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