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,
        ...
Brent Harrison
    Founder & President, SmokeJumper Strategy
         Over 30 projects in Marketing Strategy, Product In...
Why are we not growing
    as fast as…?
Outline

    Present a thinking framework
1
    Put in the context of a case
2
    Apply the framework to solve the case
3
Thriving Products Segmentation
Approach


 Industry      Company     Individual
    Size        Purchase    Motivation

  ...
Case: B2B Software Company
    B2B eCommerce marketplace:  
         Companies post supply opportunities
         Recei...
Why are we not growing as fast as…?


What trends are we missing?    Industry

What type of organizations
                ...
3 Step Industry Analysis




Size                   Substitutes        Sale Cycles
•  Overall Spending    •  Regulations  ...
Example: Improvements by Job Function

  What capabilities would improve your                Mktg /
  company's performanc...
3 Step Company Analysis




Purchasing                 Process                   People
•  Cost/innovation focus   •  Deci...
Example: Mktg/Sales vs. Finance

     Marketing / Sales                           Finance

                               ...
3 Step Individual Analysis




 Demographic          Behavior                      Personal Success
 •  Age/ Generation   ...
Example: Attitudinal/Behavioral
  Segmentation
      Revenue Reaper (41%)                                                 ...
Why are we not growing as fast as…?


           Outcomes
 Prioritize Drive   Prioritize
  product targeted   among
 backl...
Key Takeaways

  Industry               Company                   Individual
    Size                   Purchase          ...
Contact

  Dutta Satadip                  Brent Harrison
  dutta@mba.berkeley.edu      brent@smokejumperstrategy.com
     ...
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Segmenting Customers

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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

  1. 1. SEGMENTING CUSTOMERS: HOW TO DO IT QUICKLY AND EFFECTIVELY Dutta Satadip | Brent Harrison
  2. 2. Why are we not growing as fast as…?
  3. 3. 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
  4. 4. 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
  5. 5. Why are we not growing as fast as…?
  6. 6. Outline Present a thinking framework 1 Put in the context of a case 2 Apply the framework to solve the case 3
  7. 7. Thriving Products Segmentation Approach Industry Company Individual Size Purchase Motivation Substitute Process Behavior Sales Cycle People Demographic
  8. 8. Case: B2B Software Company   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 Source: Smokejumper Strategy
  9. 9. Why are we not growing as fast as…? What trends are we missing? Industry What type of organizations Company should we target? Who are the “real” buyers? Individuals
  10. 10. 3 Step Industry Analysis Size Substitutes Sale Cycles •  Overall Spending •  Regulations •  Spending triggers •  Adoption Maturity •  Local Context •  Sales competencies
  11. 11. Example: Improvements by Job Function What capabilities would improve your Mktg / company's performance? 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 1 = Not at All 4 = Dramatically Improve Note: This could be sourced from or developed by secondary or primary research. Source: Smokejumper Strategy
  12. 12. 3 Step Company Analysis Purchasing Process People •  Cost/innovation focus •  Decision making •  Organization culture •  Business goals •  Agile v/s Structured •  Risk seeking/avoiding
  13. 13. Example: Mktg/Sales vs. Finance Marketing / Sales Finance Measured on cash flow Measured on sales growth management Focused on challenges associated Focused on getting paid according with generating revenue to terms Believes EC could improve Believes EC could improve visibility marketing to customers; targeting into invoice/payment status; and decision-makers; merchandising; invoicing thru one common system and adoption of EC best practices Source: Smokejumper Strategy
  14. 14. 3 Step Individual Analysis Demographic Behavior Personal Success •  Age/ Generation •  Attitude towards product •  Social status •  Education •  Awareness •  Career progression
  15. 15. Example: Attitudinal/Behavioral Segmentation Revenue Reaper (41%) Lead Needy Increasing revenue (11%) Generating awareness & leads Margin Makers (16%) Revenue & cost Fulfillment Fiend (9%) Cost Boss (23%) Processing & Fulfillment Managing costs & investment decisions 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. Source: Smokejumper Strategy
  16. 16. Why are we not growing as fast as…? Outcomes Prioritize Drive Prioritize product targeted among backlogs marketing segments
  17. 17. Key Takeaways Industry Company Individual Size Purchase Motivation Substitute Process Behavior Sales Cycle People Demographic Identify what Identify what to you should focus on ignore
  18. 18. Contact Dutta Satadip Brent Harrison dutta@mba.berkeley.edu brent@smokejumperstrategy.com 408.828.2413 650.868.0212 twitter @duttas twitter @smokejumper thrivingproducts.ning.com smokejumperstrategy.com/blog linkedin.com/in/duttas linkedin.com/in/smokejumperstrategy Feedback: www.bit.ly/segmenting

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