Customer Segmentation: You need it and you should want it.
Updated: Apr 13, 2022
Customer segmentation is critical to focus your efforts on maintaining and potentially growing your book of business. While each customer is important, it is of the utmost importance to cut noise from non-strategic/non-focus customers who will distract you from hitting your strategic customer goals and high-quality accounts (ex. hitting X number of enterprise-level logos, getting X number of referenceable accounts, hitting $X of Q1 revenue)
So I understand the why, but how should I formulate the segmentation?
Cue the analysis paralysis…
Connect with your CSM lead and team — determine what the goals are for the company. Sure, growing revenue and retaining customers will be the number one goal for the company and team, but given limited time and resources, how can you be more specific about which customers to target?
How do you break down/segment your customers? Based on the goals, there are many ways to “slice & dice” customers:
Revenue (duh!): which customers are in your top 10, top 25, top 50, top 100, or even, top 1,000?
Logos: Which companies matter most to your target demographic? Will a Fortune 100 logo be more impressive than the top leader in their industry?
organization size (revenue, # of employees, etc.)
Use Cases: what types of problems are you addressing for your customers? What needs are you addressing?
Effort (how much revenue does the customer generate versus the amount of effort required to service the customer) Yes — you should factor in the human capital resources going to each of your customers! Some of your customers much more resource-intensive than other customers on a dollar value basis
(More applicable to smaller companies) Referenceable accounts/trusted customers, developing a base of users who will:
be your reference to other customers,
be an evangelist of your product,
provide valuable and critical feedback (product, process, etc.) to your growth as a company
(Works great for companies which a high volume of customers who run on contracts) Renewal dates — If you have a large volume of customers, but limited CSMs, perhaps focusing on T-90 or T-120 days until renewal may be most useful (assuming the customer has an all-around good experience).
Note: these segments are a pure illustration of the possibilities, there could be many more ways to filter your customers.
Final note: Make sure the segmentation makes sense for your company and use case. The customer segmentation should be periodically reviewed to see if it is still valid.
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