Customer Success, Part 3: How segmentation delivers value to customers – and your business

This guest post by Francoise Tourniaire is the second in a series that takes an in-depth look into creating a successful Customer Success program. You can catch up with Part 1, Setting the stage for customer success, and Part in Part 2, Creating a Scalable Customer Success Program.


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In our last post on scaling customer success, we proposed many alternatives to the traditional, headcount-intensive approach to customer success. Still, customer success managers can become very knowledgeable about their customers, gain their trust, become valued advisors, and artfully uncover opportunities for revenue expansion. So how do we decide what customers receive this precious resource? By segmenting.

What is segmenting?

Segmenting is a strategy that divides the customer base into subsets of customers with similar needs, so that you can supply services that are most appropriate to each segment. For instance, high-value customers may be assigned a permanent customer success manager, while others may receive only automated updates.

Is segmenting for customer success all about revenue?

In a word, no. Segmenting by revenue is common, of course, and indeed revenue is almost always a part of the segmentation strategy. But there are many other factors that may make sense in your particular context:

Revenue potential

A customer may have a small MRR (Monthly Recurring Revenue) today, but have the potential for a much higher contribution. For instance, if a large organization starts with a small pilot project, revenue is likely to grow. Assessing revenue potential is not easy, but all other things being equal, it makes sense to prioritize customers who are likely to grow in time over those whose size will remain stable.

Reference accounts

A customer may not be particularly large nor likely to grow, but still serve as an important reference account, for instance because it is a beachhead in a new territory or a new industry. Coddling reference accounts may be an excellent investment.

Lifecycle stage

Customers usually need more assistance at the beginning of the lifecycle, during onboarding. Many vendors assign onboarding representatives during the initial training period, but withdraw them afterwards.

Industry

If your product of service is used very differently in different industries, providing different customer success deliverables may make sense, above and beyond the question of size. For instance, the K-12 education market may be offered regularly scheduled online meetups to boost community exchanges, while business customers instead receive quarterly business reviews.

Troubled accounts

Most vendors assign additional resources to troubled accounts, although they rarely make that explicit to customers. The hope is that troubled accounts will work themselves out of the crisis after a period of focused care.

This is far from an exhaustive list. Think about your customers’ unique requirements and how you can best allocate resources to them. I’ve had clients separate their customers into franchisers and independents, for instance. It all depends on what makes sense for your customer base.

Are customer success segments the same as marketing segments?

Perhaps. Remember that marketing segments direct the acquisition of customers, whereas customer success focuses on retention. Just because two customers were in different marketing segments does not imply that their ongoing needs are different. For instance, you may market differently to healthcare and technology companies, but once the customers are no longer prospects it may be more important to segment by size than by industry – or vice versa.

Consider the marketing segments as one possible way to segment for customer success, but don’t feel limited by them.

How many segments do I need?

It all depends on the specifics of your customer base, as well as your size. It is the rare vendor who can use a one-size-fits-all approach, although it is possible. For instance, if your customers are consumers, all using a fixed-price service, one segment may be just the ticket. (And you will be unlikely to deploy expensive customer success managers in this situation.) But most vendors find that they can easily distinguish between key and non-key customers, creating two segments, and often more.

Don’t go crazy with multiple segments. If you have a tiny customer success group, two segments are probably the most you should have.

Can you give me an example?

Here is an example using two segments: one for enterprise customers, who receive personalized service from start to end through an assigned CSM, the other for other customers, who get less, and less personalized help.

Onboarding Retention
All Online videos & 1:1 check-ins with onboarding specialist Monthly check-ins with CSM from pool
Enterprise 1:1 sessions with the CSM Weekly check-ins with assigned CSMQuarterly onsite business reviews
Onboarding Retention
All Online videos & 1:1 check-ins with onboarding specialist Monthly check-ins with CSM from pool
Enterprise 1:1 sessions with the CSM Weekly check-ins with assigned CSMQuarterly onsite business reviews

Here is another example, with three segments, showing a possible progression from self-service to completely personalized service.

Onboarding Retention
S Videos and group webinars Automated outreach
M Videos + 1:1 check-ins with an onboarding specialist Monthly check-ins with a CSM
L Customized 1:1 training sessions Weekly check-ins with assigned CSMQuarterly onsite business reviews

This last example is segmented by industry rather than by revenue or by size, to illustrate the idea that offerings need not be organized in a Russian-doll manner.

Onboarding Retention
K-12 K-12 online videosHelp with school adoption campaigns Dedicated online community3 check-ins with the CSM during the school year
Commercial 1:1 sessions with an onboarding specialist Monthly check-ins with the CSM

Remember to adapt the examples to your specific circumstances and customer requirements. The best customer segmentation strategy is one that delivers value both to your customers and your organization. Regularly evaluate the success of your segmentation strategy and revise it as needed.


Francoise Tourniaire is the founder of FT Works and co-founder of ChurnSquad. Both companies provide consulting, training, and coaching to create and improve customer success initiatives. Her most recent book, The Art of Support: A Blueprint for Customer Success and Support Organizations, is now available on Amazon. Contact Francoise at FT@ftworks.com or 650 559 9826 for more information.