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I’d be preaching to the choir if I droned on about the importance of segmenting customers to snag results. That said, in this ever-changing world it is easy to miss the boat on how to effectively do that — even for the biggest data hounds among us. It requires us all to think differently and do differently.

The Goldilocks sweet spot: Quality metrics + invested analysis

It’s easy to miss segmentation issues. They can often look like problems caused by a thousand different things that aren’t remotely related to segmentation. At the end of the day though, when your segmentation is on point, you won’t see customer loss and stagnated growth. So if you aren’t seeing the results you expect, it’s time to take a long hard look at how you’re segmenting your customer base.

That’s when you start thinking differently. Evaluate your analytics from new perspectives and dig deeper into them. Look at indicators like:

  1. Health score
  2. Utilization rate
  3. Revenue growth per customer

Identify high-risk customers before they even know they’re a risk

When you take a hard look at the overall financial value of your customer in comparison to those indicators listed in the last section, the level of customer churn risk begins to crystallize.

Even better, as you glean potential problems or rising issues, you’re then empowered to develop nurturing processes around them to course correct. Begin with three simple questions:

  1. Which customers are scheduled to renew this quarter?
  2. How many are currently engaged in a strategy to keep their accounts?
  3. How many have requested cancellations?

Answer these questions, and you can then map necessary touch points to the segments that need it most. As you do that, new metrics will emerge to track conversions and successes.

Check out our white paper, Success Through Segmentation. Learn how to identify, prioritize and address issues that lead to high churn risk.

Look beyond whether users have logged in and how often they’re using your product. You need to know so much more. As a for instance, dial into:

  • Number of activated seats
  • Types of user roles
  • Volume of support requests
  • Utilization of features and functions
  • Level of on-boarding engagement

From there, you can determine the appropriate CS approach to begin segmenting your customer base.

Three bear dilemma: the workload is too big, the team is too small

Everything covered above is awfully big talk. I get it. Delving in deeper, increasing your level of data analysis, and then building in added processes and touch points is enough to break the strongest of resource-strapped teams.

If you’ve been keeping up with our blog, you know our solution by now. It starts with an understanding and acceptance of the 80/20 Rule. (Read more about it in our blog post here.) To find real gains in CS, you have to be able to scale. That starts with prioritization and ends with an experienced partner.

When you have a partner who truly understands the nuances of Customer Success and microcosms that support (or hinder) the customer lifecycle, it is possible to scale without incurring additional overhead, employees and workload.

You get to continue with your hands-on service earned by your top customers while a partner *ahem like ESG* can evaluate what’s happening with those top-tier customers, determine what can and cannot be replicated for your lower tiers, and will look for meaningful opportunities to engage with even your smallest clients through a balance of tech and human touch. (Check out this white paper to learn more about that.) With an opportunity to deliver significant returns and overall cost savings, it’s a low risk/high reward proposition for any company — including yours.

Clearly there isn’t a singular segmentation formula out there that will solve everything for everybody. Each customer journey is unique to the product and business, and each business is looking for particular outcomes. So while there are similarities that can drive the process for identifying appropriate segmentation approaches, a level of customization to achieve optimal results is still required.

Learn more – Discover how to identify, prioritize and address issues that leads to high churn risk. Download our white paper, Success Through Segmentation.

Chartered to increase revenue and promote company growth, but don’t have the resources?

If this sounds familiar, you’re likely one of the many budget-strapped Customer Success (CS) leaders we talk to every day. Folks who know that to improve their bottom lines they need higher touch engagement with their customers — but don’t have the resources to make that a reality.

While attending this year’s Gainsight Pulse Conference, the significance of human-touch was made clear across the board. One case study showed that even just a minor increase in human-touch engagement resulted in increased customer software subscription renewals. Confirming what we already know: Following a strong CS model unequivocally delivers increased renewals, increased revenue from aforementioned renewals, and decreased customer churn.

But how do well-meaning CS leaders, who know today’s customers demand more attention, deliver mission-critical engagement levels?

We see two options:

  1. Max out overhead by hiring additional full-time CS managers
  2. Extend customer coverage with outsourced resources

The first option is great if a CS team has the money to bring on new hires, the track record to convince decision-makers to expand the team, a pool of qualified applicants to pull from, the resources to onboard new hires, and a proven CS model to ensure ROI.

Unfortunately, that scenario tends to better describe a CSM’s fever dream than reality. The sad truth is most companies we come across run into hurdle after hurdle when trying to extend their internal CS teams.

Bring in the vCSM cavalry

That’s where the cavalry, more commonly known as virtual Customer Success Managers (vCSM), comes in. vCSMs help CS teams to scale their proven, human-centric strategy across larger or lower-value tiers without the expense and stress of hiring internal resources. vCSMs provide the critical human touch that augments tech touch and bottom-tier neglect described in our blog post, 3 Customer Success Best Practices to Scale People & Automation.

A successful vCSM solution flips the “do more with less” philosophy on its head. It answers the call to reduce cost and streamline operations while delivering bigger bottom lines — a demand that typically pressurizes organizations to do more with less and a stress that automation alleviates but does not solve alone.

The 80/20 rule: Be a victor not a victim

If you’ve been following our white papers, you know we believe most companies follow the 80/20 Rule. In short, it’s the idea that most CS teams focus on their biggest customers, typically because of limited resources. Those customers tend to make up the top 20 percent of their customer base. The other 80 percent falls in the coverage gap — a place of no return where customers experience low-touch engagement if any engagement at all.

The ugly consequences of underinvesting in CS functions:

  • Over-extending CSMs
  • Strain on other organizational resources when customers seek out absentee help to fulfill their needs
  • High churn rates
  • Renewal loss

vCSMs deliver more customers who…

  • more extensively using your product
  • meet their desired outcomes
  • take advantage of upsells and cross-sells
  • spread positive word-of-mouth about your product and company

The added bonus of vCSMs focusing on low- and middle-tier customers is that existing CSMs can stay focused on key accounts and initiatives.

In short, Customer Success as a Service (CSaaS) drives better customer experience, which unlocks more sustainable growth for you and your customers. An idea illustrated in practice by SaaS Capital, which has found that businesses prioritizing Customer Success can see a 40 percent increase in revenue and 50 percent faster growth.

The five big ways vCSMs will supplement your CS team:

  1. Customer journey mapping and opportunity discovery
  2. A more agile business model
  3. Lower labor costs
  4. Conversion of customers into ambassadors
  5. Increased revenue

Take a more in-depth look at how the right CS partner can help you have your cake and eat it too when you have champagne-level needs on a juice box-level budget in our latest white paper, Building a Business Case for More Customer Success Resources.

Learn more – Building a business case to support the need for better technology or more CSMs doesn’t need to be difficult, but there are a few key things to consider first. This PDF tells you what you need to know.

In a fast-paced, resource-strapped world, solving problems through automation is a no-brainer. Auto-delivering customer communications through technology can cost less and is often faster. Plus, hurried customers who just need answers love real-time, no hassle responses.

What customers don’t love is never having the option of human engagement — even when they don’t realize they’re missing it. Forcing customers to find their own way often leads to low product adoption and high churn — shorting companies of potentially loyal customers to fuel greater revenue growth over time.

A lot of that isn’t new to Customer Success (CS) leaders. They know full automation isn’t ideal, but what they don’t know is how to resolve it. That topic is a focus of our white paper, “Customer Success at Scale: To Automate or Not,” which explores how to assess automation with three key considerations for customer success best practices.

1) People-powered automation

Many rely on the idea of using automation in a Customer Success program to auto-deliver value without human interaction. Yet over reliance on tech enabled touch points can negatively impact customer experience. While everyone can appreciate the time savings that technology provides, it doesn’t support a customer’s need for human-to-human contact. CSMs play an important, ‘human-centric’ role in the customer lifecycle. They build relationships that empower customers to reach their goals with your products and services.

Technology should enable the CSM to help customers achieve their outcomes faster and more efficiently. It should not be a means to handle customers the CSM doesn’t have the time or desire to talk to.

2) Recognize your customer tiers

Take a look at your customer tiers when attempting to strike a balance between automated outreach and human engagement. You know your top-tier customers are experiencing top-level service. You’re ensuring success at every step of their respective lifecycles. Where things often breakdown is the mid- to low-level tiers, which for most of our clients, actually make up about 80% of their customer base — a volume many CS team structures aren’t equipped to manage.

Although it may seem difficult, extending your Customer Success strategy to these underserved segments offers many rewards. Moving customers from a tech-touch only model to a low-touch cadence with occasional, proactive phone calls from a CSM has proven to increase renewal rate and improve upsell/cross-sell within accounts.

3) A solution that scales

It’s not impossible to find scalable solutions that meet your needs and don’t leave your customers out in the cold. We recommend starting with these three questions to assess your options:

  1. Are you maxed out on your CS team headcount but have the strategic need for more human interaction across your customer base?
  2. Do you have CS best practices that are already effective with your largest customers?
  3. What would your business look like if you extended those practices into the lower segments of your customer base?

After answering those questions, our clients typically find the most success by:

  • Finding ways to make customer conversations more informed, personalized and meaningful
  • Leaning on experienced partners who can extend proven Customer Success strategies into underserved segments of your install base
  • Seamlessly accelerating execution with a reliable playbook

For a more in-depth perspective on using automation as a customer retention solution, download our white paper, Customer Success at Scale: To Automate or Not?

Learn more – Are you maxed out on your Customer Success (CS) headcount but have the strategic need for more human interaction across your customer base? Striking the right balance between human interaction and tech-touch automation is possible, if you take the right approach. This guide shows you how.

I traveled to Boston earlier this month for Customer SuccessCon East, along with our CEO Michael Harnum. It was a great opportunity to learn from some CS veterans, make new connections, and enjoy a killer lobster roll. There was a lot of buzz about a myriad of topics from CS operations to proving the value of your CS team to company leadership. One that resonated with me the most, however, was around segmentation. How should we be segmenting our customers?

It’s coming up a lot in conversations I’m having with CS leaders as well – they’re unsure that they’re getting segmentation right. If you’re asking yourself these questions, you’re not alone, and hopefully, some of my takeaways can help you make sense of the segmentation chaos.

Traditionally, tech companies have segmented their customers by contract value. That’s an easy way to do it, right? The customers that pay the most get put in the top customer segment and are smothered with attention. On the other hand, the customers that pay us very little receive little to no outreach. Makes sense, right? Wrong. Segmenting customers by how much they pay us is an outdated approach.

Within the last few years, we have seen Customer Success mature into a sophisticated business function. So, we must elevate the way we are thinking about segmentation as well. We have to dig deeper and understand our customer’s journey better than ever before.

A good place to start is with the customer journey. Talk to some of your best customers across all segments. Talk to your CSMs. Understand what an ideal journey looks like for different groups of customers, from start to finish. As you go through these exercises, your segments should begin to take shape.

Other factors to consider…

  • Contract Value: Yup, we can’t forget about this one entirely. It’s an important factor to keep in mind, but there’s so much more.
  • Industry: Do you have customers in certain industries that function differently, behave differently, renew differently than others? Segment accordingly.
  • Line of Business: Do you have multiple product lines with inherently different lifecycles and different challenges along the way? Segment accordingly.
  • Growth Potential: If there is potential for growth within a group of customers, segment accordingly. But it doesn’t stop there! Dig deeper. How long is it going to take to realize that growth? Six months? One year? 2+ years? Segment accordingly.
  • Geography: Do you have customers across multiple time zones, or different countries, with CSMs traveling to meet them? Segment accordingly.

Whether you’re just getting started with segmentation, or are re-thinking your existing structure, I’d challenge you to think beyond contract value and dig deeper.

Learn more – Get some great tips on customer segmentation from Sixteen Ventures here.