Grow your business with customer segmentation

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Not all of your customers are going to have the same needs, or offer the same value to your company. This is where customer segmentation comes in!

What is customer segmentation?

Customer segmentation is the process of dividing customers into groups based on certain traits. Segmentation is a simple way for business-to-business organisations to organise and manage the relationship with their customers. It also makes it easier to tailor and personalize marketing, service and sales efforts to specific groups. Your customers will benefit from receiving the level of help and attention they need, and you can make sure your time and efforts are spent in the most efficient and effective ways.

The importance of customer segmentation

Customer segmentation is essential for any business, and it may even determine your success in the long run. Some of these benefits include:

  1. Ability to personalize communication

  2. Identify ways to improve products or service opportunities

  3. Establish better customer relationships

  4. Understand who your most valuable customers are and why

  5. Upsell and cross-sell other products and services

Most common models and types of segmentation

What types of customer segments your company uses is based on your customer base, product, and your customer success strategy. But here are seven efficient ways to segment your customers:

1. Revenue/subscription plan

As long as you have different levels of revenue and/or subscription plans, this is one of the easiest and most straightforward way to segment your customers. There is an obvious difference in value that the customers in each subscription tier offer your company, and this type of segment can then inform your strategy. Here is an example:

  • PLATINUM customers paying $20,000+

  • GOLD customers paying $10,000 - $20,000

  • SILVER customers pay $5,000 - $10,000

You can now create a strategy for each of these customer segments. For example, you might want to use additional resources and spend more time on your higher value customers as they will offer more value to your company. To learn more about the importance of prioritizing high value by tiering, check out our webinar.

2. Product

This may sound similar to the previous step, but it is indeed different. If your company is offering different types of products, then that requires different approaches to onboarding, adoption, and success phases. Having customers separated out by product helps your entire customer journey. For example, you will be able to streamline your onboarding process, or when launching a new feature to your platform you will be able to a) communicate the new feature to the customers in that product group, and b) try to upsell the new feature to customers on other product groups.

3. Region

Geographic segmentation allows you to offer a more personal value proposition, and you can better serve customers in a particular area. Compared to other segmentation types (demographic, psychographic or behavioral) - region segmentation is relatively easy to perform. You can also look at various geographic factors, such as climate, cultural preference, population, and more.

4. Industry

Customers will not only differ by the type of product or subscription plan they have with you, but they can also have different needs based on what type of industry or what niche of the industry they are in.

Let’s say you offer a HR solution that can be useful to companies in multiple industries. You would segment your customers by the industry they work in (i.e medicine, construction, education, and so on). They are all very different and have different needs which means you need to develop a strategy to help each of these segments.

Again, a win-win for your sanity and the customer you are serving.

5. Potential

Another way is to segment your customers based on "potential” - meaning customers that don’t pay much today but have the potential of growing with you. You could base the potential on usage, on brand name, revenue etc.

Increasing the value of your existing customers is the fastest way to grow a business, and segmenting by potential allows you to easily identify which customers offer the opportunity for up-sales.

6. NPS

By using NPS to segment your customers you can create an outreach method for each of those.

If they are detractors (0-6), you will probably need to reach out to look into their feedback a bit more, see where they are not seeing the value in your product.

If they are passives (7-8) they might need a little bit more help materials but you won’t need to look into their feedback as much.

If they are promoters (9-10) you should make sure they continue to see the value in your service.

7. Health score

Calculating customer health has become one of the most important ways to identify risk and to segment customers for SaaS companies. For most companies, the health score is the base of customer success strategy and generally used as a leading indicator of churn. It also indicates the customers happiness, repeat customers through renewal, or cross-selling or up-selling strategies.

Driving actions through real-time customer segmentation

Before getting into the different ways to segment your customers, it is highly important to emphasize the good data and analytics are the basis of segmentation. Your data should be clean, updated regularly and error free. All your segmentation efforts will be meaningless if your data is incorrect or misinterpreted.

With Planhat, you can segment customer data in real-time, across any data type or object, and use all your real-time customer segments to drive action with your customers.

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Final words

There is no doubt that customer segmentation helps to grow your business by building long-term relationships with customers and providing exceptional customer experiences. To learn more about customer segmentation, feel free to check out our webinar on how to Prioritize High Value by Tiering.

How to grow with your customers in 2021

Planhat, alongside Pexip, Pleo and Hopin, are pleased to present this special end of the year virtual panel. We are joined by strategy and CS leaders, to discuss the changes this past year has brought and their top CS priorities for 2021.

The power of team alignment when delivering customer success

Three simple ways to ensure that your team is delivering a great experience to your customers.

Grow your business with customer segmentation

Not all of your customers are going to offer the same value to your company. Here are seven efficient ways to segment your customers.

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