Customer

 Segmenta.on  
For  Startups  
Daniel  Riaz  
500  Startups  
About  me  
•  9  years  in  Silicon  Valley  in  various  
marke:ng  roles  for  consumer-­‐tech  
companies  (i.e.  product,  performance,  
growth)  
 
•  Zynga  –  managed  their  mobile  UA  across  
their  en:re  porJolio  of  games  (Android  &  
iOS)  

•  LyN  –  Head  of  Mobile  UA,  driving  supply  

and  demand  acquisi:on  from  4  to  65  ci:es  

•  Distribu:on  Hacker  at  500  Startups  

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Agenda  
•  About  Me  
•  Customer  Segmenta:on  101  
•  Behavioral  Data  
•  Demographic  Data  
•  Combining  Both  Data  Types    
•  Case  Study:  Freemium  Gaming  
•  Op:mizing  Spend  on  Power  Users  
•  Recommended  Tools  
 
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WHAT  IS  IT?    
WHY  SHOULD  YOU  CARE?  

4  
 What  is  it?  
“Customer  segmenta:on  is  the  prac:ce  of  
dividing  a  customer  base  into  groups  of  
individuals  that  are  similar  in  specific  ways  
relevant  to  marke:ng,  such  as  age,  gender,  
interests  and  spending  habits.”  –  
Salesforce.com  

5  
 Different  ways  to  Segment    
•  Behavioral  data  –  engagement    
•  Geographic  data  –  loca:on    
•  Demographic  data  –  age,  gender  
•  Mo:va:on  /  Intent  –  why,  use-­‐case    
•  Acquisi:on  source  –  paid,  organic,  referral  

6  
Why  should  you  care?  

This  is  you!   7  

BEHAVIORAL  DATA  

8  
 Analyzing  Behavioral  Data  

Acquisi:on  
 

Ac:va:on  
  Avg.  Session  Length  

Reten:on  
Total  #  of  Sessions  
 
Average  Order  Value  
Referrals  
  Purchase  Category  
Time  to  First  Purchase    
Revenue  
 

9  
 Analyzing  Behavioral  Data  
35  

What  are  they  purchasing?  

30   Average  order  value?  
25  
User  Count  

20   What’s  going  on  here?  

15  

10  

5  

0  
1  to  5   6  to  10   11  to  15   16  to  20     21  to  25  

Total  Purchases     10  
Frequency  +  how  +  why  =  customer  
segment  

11  
Who  are  you  people?  

12  
 Analyzing  Demographic  Data  
•  Age  
•  Gender  
•  Loca:on  
•  Income  
•  Profession  
•  Educa:on  Level  
13  
COMBINING  THE  TWO  
BEHAVIORAL  &  DEMOGRAPHIC  

14  
 Combining  the  two  at  LyW            
Commuters:  
•  25  –  35  years  old  
•  Slight  skew  female  
•  Income:  $100,000+    
•  Use  LyN  everyday  to  go  
to  work  
•  1  yr  net  LTV  =  $250+  

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 Combining  the  two  at  LyW:    
Bar  hoppers:  
•  18  –  35  years  old  
•  Slight  skew  female  
•  Income:  <$100,000  
•  Use  LyN  as  a  designated  
driver  on  weekends  
•  1  yr  net  LTV  <  $100  
 

16  
CASE  STUDY:    
FREEMIUM  GAMING  &  
BURNING  MONEY  
17  
Case  Study:  Zynga  

Let’s  go  whale  hun.ng!  

18  
 Case  Study:  Zynga  
Revenue  

Freemium  
User-­‐base   1%   95%  

19  
Buying  users  who  don’t  mone.ze  =  
Burning  Money  

20  
OPTIMIZING  AD  SPEND    
FOR  POWER  USERS  

21  
Trea.ng  all  customers  the  same…  
Scenario  1:  
•  LTV  of  Avg.  Customer  =  $15.00  
•  CAC  of  Avg.  Customer  =  $10.00  
•  $1,000  in  marke:ng  =>  $1,500  GMV  
•  $500  Profit  

22  
 Buying  power  users…  
Scenario  2:  
•  LTV  of  Power  Customer  =  $50.00  
•  CAC  of  Power  Customer  =  $15.00  
•  $1,000  in  marke:ng  =>  $3,333  GMV  
•  $2,333  Profit  

23  
 Payback  windows  macer…  
•  Power  cust.  window  =  3  mo’s  
•  Avg.  cust.  window  =  9  mo’s  
•  Spend  more  aggressively  
•  Grow  your  business  faster!  

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 Acribu.on  is  Cri.cal  
•  Where  are  these  people  coming  from?  
•  Mixpanel,  Google  Analy:cs,  Branch  
•  Double  down  on  channels    
•  Double  down  on  crea:ve/messaging  

25  
CONCLUSIONS  &  
WHERE  TO  GO  FROM  HERE  

26  
 Conclusions  
•  Segment  your  users  by  engagement  
•  Answer  the  “How’s”  &  “Why’s”  
•  Answer  “Who”  using  demographic  data  
•  Op:mize  ad  spend  for  power  users  to  
maximize  ROI  w/limited  budget  
•  All  of  the  above  =  Faster  Growth!  

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 Recommended  tools  
•  Mixpanel  (web  analy:cs)  
•  Amplitude  (mobile  in-­‐app  analy:cs)  
•  Facebook  Audience  Insights  (user  insights)  
•  Auto  Pilot  (CRM  op:miza:on)  
•  Segment.io  (data  hub)  
•  mPar:cle  (mobile  data  hub)  

 
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 Thank  You  
•  E-­‐mail:  Daniel@500Startups.com  
 

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