May 5, 2016

Read Time 6 min

The importance of segmentation – key post-implementation milestones and internal comms about customer success


All of us in Customer Success can probably agree that the key to customer expansion is getting customers to do more. The more a customer does, the more likely they are to reach their goals using your product, consider your product a good return on investment and want to do even more with it in the future. But to get your customers to do more and be successful, it is absolutely essential that you understand their unique goals and corresponding needs so you can engage with them in relevant, meaningful ways. A one-size-fits-all approach is the kiss of death in the pursuit of customer success.

This is why understanding customer attributes and their full potential is so important and makes customer segmentation such a necessity. Customer segmentation is the grouping of customers who are similar in specific ways. From a customer success standpoint, grouping customers with the same potential and needs helps CSMs develop a more focused and efficient approach in guiding the customer through their journey.

There is a lot of information that explains how to segment customers but this week we want to highlight three key points for CSM teams to consider when looking at segmenting their customer base as part of their customer expansion strategy:

  • Maturity model: Assess how business maturity plays into the adoption of your product. If your product is self-explanatory and easy to use, this will not factor significantly into your segmentation model. If, however, you have a complex product that requires CS teams to provide a lot of training or guidance, you will likely want to use business maturity as a segmentation criteria.
  • Revenue potential: If you want to expand an account, there has to be the potential to do so. Look at whether your customers will buy more of your product. If they have bought everything they can, the potential to spend is zero, even if they are a large customer. Conversely, new customers offer opportunities to sell them more licenses or move into new functional areas of the organization.
  • ARR & Company Revenue/Size: Don’t fall into the trap of believing there is a lot of expansion potential with a customer due to the company’s revenues or size or because they are currently large spenders with you. You may have mid-sized companies with more expansion potential than larger companies due to corporate initiatives. It is important to know why your customer purchased your product and what they want to to achieve within their organization. You need to understand their long-term goals and determine how your product grows with them.

Want to dig into the power of segmentation even deeper? We suggesting starting by reading this and this.

Important post-implementation milestones

For SaaS companies, product implementation is an important part of the customer journey and can have a positive or negative impact depending on how it’s completed. The first 90 days are critical to set up your clients for success. But we are often so focused on providing positive initial experiences that we fail to prioritize and track critical post-implementation milestones the way we should.

If this sounds like you and your team, here are 4 post-implementation milestones that every CSM team should strive to achieve, with the goal of delivering customer success, business value and satisfaction:

  • Active use of your product: Once implementation and training concludes, you need to make sure all of the users know how your product will help them and how it fits into their daily roles. Not sure how to track this? One of the best investments a CSM team can make is in technology that gives them the ability to monitor what features the customer is using (technology like ChurnZero, shameless plug!). Such technology can answer key questions like how are core features working for them, what are the areas of the platform where they get hung up and what feature they are not using. This is invaluable information as you develop plans to help them be successful.
  • Completion of at least one purchase reason: When your customer signed an agreement with your company, it’s likely they had a list of key objectives they wanted to achieve with the help of your product. Whatever their goals and objectives, it’s important that you and your team remain focused on helping your customer achieve those goals as fast and painlessly as possible. The goal should be to accomplish one of your customer’s main goals of the purchase as soon as possible after implementation is complete – and you should track how long this takes.
  • Referenceability: After the implementation process is complete and you have really started to build up a solid relationship with your customer, it’s important to understand if your customer is willing to be a reference. The question of a reference indicates a certain level of satisfaction with you (the CSM), the implementation team, the sales team and, of course, the product and company itself. If they respond that they are willing, then great! However, if they aren’t willing to be a reference or simply say “not yet” or “let’s get through XX”, then that could be a red flag.
  • Willingness to be a success story: Once your product is fully implemented and your customers are using your platform, a great temperature gauge on the relationship is to ask whether or not they are willing to be a success story. As a CSM, you can find out a lot about a customer satisfaction by determining their willingness to participate in a success story.

Effective internal communication about customer success

The best brands and companies build products, services and experiences that focus on the success of their customers. As you dive into what makes these companies successful, you’ll find that they have one thing in common: they build strong internal communication channels, processes, and strategies that center on their customers. This sort of focus helps these companies rally around the customer and their success.

If your company doesn’t look like this yet, here are 5 ways to improve internal communication around customer success:

  • Start with “why”: The “why” seeks to answer the question about your company’s values, what matters most and what success looks like. The reason for being in business is not the money – at least, not for the great companies and the leaders of those great companies. Great companies are in business for the positive life impact the product or solution solves. This concept is absolutely essential for the companies that nail internal communications and customer success. This “why”, if articulated across your company, will clearly impact you they way your teams think and act toward the customer.
  • Make customer quotes real time: Customer quotes should be for the internal audience of your business only – but they should be shared constantly. It’s key that the contributors are across every department see quotes from CSMs, Marketers, Product Leaders, Development, Finance, and so on. This internal communication strategy can really bring energy and focus around your customers and their success.
  • Communicate product roadmap clearly: Your customers ask for the product road map constantly. They want to know what products your company is working on so they know how to prepare and can anticipate how processes will need to change in the future. Internally communicating the product roadmap will be vital to building a business that your customers trust. The road map should be clear, simple, prioritized and real before it is communicated to your internal teams. This is important as internal teams ultimately communicate it out to customers, so it’s important that it’s clear and simple to understand.
  • Share success stories: There’s no better way to align a company on customer success than to share how customers are really impacted by your product or service. Share success stories to the internal audience in your company – everyone! Often times those in marketing, sales, and customer success know these stories and are used to hearing about customer wins and great successes, but the rest of the departments don’t. Build a communication culture that celebrates the success of your customers. Communicate them in meetings and place them on the walls of the office.
  • Share use cases around challenges: Customers current product challenges can really push your company to become better and help you think through problems from a customer’s point of view. But make sure these challenges are communicated via use cases! Many times the entire conversation about the challenge is all about product features, which can be the spiral of death. If you shift the focus to use cases, it helps you and your team clearly define the challenge, as use cases drive towards solutions.

Word to the Wise

This week’s wisdom comes from Byron Deeter of Bessemer Venture Partners. Deeter puts successful SaaS models into two main buckets: companies that adopt the “SaaS for X” model, taking something done by other companies, even other software companies, and doing it better; and companies that do things that are only possible with the cloud and with mobile enterprise. Bessemer has backed both types of company – and has had great returns from both. The defining feature of successful SaaS companies in his mind is not the model they adopt, but whether they are able to achieve “efficient growth”:

 “For Deeter, efficient growth means from Series B onwards at least a dollar of ARR growth for every dollar of net burn. As companies mature, this also means drawing more from the existing customer base and relying less on new customers. This is the reason for the growth in customer success managers and teams, as companies look not just to reduce churn but consistently up-sell and deliver better results to their existing customer base.”
In Bessemer’s analysis, this efficient growth has always been rewarded by the market, but as cash becomes more constricted, particularly at the late stage, this efficiency will become more and more important. At the early stage he predicts that VCs, including Bessemer, will not drastically change what they look for or how they deploy cash, but later-stage companies will be punished for inefficiency.

Want to hear more? Take a listen to the full episode of Twenty Minute VC and the full interview with Deeter.


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