How to Segment Customers

Segments
Suprej Venkat Aug 23, 2021

How to Segment Customers

What are Customer Segments?

A Customer Segment is a set of customers grouped based on some common attributes. Grouping helps in the planning and application of engagement strategies. This helps the Customer Success Managers (CSMs) to manage Customers at scale more efficiently.

Why is it needed for Customer Success Management?

Customer Success Management is all about one-to-one hand-holding. True, but as the customers grow in number it stops becoming economical to reach out to individual Customers for tasks like engagement. This is where grouping Customers based on common attributes becomes essential. As an example, you may send industry-specific blogs on a fortnightly basis to your Customers of a specific Industry. If they are grouped, it becomes simpler to target the specific audience efficiently.

Likewise, even though all Customers are supposed to be equal, some customers deliver more value to businesses than others and they deserve extra attention. These high-value Customers, if grouped, can be managed and engaged differently from your other Customers.

There are different factors based on which customers can be grouped for various Engagements. We will be looking at some of them below.

Some Mertics to Segment Customers

Data is everything as far as Segmenting Customers is concerned. The more relevant data you have the better you can Segment Customers. Here are some data-related examples.

  • Churn Scores

    Churn scores are an easy way to help CSMs focus on the right customers at the right time. You can read more about churn scores in our blog here. For a simple explanation, Churn scores collate various data about a customer including things like the number of logins, features usages, billing history and so on and form a score that shows the likelihood of a customer churning. This helps the CSM to proactively manage customers who are not getting full value and see how they can be assisted. Churn scores are a great way to start. By grouping customers with an average, poor and good health score, the CSM can have different engagement strategies for each.

  • For example, for the Segment of customers with poor churn scores, the CSM can analyse usage and suggest features that could bring value to their business which they probably are not using. For customers with average churn scores, the engagement strategy should be to ensure they do not fall to poor. By understanding those customers more, CSMs can map what they must do to improve the score. Customers with good churn scores are the ones who will become your advocates, so campaigns to get referrals and advocacy campaigns can be run with them.

  • Customers Value to you (MRR/ARR)

    The higher the MRR/ARR of a customer, the more value they would expect from your product and the higher the customer service they expect from you. So, grouping customers based on MRR/ARR is a very good starting point.

  • Renewal Days Left

    Even though CSMs would have processes to try and renew customers early, some customers do not renew till the last few days. It is important to track these customers and follow up regularly to ensure they renew before the renewal date. Creating a Customer Segment for customers who are due for renewal within the next 30 days or even 15 days and keep a close watch on them will be very useful.

  • Plans

    If your product has multiple plans, grouping customers based on their plans will help CSMs send relevant information to customers. For example, if each plan has different features, then the CSM does not have to worry about feature usage or sending information about features that are not part of a plan.

  • Demographics

    If you sell your product in different countries, then grouping customers by demographics and assigning CSMs who understand their culture better goes a long way in increasing customer service levels. It is also very useful to send information to customers in different countries at the time that works for them.

  • Use Cases

    Every Customer’s reason for using your software will be different. Understanding why your Customers are using your product is important to ensure your Customer’s goal is achieved as one size does not fit all. This information can be used to cater relevant messaging and engagement to your Customers to track their goals and ensure true Customer Success.

  • Customer’s Age

    New Customers require different hand-holding compared to old customers. Based on your processes, Segmenting Customers based on their age can be very useful.

  • Customers by Industry

    Businesses in similar industries may use your product for similar use cases. In that case, grouping by industry will help. Grouping by industry also has the advantage of allowing CSMs to speak similar jargon to the set of customers who will understand that.

Where to get the metrics to create segments from ?

The data required to create segments usually reside in multiple systems. This is where a Customer Success platform like Churn360 helps you. It will pull data from your CRM, finance systems like Stripe or Chargebee, user analytics and feature adoption from platforms like Segment, support ticket information from tools like Freshservice or Zoho to name a few. All this data is available in one place which makes it easy to create Segments.

Summary

Start by Segmenting Customers with the metrics that you have readily available like MRR, industry, use case and work out different strategies for each of the Segments that you create. As you collect more data like usage, for example, add more Segments and help CSMs to focus on the right problems at the right time.

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