Acquire Customers Faster

The Problem

How to focus Socrata’s resources on specific subsets of its target market to get the most return on its marketing and sales investments.

In early 2014, Socrata, the leading provider of Open Data platforms for local government institutions, was growing at a rapid clip and beginning to execute an ambitious sales and marketing plan to meet rising customer demand. Naturally, that plan called for investment in additional sales and marketing headcount throughout the United States, but the last thing the Seattle-based business wanted to do was allocate those resources haphazardly.

They knew this required re-thinking their territory prioritization process and marketing allocation plan, and they knew if they got it right, the adjustments would accelerate their customer acquisition process.

“It was pretty obvious that there was something going on in certain markets that gave us stronger traction,” says Socrata Senior Vice President of Sales and Marketing, Bill Lawler. “But it wasn’t clear how we should go about prioritizing those markets and amplifying our presence in the regions with the largest opportunities.”

"(This project) gave us a data-driven roadmap for sales expansion and customer acquisition in our core U.S. market that, frankly, I’m not sure we would have had the resources, expertise, or time to create ourselves. “

Bill Lawler

Senior VP of Sales and Marketing

The Solution

Socrata called on the Research and Analytics team at OpenView Venture Partners to conduct geo-targeting and spatial analytics initiative.

Lawler and Socrata’s leadership recognized the need to adopt a data-driven approach to address two key questions:

  • First, which geographical territories should the company’s existing sales and marketing team focus on first?
  • And, second, where should new sales representatives be placed as the company expands its sales and marketing teams over the next 12-18 months?

The goal: Identify the top markets for Socrata’s marketing and sales teams to target as the company scales.

To kick off the project, OpenView Marketing Insights Manager Brandon Hickie and his team spent time with Lawler and Socrata VP of Marketing Bill Glenn to define the project’s scope and key objectives. From those conversations, Hickie and his team determined that cluster analysis and spatial analysis were the most appropriate techniques to identify and prioritize the company’s top target sales geographies (see sidebar: 3 Steps to Spatial Geographic Market Analysis). They also formulated an initial hypothesis to test: That prospects’ geographic proximity to an existing customer increased the perceived value of Socrata’s service and decreased the cost of customer acquisition.

The Results

After adopting the geo-targeting strategy and selecting two prioritized target geographies to focus on, Socrata secured 9 new customers in less than 90 days, and 19 percent reduction in the company’s average sales cycle

It took OpenView’s team four weeks to complete the spatial analysis and the tangible quantitative results of the project immediately exceeded Lawler’s highest expectations. Three steps were followed in completing
this analysis:

  1. Defining scope and key qualifying questions: This step is standard in all Expansion projects. The goal was to define the most important factors for selecting potential markets, identify the right spatial analysis methodology for this particular project, and gain
    alignment around key project goals and deliverables.
  2. Executing visual mapping analyses: In this phase, OpenView’s Expansion team carried out data collection on Socrata’s current customers and sales team members, as well as more than 2,000 identifiable prospects. That helped to develop hypotheses on the best ways to define Socrata’s target markets. From there, OpenView mapped areas of high customer, prospect, and sales rep populations, and identified the geographical clusters that were particularly concentrated or connected (see: Map of Target Sales Territories). In Socrata’s case, those clusters were limited to a 100-mile radius that represented the practical driving distance for remote sales personnel.
  3. Conducting spatial cluster analysis: Once OpenView identified all of the potentially viable geographic markets Socrata could target, Hickie and his team created an algorithm to divide Socrata’s prospect base into clusters — this time based on the geographic distance between each pair of prospects (calculated by the Haversine formula). From there, OpenView optimized its algorithm to measure the attractiveness and density of prospect clusters, and mapped potential new territories against current customers and sales reps. Ultimately, that allowed Socrata to see which areas were already covered by its current reps, and which territories needed new headcount.

Map of Target Sales Territories

“Those kinds of results have given us the confidence to double down in our top two regions and hire two new sales people on the ground,” Lawler says. “It’s really the tip of the iceberg for us. This initiative will help us bolster our position in our most important regions, and I expect it to continue paying dividends as we develop a presence in our other prioritized target markets.”

This initiative also provided Socrata with a detailed plan for sales growth to support its geo-targeting strategy. More specifically, OpenView’s final report included:

  • Maps of sales territories ranked by prospect density and customer presence (see: Sample Customers Map with Nearby Prospects)
  • Recommendations for which territories could be addressed by existing staff
  • A prioritized list of sales territories where new sales reps should be placed as the company scaled (see: Prospect Clustering Map)
  • A list of target prospects in prioritized geographies

Sample Customers Map with Nearby Prospects

Socrata Sample Customers Map with Nearby Prospects

Prospect Clustering Map

Socrata prospect clustering map

“Those outputs give us a data-driven roadmap for sales expansion and customer acquisition in our core U.S. market that, frankly, I’m not sure we would have had the resources, expertise, or time to create ourselves,” Lawler says. “OpenView’s team is chock full of strategic thinkers who are capable of solving incredibly complex problems. It was an incredibly helpful collaboration that successfully sequenced our hiring and acquisition plans for the next 12 to 18 months.

That’s precisely the goal of spatial analysis projects like these.

"Spatial analysis opens up a whole new way of thinking and can change the way companies view and attack their key market opportunities."

Brandon Hickie

Market Insights Manager