#34: A Customer Segmentation Strategy That Helps You Scale Better

The first step companies take when they start gathering a meaningful number of customers is to segment their install base using 3 criteria:

1. how much they spend
2. their company size
3. where they are located (or what language they speak)

I've talked extensively about how to evolve segmentation strategies to be more comprehensive of customer maturity and be more effective at driving value for customers.

While I continue to advocate for companies to level up their segmentation strategy, I can't help but feel that using customer segmentation to scale is to apply a 00's solution to a 20's problem.

Today I want to share with you how I'm thinking about scaling how we organise CS teams so that we're driving more value for customers while being more efficient.

Let's dive in.

🚀 Design Dynamic Segmentation Systems

These traditional methods for slicing and dicing the customer base are too static. As are the playbooks CSMs use to engage with customers. 

Old-school segmentation over-indexes on the value of human relationships.

It trades expertise for coverage and doesn't allow CSMs to be truly proactive when solving for the customer.

Even when a CSM has a small book of business, they still can't see everything, be everywhere, and act on all the signals all at once.

What we need in order to scale better are dynamic ways to identify:

1. where customers are at in their adoption journey
2. which customers need extra help to see value in the product 
3. what help is needed to unlock those outcomes
4. what are the best resources to provide that help (digital or human)
5. which customers have high-propensity to growth 
6. what  are the best resources to provide that help (digital or human)

If this sounds too complicated and expensive to achieve on your own, you should check Hook out. I had a great demo from them just this week and their tool is fire (this is not an ad, it's just a good ol' recommendation).

Alternatively, working with your CS Ops team to build a smart alert system could be your first step into this segmentation strategy. 

🚨 2- Organise CS Teams For Use-Cases Specialisation

Dynamic Segmentation Systems are not just for the long tail of your customer base, they can 10x the impact of your high-touch CSM.

For the high-value and high-potential cohort of customers, this approach will maximise the impact of the CSM by helping with prioritisation and proactively nurturing all users in the customer team.

It will let dedicated CSMs focus on communicating value, aligning behind strategic goals, driving accountability with key stakeholders, multi-threading etc.

But that's likely only 20% of your accounts.

The true magic happens when you get out of the "top accounts" space and you look at the remaining 80% of your customers.

Today we have 2 strategies for this segment: pooled CSMs who share a book of business, and dedicated CSMs with large-ish books of business, managing way too many accounts and trying to be jacks of all trades.

This model leaves customers underwhelmed and CSMs overwhelmed.

With a smart system like the one I suggested above, you can effectively say goodbye to traditional "SMB", "Mid-Market" and "Corporate" teams. 👋🏻

Instead, you organise teams by use-case specialisation.

How does that work?

Imagine what CSMing would look like if instead of books of business, we had a routing system. 

As the system flags the need for human interventions, these get routed to specialised resources. Then the human resources intervene at the right time with the right knowledge. 

Teams can develop T shape knowledge, instead of the broad and shallow skills CSMs have today. Every CSM would be equipped with the overall product strategy info while also going narrow and deep in key areas of the product.

This model maximises efficiency and increases customer value by giving them specialised resources that can truly help them unlock their use case.

You might be thinking that it sounds a lot like support. 

So what's different?

The difference is that you are proactively choosing to engage based on the customer's behaviours and your data-backed understanding of what drives positive outcomes for customers.

You are not waiting for the customer to ask for help to offer it.

And some of those interventions will be digital, some will be human, and others will be blended!

Finally integrating the customer experience, vs. seeing CS as a single layer, disconnected from marketing and in-app experience.

For example:

• A customer hits the halfway mark of their contract
• You send key stakeholders an email with an automated one-page Enterprise Business Review and suggest a call with a CSM.
• If the customer doesn't book one proactively in 3 days, you can route a task for a CSM that is specialised CSM on their top growth opportunity or risk to reach out with a call to the main POC.
• When the call happens, the CSM can input agreed actions to the CRM and that info can help shape the future communication with the customer.

That's how you scale better!

Not by further refining static models.

TL'DR:

To scale, you've got to forget most of what you know about segmentation. 

1. Design a dynamic segmentation system, where customers are consistently being evaluated and nurtured based on their behaviours and outcomes.
2. Organise your lower-touch team by use-case specialisation so their interventions can maximise value for customers and drive better results.

See you next Friday!