Segment Customers, from Flies to Whales

For the last two days I’ve had the opportunity to spend time with entrepreneurs from around the world through Endeavor. In our group, we had entrepreneurs from Venezuela, Columbia, Greece, Argentina, and Saudi Arabia all sharing stories of challenge and opportunity. As part of the program, we spent time talking through their customers using a simple naming convention:

  • Flies
  • Rabbits
  • Deer
  • Elephants
  • Whales

Now, these names aren’t meant to degrade or belittle certain customers. Rather, they’re for the entrepreneur to understand what is, and what isn’t, working within segments of the business.

For each segment, here are some common metrics:

  • Cost of customer acquisition
  • Average revenue
  • Renewal rate
  • Lifetime value

Only, by looking deeper, new insights emerge.

Instead of investing resources to grow all segments, invest in the most important segments.

Segments are divided based on a variety of characteristics including:

  • Number of employees
  • Revenue
  • Potential usage (users, locations, etc.)

Initially, as the business is growing, it’s best to keep things simple. Once some level of scale is reached — say 100+ customers — it’s good to segment the customers and understand the business in a more fine-grained way.

What else? What are some more ideas on segmenting customers?

3 thoughts on “Segment Customers, from Flies to Whales

  1. Of course it’s different for every business, but… do you have an example of the kind of profile of the customer that’d fall into each segment?

  2. Great stuff, this is an important exercise in many disciplines. The critical issue to be aware of with static segments is that people’s behavior changes over time – so flies become rabbits who become whales who go back to being flies.

    Understanding the context of their behavior vs. just their immediate behavior with your brand is very important.

    That boils down to knowing why they are in the segment they are in at the moment they are in it so you can get ready when they shift behaviors when that happens.

    The ultimate goal, of course, is to be able to move people through segments through your own actions but you should also be able to understand when that shift happens due to an external factor and if that factor is in your control or not.

    i.e. If I’m a sky miles member and I move from Atlanta to Dallas then I’m simply not going to fly Delta anymore and there is very little to be done about it.

  3. Friends of founder is a good segment or as my previous team called them friends of Dave (FOD) or event friends of dave’s Dad (FODD) 🙂

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