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How to segment customers quickly and effectively to improve products. Presentation given by Dutta Satadip of Market Tools and Brent Harrison of SmokeJumper Strategy at Silicon Valley PCamp10, Mar-12 2010 at Yahoo!.
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SEGMENTING CUSTOMERS: HOW TO DO IT QUICKLY AND EFFECTIVELY
Dutta Satadip | Brent Harrison
Why are we not growing as fast as…?
Dutta Satadip
Director of Products, MarketTools Leadership roles in Product Management, Marketing,
Consulting and Engineering 10 + different enterprise software products with
over 20+ end to end product lifecycles Global business development & execution in
Europe (Czech Republic, Italy, Spain, UK, Germany) & Asia ( India, Viet Nam, Israel)
MBA, Haas School of Business, UC Berkeley with background in Computer Science
President, Board of Directors, Hemophilia Foundation of Northern California
Senior Manager, Application Modernization Products, HP Avid traveler, over 25 countries with aspirations to
double that number
Brent Harrison
Founder & President, SmokeJumper Strategy Over 30 projects in Marketing Strategy, Product Innovation &
Online Marketing
B2B: Ariba, Emerson, MerchantCircle, VeriSign
B2C: MyWire, Veoh, Yahoo!, Yakima
Biotech: BD Biosciences
Development: M7 (BEA)
Education: McGraw-Hill, SchoolLoop, SunGard Public Sector
Founder, Savvy Cellar Wines & Organic Wine Review Vice President, Marketing @ Apple Executive Director & GM @ AOL and Netscape “Smokejumper”, parachuting into forest fires
Why are we not growing as fast as…?
Outline
1 Present a thinking framework
2 Put in the context of a case
3 Apply the framework to solve the case
Thriving Products Segmentation Approach
Industry
Size
Substitute
Sales Cycle
Company
Purchase
Process
People
Individual
Motivation
Behavior
Demographic
B2B eCommerce marketplace: Companies post supply opportunities
Receive bids
Issue purchase orders
Complete payment cycles
Situation: Not growing as rapidly as planned
Desired Outcomes: Attract more suppliers
Encourage more transactions
Develop revenue-producing supplier programs
Case: B2B Software Company
Source: Smokejumper Strategy
Why are we not growing as fast as…?
What trends are we missing? Industry
What type of organizations should we target? Company
Who are the “real” buyers? Individuals
3 Step Industry Analysis
Size • Overall Spending • Adoption Maturity
Substitutes • Regulations • Local Context
Sale Cycles • Spending triggers • Sales competencies
Example: Improvements by Job Function
What capabilities would improve your company's performance?
Mktg / Sales Finance Ops Admin IT
Improving accuracy of customers 'PO's 2.70 2.68 2.49 2.92 3.00
Marketing to customers 2.82 2.07 2.41 3.15 2.53
Invoice / payment status 2.35 2.97 2.61 2.88 2.54
Collaborating with customers 2.62 2.44 2.45 2.54 2.71
Targeting buying decision-makers 2.81 1.97 2.35 2.73 2.27
Adopting best practices 2.51 1.91 2.41 2.85 2.65
Improving merchandising 2.48 1.92 2.35 2.92 2.33
Invoicing 2.28 2.82 2.31 2.48 2.39
Note: This could be sourced from or developed by secondary or primary research. 1 = Not at All 4 = Dramatically Improve
Source: Smokejumper Strategy
3 Step Company Analysis
Purchasing • Cost/innovation focus • Business goals
Process • Decision making • Agile v/s Structured
People • Organization culture • Risk seeking/avoiding
Example: Mktg/Sales vs. Finance
Marketing / Sales
Measured on sales growth
Focused on challenges associated with generating revenue
Believes EC could improve marketing to customers; targeting decision-makers; merchandising; and adoption of EC best practices
Finance
Measured on cash flow management
Focused on getting paid according to terms
Believes EC could improve visibility into invoice/payment status; and invoicing thru one common system
Source: Smokejumper Strategy
3 Step Individual Analysis
Demographic • Age/ Generation • Education
Behavior • Attitude towards product • Awareness
Personal Success • Social status • Career progression
Example: Attitudinal/Behavioral Segmentation
Margin Makers (16%) Revenue & cost
Note: Placement of companies based on primary motivation; many respondents have multiple motivators; segments are mutually exclusive - each company is plotted in one and only one segment.
Revenue Reaper (41%) Increasing revenue
Cost Boss (23%) Managing costs & investment decisions
Lead Needy (11%) Generating awareness & leads
Fulfillment Fiend (9%) Processing & Fulfillment
Source: Smokejumper Strategy
Outcomes
Prioritize product backlogs
Drive targeted
marketing
Prioritize among
segments
Why are we not growing as fast as…?
Key Takeaways
Identify what you should
ignore
Identify what to focus on
Industry Size
Substitute
Sales Cycle
Company Purchase
Process
People
Individual Motivation
Behavior
Demographic
Contact
408.828.2413
twitter @duttas
thrivingproducts.ning.com
linkedin.com/in/duttas
650.868.0212
twitter @smokejumper
smokejumperstrategy.com/blog
linkedin.com/in/smokejumperstrategy
Dutta Satadip Brent Harrison
Feedback: www.bit.ly/segmenting
