Why Customer Segmentation
Customer segmentation is key to successful and scalable customer success management.
It enables you to drive deeper insights into your customers and understand why some of them succeeded while others faded away. Your message becomes more effective when the recipient finds it relevant. And you can achieve more with less effort when you know how to prioritize your customer workflows and tasks.
Depending on the customer data you can collect, you can segment your customers by company size, industry, customer type, purchased products, MRR/ARR, or the different lifecycle stages they are at. The goal is not to identify surface differences but the differences that affect:
Their usage behavior,
The additional dollar value they are going to bring to your business,
The level of support you’ll provide, and
The non-monetary value they can bring to your business, referral, case studies etc.
Although there can be many ways to segment your customers, we recommend you look at two simple ways to start with if you currently don’t have any account segmentation: tiers and lifecycle stages.
Tiers can be used to classify your customers into different groups according to their size, expected support level, and value to your business. It helps CSMs learn which accounts deserve the most time, resources, and attention.
Analyzing product adoption and usage for tiers also sheds light on how certain features drive value (or less relevant) to a customer tier, which in turn helps marketing & sales make sense of the product tiers designed; the CSMs learn where the support is most needed, and product managers understand feature stickiness and uptake.
In Customer Success, the purpose of the customer lifecycle is to define and communicate the stages through which a customer progresses when using your product, and the associated business processes your company uses to move the customer through this journey.
If you want to understand how successful your customers are, it’s important to know which stage they are at throughout their entire lifecycle. For instance, someone who has just started using your product will likely behave entirely differently than a senior account who has been using the product for years.
Lifecycle stages are usually defined uniquely by your organization to help your CSMs track the status of an account, automate the account lifecycle management, and perform targeted outreach accordingly. Example lifecycle stages can include: trial -> onboarding -> adoption -> established -> advocate.
Customer Segments are used to provide quick access to key account/contacts segments that the CSMs are interested in monitoring. For example, you can create an account segment to help monitor upcoming renewal accounts with instant access to their current ARR, health score, contract expiration date, primary contact, latest interaction details, and recent NPS.
Account/user segments are dynamic and can be configured using smart rules to drive fine-grained segmentation. These segments can be associated with Goals, Reports, Tasks, Deals, or Touchpoints to set up:
Email campaigns to enable targeted messaging to those segments
Goals automation to empower specific process tracking against those segments
Analytics and reports to drive insights on those segments
Example Account Segments
New accounts created in the last week
Accounts with renewal in the next 90 days
Accounts with expansion potential due to increased usage and seat utilization
At-risk accounts due to a huge decline in health score
Accounts with no interactions for more than 30 days
Churned accounts in the last 60 days
Accounts with unpaid/failed invoices
Example AM use case
AMs can create an account segment to help monitor accounts that have exhibited behaviors that indicate expansion potential, for example:
Customer’s % seat utilization has reached 95% or more
Customer’s MAU has greatly increased
Customer’s overall feature adoption has increased
Customer has recently submitted a promotor NPS score
AMs should then review this segment closely to identify the accounts appropriate for initiating the Upgrade/Expansion Goals. AMs can then work with the CSMs on cultivating an expansion opportunity. And as a result, an up-sell/cross-sell deal can be justified by managing the customer through the Goals process.