Customer segmentation to advise a global financial management solution vendor on its SaaS strategy

The problem

• A large financial management solution vendor wanted to better understand the needs and behaviours of its small and medium-sized business (SMB) customer base as well as its target customers, as part of its modernisation strategy and its ongoing migration to software as a service (SaaS) 
• The client wanted advice on how to focus its marketing and sales efforts on targeting the most attractive SMB customers (high-spending businesses interested in solutions delivered via a SaaS-based model), and to ensure that it retains most of its slightly less attractive customers (high volume of low-spending organisations with perpetual licences)

The solution

• We carried out a survey of 10 600 SMBs and conducted in-depth interviews with 223 SMB technology-decision markets across 9 countries: the USA, Canada, the UK, Ireland, France, Germany, Spain, Australia and South Africa
• We used multivariate cluster analysis to segment the market and create ‘buyer personas’
  • we identified five customer segments, out of which two were clearly attractive targets for our client 
  • the seven buyer personas that we created personalised the leadership of the businesses, and reflected their willingness to embrace change, IT focus, outlook on the future, level of experience and other characteristics
  • we also developed a database-tagging algorithm to tag the most attractive segments within our client’s actual database of clients and targets 

Figure: Overview of customer segments

The result

• The project has enabled our client to focus its resources on the most attractive SMB clients and improve its sales pitch to SMB executives, as well as revise its product/solution roadmap to include features that its most attractive customers value the most. The project also identified the client’s current customers that are more likely to churn in the next 6–12 months and provided recommendations on how to retain some of them