Segmenting Customers
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The document discusses customer segmentation strategies to enhance growth for a B2B e-commerce marketplace facing stagnation. It outlines a three-step framework for analysis focusing on industry, company, and individual factors that influence purchasing behavior. Key suggestions include identifying target customers, understanding buying motivations, and improving marketing and sales processes to drive revenue and supplier engagement.
Segmenting Customers
- 1. SEGMENTING CUSTOMERS: HOW TO DO IT QUICKLY AND EFFECTIVELY Dutta Satadip | Brent Harrison
- 2. Why are we not growing as fast as…?
- 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. 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. Why are we not growing as fast as…?
- 6. Outline Present a thinking framework 1 Put in the context of a case 2 Apply the framework to solve the case 3
- 7. Thriving Products Segmentation Approach Industry Company Individual Size Purchase Motivation Substitute Process Behavior Sales Cycle People Demographic
- 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. 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. 3 Step Industry Analysis Size Substitutes Sale Cycles • Overall Spending • Regulations • Spending triggers • Adoption Maturity • Local Context • Sales competencies
- 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. 3 Step Company Analysis Purchasing Process People • Cost/innovation focus • Decision making • Organization culture • Business goals • Agile v/s Structured • Risk seeking/avoiding
- 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. 3 Step Individual Analysis Demographic Behavior Personal Success • Age/ Generation • Attitude towards product • Social status • Education • Awareness • Career progression
- 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. Why are we not growing as fast as…? Outcomes Prioritize Drive Prioritize product targeted among backlogs marketing segments
- 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. 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