segmenting customers: how to do it quickly and effectively
DESCRIPTION
Talk Delievred at Product Camp 10 Conference on March 13 2010. Segmentation as a concept is well understood but rarely applied as it is perceived to be time consuming. Understanding the right segmentation variables will provide a product manager with finite criteria to uncover the gaps in understanding of the market problems. These variables can be used to understand where and why the competition is succeeding (for example, they may be addressing organizations adopting agile development versus your company is addressing more traditional development organizations where agile adoption is nascent). When these variables are framed within the product portfolio, the mismatch manifests in real life as struggles faced by sales teams. This session will cover how to identify segmentation variables related to industry, company and individuals so that product managers can quickly douse management concerns and attack the real product improvement areas.TRANSCRIPT
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
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 2.39Note: 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 targetedmarketing
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 SatadipBrent
Harrison
Feedback: www.bit.ly/segmenting