Starting with Segmentation
By Kristen Hayer
All too often I'll hear a CEO or CS leader say, “We treat all of our customers the same!” in reference to segmentation. While it is a noble ideal to treat people equally, the fact is that customers aren’t the same and many times don’t need or want the same experience as each other. This is why segmentation is such an important foundation for building a solid customer success program.
In fact, I believe that segmentation should be the very first thing you do when you’re building out a scalable success program. A customer segmentation plan flows into other activities like mapping the customer experience (by segment), planning a team structure (also by segment) and setting goals and KPIs (again, by segment).
Aside from helping you match your customer experience to your customers; segmentation also ensures that the cost structure of your customer success program aligns with the revenue your customers are bringing in. As you scale your program, you need to make sure that you can continue to support an excellent experience, but you can’t do that if you are overspending on customers who aren’t paying enough to justify the cost.
HOW DO I GO ABOUT SEGMENTING CUSTOMERS?
At The Success League, we think about it like a matrix. One side is the revenue that customers are bringing in. This side of the matrix can also accommodate brand value (for example, if you have a customer with a recognizable brand, the cache that brings to your company might outweigh what they are paying you). The other side is a customer behavior marker. This is different for every company. We’ve had customers use vertical, level of technical ability, number of employees, and whitespace just to name a few. The marker should be something that relates to a customer needing a different journey and be easy to measure and track.
CAN I JUST USE THE SEGMENTATION OUR SALES AND MARKETING TEAMS USE?
Sales and marketing segmentation is designed to be used to target and message prospective customers. Often, this segmentation is more detailed or granular to be practical for use in customer success, although it can be a good jumping off point. The other thing that sales and marketing segmentation doesn’t consider is legacy customers. Early-stage companies try a lot of things when they are getting started, and this typically results in a group of customers that are no longer an ideal fit for the company. However, they are still customers who expect a great experience.
HOW DOES SEGMENTATION IMPACT HOW OUR TEAM IS STAFFED?
Ideally you want one team per segment. It is easiest for a CSM to learn one customer journey and deliver that consistently to a group of customers. When you have CSMs switching back and forth between different segments, the journeys will start to blend together, and you’ll lose some of the benefits of segmentation. That said, not every company is staffed to the level that they can assign CSMs to each segment. If that is the case for you, consider simplifying your segmentation plan or introducing more automation.
All customers aren’t the same, but they all deserve a great experience. Segmentation helps you consider groupings that deliver the experiences that customers want at a cost that is efficient for your company.
Are you thinking about segmenting your customer base? The Success League is a customer success consulting firm that offers leadership consulting, coaching, and a class on Customer Segmentation. Please visit TheSuccessLeague.io for more on these and our other offerings.
Kristen Hayer - Kristen Hayer founded The Success League in 2015 and currently serves as the company's CEO. Over the past 25 years Kristen has been a success, sales, and marketing executive, primarily working with growth-stage tech companies, and leading several award-winning customer success teams. She has written over 100 articles on customer success, and is the host of 3 podcasts about the field: Innovations in Leadership, CS Essentials with Gainsight, and Reading for Success. Kristen serves on the boards of the Customer Success Leadership Network, the Customer Success program at the University of San Francisco, and the Women in Leadership Program at UC Santa Barbara. She received her MBA from the University of Washington in Seattle, and now lives in San Francisco.
