How do you apply market segmentation to customer success?

Steven ForthSteven Forth Managing PartnerFounding Partner | Expert ✭✭✭

Effective market segmentation is the key to marketing, sales and pricing. The state of the art is to segment markets based on how customers get economic, emotional and community value.

How are people in customer success segmenting markets? How are they using those segmentations to inform customer success programs?

Are the market segmentations used for customer success the same as those used in other parts of the business?

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Answers

  • Laura FayLaura Fay VP & Managing Director, Research & Advisory Member | Guru ✭✭✭✭✭

    @Steven Forth Good question.

    Effective segmentation framing is key to optimal fit of the offer to the target customer. That is, offer-market fit.

    When creating solutions, and expecting them to renew and grow, that offer-market fit is important to get right. It will increase the likelihood of customer value realization and enable the customer success to be more effective in helping customer achieve their outcomes with the solutions.

    We often see product, customer success and sales leveraging different segmentation strategies and others completely aligned.

    All - How is it working at your company?

  • I'm also interested in the segmentation strategies different product teams are using and if those are also aligned with customer success and sales segmentation. Especially interested in how this is happening for equipment manufacturers/OEMs.

  • Steven ForthSteven Forth Managing Partner Founding Partner | Expert ✭✭✭

    A related question is should a business have only one segmentation that it uses for all business functions (offer development, marketing, pricing, sales, customer success) or if each of these needs its own approach to segmentation.

    My gut says the latter. For example, Customer Success is often concerned with churn and a segmentation that helps manage this is valuable.

    On the other hand, multiple segmentations leads to noise and confusion. It makes it hard to really internalize persona.

    There may be a middle way here: (i) have core and specialized segments or (ii) have a way to map between segments.

    Modern clustering and segmentation tools like Louvain can be used to explore these questions and find and compare different segmentations.

  • Benjamin BloomBenjamin Bloom Senior Director, Service Line (Ben/he/him) Founding Member | Scholar ✭✭

    Our approach to customer segmentation has been to focus our resourcing and investments in alignment with the value and opportunity of a given segment. The top level segments in order of descending value were: Preferred, Core, and Standardized. For customers in the Standardized segment, the emphasis is on automation and low-touch engagements. Preferred customers get bespoke, high-touch engagements with local resources. Core gets a combination of the two - blending automated activities with some higher touch work.

    Since the segments themselves were defined in the context of overall value and opportunity, we have an exception process to provide higher touch engagements for accounts that are either lower segment and paying for higher value services OR lower segment with forecasted upside.

  • Steven ForthSteven Forth Managing Partner Founding Partner | Expert ✭✭✭

    @Benjamin Bloom Hi Benjamin, when you say 'value' are you referring to the value you can provide to members of the segment or to the value of the segment to your business?

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