Date post: | 01-Nov-2014 |
Category: |
Business |
Upload: | ignite-cloudware |
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Revital Libfrand, Co-founder Ignite Cloudware
Customer Segmentation in B2B SaaS Sales–
Overview
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Is customer Segmentation for SaaS different from others?
Customers segmentation is a common practice that divide the company target markets and/or customers into subsets that have something in common.
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Is customer Segmentation for SaaS different from others?
As SaaS is a new business model that enables business customers to benefit from the most advanced technologies at a lower-cost subscription model. Keeping the customer acquisition cost (CAC) low and manageable become critical factor for the SaaS vendor success.
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Is customer Segmentation for SaaS different from others?
Companies use customer segmentation to: • Address relevant offering to each segment • Allocate sales resources according to the relevant segment • Communicate with each segment in the relevant channel
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Is customer Segmentation for SaaS different from others?
Segmentation Definition Challenges in B2B SaaS Sales: • Different sales cycles are required when approaching B2B sub-
segments • Allocating the required sales resources for each sub-segment
directly affect the CAC • Mismatching resource with the relevant sub-segment creates a
gap. My customer pays 199 $
MRR …and thinks he owns our company…
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Common Segmentation Models- Overview
Geographic Segmentation
Segmentation By Customer
Type
Demographic Segmentation
Behavioral Segmentation
Segmentation By Occasion
Segmentation By Value
Where is my
customer?
What is he doing?
Who is my customer?
How is my customer using the product?
When should I propose
my product?
How much the
revenue I get?
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Common Segmentation Models - Overview
Geographic Segmentation
Divide your target market
By country, region, zip code etc
Segmentation By Customer
Type
Divide your target market
by their business,
consumer vs companies
Behavioral Segmentation
Divide your target market according to
their usage of your product
Demographic Segmentation
Divide your target market
by age, gender,
education etc
Segmentation By Occasion
Approach your
customers is based on
special products you
sell specifically for special occasions
Segmentation By Value
Divide your customer
according to potential
revenue they would bring
to your company
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Common customer segmentation in B2B SaaS Companies
Customers Funnel
Small Business
Geography
Mid-size Business
Geography
Enterprises
Geography
Most of the B2B SaaS Companies divide their customers funnel to small, medium and enterprises companies; in accordance the company allocate sales REPs, usually geography based, to handle the sales processes.
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Next Challenge: define each segment….
SaaS companies are struggling with providing an accurate definition to each segment… Characteristics for segment definition:
• Small, medium and enterprise segmentation is defined according to customer’s yearly revenues; i.e. small business- companies with annual revenues of 1M$
• Small, medium and enterprise segmentation is defined according to customer’s number of employees; i.e small business with 100 or fewer employees
Customer perspective
• Small, medium and enterprise segmentation is defined according to the product package the customer bought.
• Small, medium and enterprise segmentation is defined according to the annual/monthly revenues the customer contributes to the vendor
Saas Vendor perspective
Let’s take a look at the sales cycle process….
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Sales process characteristics
Enterprise Medium Company Small Business
Each potential buyer within the organization has other interest/needs
Intermediate difficulty
Need is usually clear and easy to identify
Identify need
Involves several people from business side as well as IT side
Involve few people Usually done by the business owner
Decision making
Complex alternatives process evaluation
Intermediate alternatives process evaluation
Not always done, might check other alternative pricing
Solution Alternatives evaluation
Usually complex and long process (few month to years)
Intermediate sale cycle (few weeks to few months)
Usually very short (days-to few weeks)
Overall sale cycle
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Sales process characteristics
Enterprise Medium Company Small Business
Must have legal department to approve the contract…and they always have something to change
Intermediate process, legal counsel will shortly approve the generic contract if no critical issues are present
Short process, buyer will not involve a legal counsel if generic contract is proposed
Contract Issues
Many interactions to complete the sale process
Intermediate number of interaction
Few interaction # of interactions with customer
Seriously evaluated prior purchasing
The issue is evaluated slightly prior purchasing
Standard support is usually accepted
Maintenance & Support
Willing and use to pay premium fees as long as ROI is demonstrated
Price is one of the parameters been considered
Price sensitive Price
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Sales process characteristics - summary
Small business - short & simple sales process
Medium company - Intermediate sales process
Enterprise – long & complex sales process
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How is the GAP created?
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Suggested Segmentation for B2B SaaS
Customers Funnel
Geography
Small Business Package
Mid-size Business Package
Enterprises Package
• Adjust segmentation characteristics for each market - You can’t define a global homogenous characteristics for small, medium & enterprises without localizing the levels per geography. A medium size company in the USA with 1000 employees might considered an enterprise in a different country.
• Evaluate the sector your company is targeting. For example: products targeting IT department; sales cycle complexity also depends on the IT department size; i.e. a huge constructions building company with thousands of employees but with medium size IT department
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Suggested Segmentation for B2B SaaS
Customers Funnel
Geography
Small Business Package
Mid-size Business Package
Enterprises Package
• Create a package per segment The package should meet the segment needs (SLA, legal, security, availability etc) and must justify your investment in the sale process
• The sale cycle must be adjusted to the customer nature way of doing businesses…sales process within an enterprise takes months even if your great product price cost only 199$/month
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…and let’s ensure we make it work…
Customers Funnel
Geography
Small Business Package
Sales REP
Mid-size Business Package
Sales Manager
Enterprises Package
Sales Executives
• Assign relevant sales professionals that would be knowledgeable with sales process and the customer nature
Are you struggling with clearly define sales processes within
your inside sales organization?
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