Too many clients to count? Time to Segment Your Customers

August 26, 2014 Paul Chilensky

Segment Your Customers

One of the biggest challenges every Customer Success Executive faces is how to align the organization with the customer base.

Time to Segment Your Customers

Proper alignment will result in an efficient, scalable and cost effective Customer Success organization. In addition it will allow you to better understand your customer needs as you develop the services the Customer Success organization will deliver.

Let’s start with how to segment the customer base. There are a few approaches to segmentation including revenue size, demographic and industry. One method I believe is important is to segment by revenue size (Annual Recurring Revenue or ARR).  The reason I prefer this method is it enables you to align services, including pricing models, deliverables and cost against annual revenue.

With your customer base segmented successfully, it’s time to perform a deep dive into how to align the Customer Success organization with your customer base. At this point you should have already defined the success criteria for your customer segments that should include, but not be limited to, meeting their business objectives with your product and high levels of product adoption and customer satisfaction. You will also require definition of the work effort (workflows) to support this effort.

The workflows should then be aligned with your customer segments, meaning you have identified what is required for success for each segment. In addition, you will be able to identify the different levels of experience required from your Customer Success staff.

You’ll soon discover that the high revenue accounts will require a higher level of skills and more time and effort than the lower revenue accounts. So if you look at this from a cost standpoint it makes sense, you are bringing in more revenue per customer to justify the higher cost of a Customer Success Manager (CSM) and less revenue to justify the costs of a Customer Success Associate/Advocate (CSA). Your Customer ratio to a CSM or CSA will also vary greatly. I would expect to see a higher number of Customers to a CSA compared to a CSM.

The next step? Implement automation, possible using SaaS CRM systems, to increase the ratio.

How have you segmented your customers?

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