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How Customer Success Teams Should Segment Their Customers

Segmentation is one of the fundamental elements of a successful customer success team.

With it, customer success managers can better manage multiple clients, take advantage of similarities between their accounts, and quicken the customer’s journey to success by applying lessons learned from one customer to the next.

But choosing how to segment your customers is another question. Many customer success teams segment their base on revenue, while others might focus on company size, customer needs, use cases, or even growth potential.

Your CS team’s structure also influences your segmentation… Is the team in charge of a revenue number? Do managers upsell their accounts? Factors like these play a part in the decision on what you use for your segmentation.

There is no perfect answer, so we talked with several CS professionals to find out their favorite segmentation methods. Their answers vary, but the detail in their answers will provide you with the foundation you need to make the right decision for your business. 

Ronni Gaun – Enterprise Customer Success Manager at Zoom

“In my experience, segmenting customers is multi-layered and should not be entirely based on MRR band. Instead, consider CSM tenure, industry knowledge and personality as an overlay to MRR, % solutions adopted, realistic current and future upsell opportunity. Further, look at CSM product expertise. If your offering is ‘dense’, ensure that they are well supported by cross functional SMEs in the same segment.”

Customer Success Quote from Ronni Gaun

Shari Srebnick – Head of Client Success US at SearchMetrics

“Segmentation isn’t just about developing a well-organized, operational approach to Customer Success.  It’s a key foundational piece to growing your revenue and moving clients forward with your solutions.  I don’t necessarily have a “favorite” way, because how you segment your customer base is going to be highly dependent on your business model and what your customers need at different phases of their lifecycle.  From there, you can determine the engagement model for each segment, and where, if needed, automation might be needed as a supplement.

A few key criteria you might want to consider:

  • Understanding the Needs of Your Customers: Each segment will have different needs
  • Understanding their Value to You: What is their value to your company?  Should we serve each segment?
  • Define Each Segment: A common practice is to use ARR.  Using a financial metric can help define the right engagement model.
  • Outline your Lifecycle: This will help outline the “touches” needed for each segment”

 

Soumik M. – Senior Customer Success Manager at Ally.io

“Segmentation is key to ensure proactive customer success & my favorite way to segment customers is based on:

  1. The lifecycle of the customer i.e where they are in the utilization of the platform: onboarding, adoption, or renewal phase. This enables the creation of separate playbooks for the lifecycle to tackle challenges & ensure success. 
  2. Health & Engagement score i.e creating a different segment for healthy customers & ones at risk. The customer engagement is different based on the health of the customer, this segmentation will allow CSM’s to on focus/prioritize both areas. 
  3. Revenue Potential or Overall Revenue i.e Customers with higher ARR need to be top of mind along with customers that have great growth potentials. End of the day customer success is a growth function.”

Soumik M. Customer Segmentation Quote

Sue Nabeth Moore – Founder of Success Track Enterprise and Co-Founder of Success Chain

“I’m a strong advocate of segmenting based on customer needs. I encourage a “persona” approach where sponsors and users are mapped based on their goals and/or tasks (jobs to be done in/out of the tool). Goals and tasks are paved throughout the milestones and touchpoints of the customer journey/s.

These may have variants per sponsor and user persona. This persona approach may be combined with account segmentation based on criteria such as growth potential. Focusing first on segmentation per needs ultimately ensures growth potential.”

Ty Raia – Senior Enterprise Customer Success Manager at Terminus

“Exceptional customer success is derived from listening to the needs of our customers. Social science tells us that the biggest predictor of successfully ushering change is the bond between the subjects. In my experience segmenting CSM’s along these same lines has proven to work. Cultivating a CS team with a variety of skill sets has allowed me to segment those who are technical superstars, exceptional project managers, compassionate coaches, and executive leaders, to match the bespoke needs of each customer.”

Maddie Schiess – Customer Success Manager at Crosschq

“When it comes to segmentation, spend is a popular choice as it enables you to apply a higher touch model to those with higher spend, and conversely, lower touch with lower spend customers. I wouldn’t say spend is my favourite way to segment, but it is one of the most effective. Additionally, I like business size because it positions you nicely to really hone in on the value your product is bringing (or not) to varying business segments — which can ultimately then be leveraged to help your organization grow better.”

Maddie Schiess Quote on Customer Segmentation

Parker Chase-Corwin – Senior Director, Customer Success and Support at Paytronix Systems

“Segmentation isn’t meant to be a perfect science so make space for exceptions to your rules when assigning your customers. 

Dividing up your customer base by annual revenue is probably the most common method, and for good reason. The largest customers get the most most resources proportionate to their spend.

However, I’ve found the ARR model breaks when you get particularly innovative smaller customers who are early adopters and more nimble than their larger counterparts. These are the customers that will demand similar attention as your largest customers (and will get it one way or another).

Don’t resist this for the sake of preserving your segmentation rules: these customers will help make your product stronger through their experimentation. Don’t be afraid to break the bands for up-and-comers and future potential.”

Parker Chase-Corwin Quote on Customer Segmentation

Sana Farooq – Director of Customer Success at FloQast

“We take a very consultative approach to our customers at Floqast, so at the top level we segment by Geo and ARR to align with Sales. This ensures the pre-post sale handoff is seamless and the customer has a consistent team. From there, we drill down to the goals the customer is looking to achieve. The “choose your own adventure” approach is not a traditional segmentation, but it allows our Customer Success team to focus on what matters most, which is customer outcomes.”

Sana Farooq Quote on Customer Segmentation

Oliver Plane – Customer Success Executive at NorthStar.buzz

“Customer segmentation drives personalization, thereby creating a perception of a unique tailored journey for the customer who feels valued and understood, resulting in a great customer experience.

Properly executed this is extremely powerful, but get it wrong and it can be an embarrassing disaster.

It is a fine line between creating a personal customer experience vs coming across as too personal and creepy, or completely impersonal and irrelevant.

The cause for a poor customer experience is usually poor underlying data. There is no point in segmenting your customer base if you don’t have a holistic view of the customer data.”

Oliver Plane Quote on Customer Segmentation

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