are reaching the right audience.

Tracking & Measuring Success

Proper brand tracking is tough, especially in B2B markets where it's hard to find the right people to ask.

There is a slow feedback loop to find out if your campaigns are actually effective beacuse the real metric is in future cahsflow. Getting to double-digit figures for mental availability is a multi-year task. Many well-established brands achieve no higher than 20-30% of respondents linking them to a CEP (according to Romaniuk & Sharp, 2016, How Brands Grow: Part 2, Ch. 4.).

Assesing if your targeting is reaching the right people is easier.

Firmographics

Is it the right industry and size? Using tools to detect companies based on the IP addresses (like Clearbit , Demandbase or Dealfront ) can answer the question.

Tip: you can set the clearbit code just on the campaign landing page to get the results and stay in the free tier. Or have an unindexed copy of the LP if you want to test it on a channel or campaign level. (Just the URL will be different like https://www.sanity.io/landing-pages and https://www.sanity.io/landing-pages-fb)

People Level

Is it the right people form the company? You can ask the visitors about seniority in the contact forms or chat discussions on your site (eventually popup question on specific landing pages).

Tip: Before scaling the campaigns, I often even check the profiles of people who like or comment on the promoted posts.

Website analytics

Checking actual behavior on the site can help too. Does your messaging resonate with the visitors? If they don’t find the content relevant and there is a low rate of the engaged sessions (compared to other channels), the problem might be in the targeting.

Targeting Options

Now, let's talk about how to target potential buyers in your category without spending too much money on out-category people.

It depends on the project. If you're going after a small market (let's say there are only about 10,000 potential customers in the world), you can follow steps similar to targeting the in-market segment described in the previous article - creating a list of all those companies and targeting them specifically.

Most advertising platforms don't have the option to target just your category or the type of customer you want. Targeting the whole category is a balancing game. You need to figure out how many of the people you're reaching are actually in-category and how much is “wasted” on non-category people.

Platform Targeting Capabilities

Think about whether people are giving the advertising platform enough job-related information to target them effectively. Platforms like LinkedIn Ads make it easy to target based on things like job title and company. Other platforms like Meta and Google offer options like job title or industry, but the information might not always be accurate. (Or it is a high level targeting - like combining the whole software industry together).

Targeting Through Optimization

To make up for the lack of good targeting options, Meta or Google have really strong algorithms. It is possible to optimize targeting based on the conversion data you provide so the ads will be delivered only to those that are more likely to do the action. Or the algorithm can find new audiences similar to your existing audience lists.

Which leads us back to tracking again.

For example, if someone from a company that fits your ideal customer profile visits your website, you can use that information to show them ads.

And I usually optimize towards this soft conversion like simple visit form relevant company using the identification tool data that I push as a conversion to marketing platforms.

Conclusion

When you're advertising in B2B, it's important to narrow down your targeting to focus on your specific category as much as possible. To do that effectively, you need a good tracking system that tells you if you're on the right track and helps you improve your targeting. In the next articles, we'll dive into targeting strategies on platforms like Google and Meta and how they apply to B2B SaaS projects.