Who's more important?

Here's an interesting question that's come up for me. Say you have a user population that subscribes to services you offer. Those groups can be categorized, e.g. in my case by business unit. You have statistics for each of the user groups and can describe:

  1. the number of subscribed users in each group
  2. the amount of money spent by each group
There are other dimensions as well, e.g. subscription to particular products by user group, but these are the simplest to compare. So the question is, what's more important do you think? Who has the most users or who pays the most money? I know there's more to consider than these two dimensions, but I found it interesting in the data I'm looking at, because the group with the most users does not spend the most money on products.

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It depends

My marketing/business strategy skills aren't that great, but here goes: future potential is crucial: where is the market going, what's the competition like, how do you position yourself. Which customers do you want to serve primarily? Which ones will be likely to make you most money over time?

Can you refine the question ("what's more important")? Ie, to make which decisions?

Agreed

My business strategy skills aren't the feather in my cap either. My responses to Jeff address my thoughts about figuring out future potential in an organization in flux.

The key questions to me presently are, which customers do we want to serve primarily and which will make us the most money. The reason I asked the question, which is more important is that I am wondering how important it is to consider dollars over total usage. But as you rightly point out, without the context of business strategy, viewing this decision on its own is less meaningful.

Pareto rules

Once again 80/20 pops up -- 20% of the users provide 80% of the revenue. Probably not exactly that, but the principle applies.

It comes back to business goals -- what's the goals of this service? Is it to grow via market share or grow via extra selling and reselling to the same community?

There's no right or wrong answer, it just depends on the business model.

Mercedes has a very small market share but they can get their customers to spend more money per car and get them to buy a new Mercedes when they old one no longer serves them. Contrast that with a Ford or Toyota economy car (Ford Focus, Toyota Corolla); sure, they'd like people to buy more than one and stay with the brand, but with cheap cars they're focusing on a much larger segment of the population and trying to get as many people as possible to buy those cars.

I agree with the previous comment, too, that it also depends on the future direction of the business. Right now you might be getting a lot of revenue from a small, specialized user group, but the business is changing its goals to focus on getting a lot of people to spend a little money each rather than getting a few people to spend a lot of money each.

Economy in flux means strategy in flux

In this case, our organization provides information services to the entire corportation, but on a pay per usage basis. We're a digital library. Among one of the services we offer is filtered/indexed information such as news, market reports, financial data, etc. It just so happens that some of these services cost more (e.g. market reports) and some of the segments of the user population use these more.

In this economy it is hard to know the what the future direction of our organization is. Environmental shifts happen such as frequent changes in the corporate structure (e.g. the business units/audiences shift), spin offs of significant parts of the business, down sizing of business units with corresponding down sizing of spending. These are real world numbers that affect how we view our user base. We slice our usage data by business unit with dimension of subscribed user counts, product use, money spent, region/location, etc. There are so many dimensions.

So it's hard to know what our strategy/business direction is month to month. Luckily we review this data month to month, but when attempting to do personas (which is why I am considering this data in the first place), it's hard to know if this data is meaningful given that our view of our internal market place is in flux. Sure makes design work a challenge.

Pareto rules

More interesting observations of my data sets. I got a report that shows dollars spent per department and it clearly shows that a 2 small departments spend the most dollars because of the types of products they use (market reports are expensive). There's Pareto's rule. The thing about these users are that they're highly skilled information seekers. They do stuff like competitive intelligence, corporate strategy, intellectual property. And even though the are the heaviest users and spend the most per user, they don't have the most usage overall and spend the most overall. It's interestingn dealing with statistics. The more dimensions you add to describe usage the more complex it gets. Seemingly unimportant populations become more important.

I spent a little time with a manager talking about her predictions for how these numbers will shift in the future based on her reading of this data -- she reads it every month, quarterly, annually. She is an important type of person to consult when studying user population, because clearly if she can forecast changes in our market/user landscape, then we might have a better understanding of how to take these numbers into account.

Lou's observations