Customer Segmentation: A Step-by-step guide

SEGMENTATION

Customer segmentation is dividing customers into groups based on shared characteristics. During a recession, customer segmentation can be even more critical than usual. Why?

βœ…It can help CS teams be more effective and increase their sense of impact and focus. Treating all customers the same way at a certain point in the company’s growth makes no sense and generates chaos.

βœ…It also allows the teams to specialize in different segments and provide a more personalized experience based on their needs, especially in cases where the company has diverse offerings that address different needs and use cases. 

How to Segment your customer? 

There are many different ways to segment customers. The key is to slice and dice your customer base to invest more resources where you have the highest ROI and develop at-scale processes for the rest while keeping a great customer experience. 

Here are four tips: (Depending on your specific business model and goals)

🧬Streamline with the product and GTM (Go-to-market) strategy: As a matter of fact, customer segmentation is a by-product of your GTM strategy. All GTM elements like market research, product development, pricing, marketing, and sales are based on market segmentation, so aligning the definition will ensure that the entire company rallies behind the same market/customer understanding and works according to the same definitions. 

πŸ“ Use a data-driven approach: Collect and analyze your existing customer base based on the following:

  • Annual revenue
  • Brand strength 
  • Number of employees
  • Industry
  • Complexity of needs
  • Level of service required

πŸ‘£ Segmentation is only the first step: After segmenting, there should be an end-to-end customer journey per segment: (From “White glove” to “Low touch” approach) 

  • Resource allocation per skills 
  • Onboarding and implementation process – Training length, type of resource, value plan, and more. 
  • Engagement level – What is the cadence, and in what way? (Travel, EBR, ongoing meetings) 
  • Who owns the decision-maker relationship? 
  • How to measure customer health?

πŸ€Ήβ€β™€οΈ Keep it simple: Segment your customers into a manageable number of groups based on the most significant differences. Too many segments can become challenging to manage. For example:

FeatureHigh-TouchMid-TouchLow-Touch
Level of interactionHighModerateLow
Self-service optionsLimitedBalancedExtensive
CostHighModerateLow
Best forHigh-value customers with complex needsCustomers with moderate needsCustomers with low needs

🀝 Customer > Process: It is almost impossible to cover all scenarios. The most important thing is to react fast when identifying that a customer is not getting the appropriate attention/journey and fix it outside the process definition.

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