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

dutta@mba.berkeley.edu

408.828.2413

twitter @duttas

thrivingproducts.ning.com

linkedin.com/in/duttas

brent@smokejumperstrategy.com

650.868.0212

twitter @smokejumper

smokejumperstrategy.com/blog

linkedin.com/in/smokejumperstrategy

Dutta Satadip Brent Harrison

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