® Sprint, 1, 04/21/23

BusinessMarket Segmentation

Leveraging Past Failures into Future Opportunities

Jan EkonomyManager--Business Market Segmentation

October 3 2000

Jan EkonomyManager - Market Segmentation

® Sprint, 2, 04/21/23

BusinessMarket SegmentationPast segmentation efforts have not

fulfilled our expectations

Prior efforts were not sufficiently actionable Primarily behavior based Did not provide insight into future needs and behaviors

Others were actionable but relatively ineffective None focused on what was valuable to Sprint and to

prospects/customers None sufficiently modeled the complexity of the decision-making

process within large businesses None focused on a holistic view of the business market Resources, time, and leadership were significantly underestimated

in past efforts

® Sprint, 3, 04/21/23

BusinessMarket Segmentation

A snapshot of past failed segmentation approaches

Application &Criterion

Firmographics Needs &Applications

Revenue/Spend

ProductBased

S2K(future state)

What to offer? Who to target? Where to adv/market? Why behave? Accessibility Actionability Supports prioritization Durability Face Validity Multidimensionality Overall

® Sprint, 4, 04/21/23

BusinessMarket SegmentationSegmentation problem statement

Find an actionable segmentation approach that will enable Sprint Business to support efficient, customer focused revenue acquisition, retention and growth.

The methodology chosen must be able to be implemented successfully and supported across the organization.

® Sprint, 5, 04/21/23

BusinessMarket Segmentation

Best practices assessment: A step by step approach

Step I: Documented what we know about past failed and traditional segmentation approaches

Step II: Examined refinements on the traditional approaches, and drew hypotheses about the utilities of each

Step III: Conducted in-depth discussions with thought and opinion leaders on the topic of business market segmentation

Step IV: Established criteria for developing the best segmentation approach for Sprint Business

Step V: Development of the methodology

® Sprint, 6, 04/21/23

BusinessMarket Segmentation

Step I: Documented what we knew about traditional segmentation approaches

Traditional segmentation approaches can be categorized into four general classes

Firmographics Segments based on enterprise or location size by number of employees or revenues, industry

classification: SIC

Needs Segments based on categories of needs such as strategy, operational, or functional.

Usage Behaviors Segments based on amount of product usage

Product Purchase Behaviors Segments based on combinations of products purchased/used

® Sprint, 7, 04/21/23

BusinessMarket Segmentation

Step II: Examined refinements on the traditional approaches

Segmenting on easily identified characteristics (e.g., Verticals/SIC) Benefits: organizing and aligning resources (e.g., sales territories and channels) Overall utility hypothesis:

Segmenting by combining geography, size with current Sprint revenue Additional benefits:

Prioritization of current accounts for growth and retention purposes Insight into purchase behavior by location and size

Overall utility hypothesis :

Sub-segmenting on purchase behavior (Voice, FR, IP, etc.) Additional benefits: creates understanding of previous behaviors of customer/prospects Overall utility hypothesis :

Segmenting on customer value as well as customer needs and behaviors Additional benefits:

Basis for prioritizing efforts/investments and allocating resources Ability to develop offerings that meet needs and have greater success probabilities More precise tactical targeting and messaging based on an understanding of needs and behaviors

Overall utility hypothesis :

® Sprint, 8, 04/21/23

BusinessMarket Segmentation

Step III: Spoke to thought and opinion leaders on segmentation

What the experts told us

Few success stories Value is KEY Common ground among experts in that each recommended a form of “macro/micro” methodology Iterative process Build upon what you have

® Sprint, 9, 04/21/23

BusinessMarket SegmentationStep IV: Established Segmentation criteria

Must yield an understanding of the market Who to target? What to offer? Why do customers behave as they do? Where to advertise and market?

Must be actionable Must support prioritization Must be durable Must be believable Predictive of future behavior

® Sprint, 10, 04/21/23

BusinessMarket Segmentation

Step V: Methodology developmentThe combination of two tiers ensures that all of our important marketing requirements can be met

Value Group A

ValueGroup B

ValueGroup C

1 2 3

4 5

1 2

3 4 5

1 2

3 4

Tier 2: Customer SpecificsTier 2: Customer Specifics

Tier 1: Customer Value Tier 1: Customer Value

• Market & productplanning

• Campaign planning & execution

• Marketing communicationsplanning

• Granular view oftarget markets& motivators

• Basis for offer development, targeting and positioning

• Valuation

• Prioritization

• Resource allocation

• Channel assignments

• Easy to understand and use

• Stable over time

Key Benefits Key Purposes

® Sprint, 11, 04/21/23

BusinessMarket SegmentationWhere we are today

Research Phase is completed and took 1 year to complete

We have a segmentation framework that encompasses the entire business market.

Tier 1 and Tier 2 segments have been defined and have executive approval Segments incorporate what is important to Sprint and to the customer Segments deal with complexity of decision making environment in large businesses

Predictive models to assign all businesses in D&B to macro and micro segments are in development

Pilots are in development to demonstrate the value of the work that has been done

Internal focus groups were conducted to inform program socialization and implementation plan

® Sprint, 12, 04/21/23

BusinessMarket Segmentation Internal Focus Group Insights

There is a cautious optimism regarding the segmentation initiative “Once burned, twice shy” - perceived failure of segmentation (and other) initiatives leads to hesitancy

to invest time and resources. Understanding and agreement of segmentation approach was wide spread Early involvement of cross functional and level of detail were encouraging

Executive ownership and follow through are essential Buy-in at front end and back end Culture change identified as critical success factor Keep stakeholders informed

Effectiveness of communication plan is key “Bite size” pieces Customized messages to different audiences, at different times Limit to those whose behavior needs to change Communication of project needs to continue past launch - close the loop

Infrastructure plan must be articulated Great deal of concern regarding systems and ability to support

® Sprint, 13, 04/21/23

BusinessMarket Segmentation

Lessons Learned

Traditional research methodologies are getting less reliable Make sure your respective technical teams understand one another

Survey-based modeling vs. Database modeling

Take time to get agreement on definitions and terminology Simple terms like profile or model mean different things to different people Minimizes errors of expectation

Communicate segmentation program cautiously Model performance may result in changes to segments Predictive models may not be possible on all segments with the desired level of accuracy

Periodic reviews of objectives and budgets essential Front end efficiencies in research design can lead to high complexity and greater analytical costs on the back end.