Customer Segmentation Definitions Need to Change

This shift in thinking about consumption instead of size translates into new debates about customer segmentation. Cloud not only heralds change in how organizations consume technology, it’s changing how providers (including channel partners) define and serve their clientele.

“A per-seat SaaS still is how you should do it,” said SADA’s Safoian. “But we’re selling consumption, which is completely divorced from employee count, revenue, are you public or not.”

But helping vendors (not just partners) segment better and more appropriately for a cloud world will take time.

“It’s a big challenge,” Safoian said. “Google is figuring out,” he added. (SADA is a Google Cloud-only managed service provider).

Terminology needs to become more broad and widely applicable, too, AllCloud’s Gil pointed out.

“You can’t go to Israel and say an enterprise client there is also an enterprise client in the U.S.,” he said. AllCloud, an Amazon Web Services MSP, has operations in Israel and sees the disparities among definitions and segmentation every day. Europe, too, varies, he said.

“In Europe, $5 billion old-school companies are considered middle market.”

The solution might lie in looking at a “propensity to spend” segmentation, Safoian suggested.

Jennifer Chason, director, Google Cloud Enterprise — western states and southern California, agreed.

“My customers are defined as enterprise,” she said. “But the book of business looks like midmarket, not just enterprise.”

The issue, she added, concerns “propensity to consume.” And that starts to differ depending on whether a client already uses cloud resources or if the deployment is brand-new.

“So we have to balance where to invest resources and time, and grow the middle,” she said.