Customer segmentation and engagement should change within the customer lifecycle and divided simply

Effie Mansdorf
Effie Mansdorf Member Posts: 76 Expert
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edited July 2020 in Metrics & Analytics

It's an incorrect strategy to segment your customer according to ARR/MRR and then leave it that way.  CSMs should invest their time in a customer based on the highest return on their investment according to where their customer is at any given stage.

Often we assign a segment to a customer and it stays that way until they increase their worth.  However this not a cost effective approach for the CSMs time. The proper approach should be segmenting within High and Low touch tiers. Then segment further by ARR and goal ( risk mitigation, adoption, retention, key customer turnover, etc') within those two main tiers. Done properly, the customer may move from one tier to another depending on the goals set for the customer at any given time. 

Take these two companies as an example:

Company A - 

  • Enterprise customer - high ARR
  • Maxed out in Growth and Expansion
  • Fully adopted
  • Champions of your organization
  • Strong relationships with several teams 

On paper, due to their ARR, some would say they should have the highest touch and most attention from the CSM. However do they really need high touch activities such as:

  • 4 QBRs a year?
  • Bi Weekly meetings?
  • Frequent high touch adoption check ins ( however you do this)?

Company A should be segmented into a Lower Touch Enterprise tier. This can change throughout the customer life cycle as mentioned above.

Company B-

  • Commercial Customer - Low ARR/MRR
  • Expansion into global market potential
  • Never fully adopted (for whatever reason)
  • Champions of your organization

Company B should be given High Touch treatment. Why? They have an expansion opp into the global market and they are champions. This should be nurtured and given the high touch treatment. That means you should be engagement in the following high touch activities like:

  • 4 QBRs a year
  • Bi Weekly meetings
  • High touch adoption flow

The potential return on this high touch activity for this low ARR customer is high. Therefore a company should invest a high touch method with the CSM. 


@Jay Nathan - Would be happy if you'd share your engagement pyramid that I've seen you post. It's a great visual. 


  • Kevin Mitchell Leonor
    Kevin Mitchell Leonor Member Posts: 248 Expert
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    edited July 2020

    So we have a similar blend at RingCentral. Some of my accounts don't necessarily qualify for a CSM because of their ARR. However, the growth potential is high enough where it becomes strategic.

    With customer A, if we have a customer that is fully adopted, we also need to consider how the total customer adoption value has grown. The delta has to continue to scale. I look at company A as an opportunity to lean on them as a partner to learn ways to improve the service, increase monetized features, and look at enhancements of the product.

    Some products are not enterprise focused for strategic reasons, but with enough Company A's, they could begin to model towards that segment through the feedback and improvement working with this level of customer.


    But in principle, I believe in what you are saying. We should look into different strategic opportunities regardless of ARR

  • Phyllis Windham
    Phyllis Windham Member Posts: 9 Contributor
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    edited July 2020

    Totally agree @Effie Mansdorf!  Taking an additional view on this, Company A may no longer need the same high level touch based on reasons you mentioned, but can be used internally for the CSMs as an example/model for best practices to grow Customer B. 

  • Jay Nathan
    Jay Nathan Member Posts: 108 Expert
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    edited July 2020

    Hi @Effie Mansdorf, two items for you. I also just posted about this in more detail at the bottom of this thread:

    This is only a framework, but it works not matter how many resources you have in CS; however, if you have too few resources, retention and expansion opportunity may be left on the table.



    The 2x2 above translates to this: 

  • Thomas Seelbinder
    Thomas Seelbinder Member Posts: 22 Thought Leader
    edited July 2020

    Can't agree more with this. We need to be flexible and be pivoting whenever necessary. 


    No account left behind :) 



  • Matt Vadala
    Matt Vadala Member Posts: 47 Expert
    edited July 2020

    The mere ability to ever change comes from listening. To adapt your approach for a client shows them and your company that you are listening to what is being broadcasted. Listening leads to buy-in from both customer and organization. Buy-in helps the CSM feel empowered which in turn shows in the work they put before both parties. 

  • Alex Farmer
    Alex Farmer Member Posts: 62 Expert
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    edited July 2020

    Yes @Effie Mansdorf !  The matrix we use to assign our CS "playbooks" (in quotes because its a bit generous to call a one-pager with bullet points a playbook) is growth potential and customer risk.  This is very similar to the model Salesforce used for their customers a few years ago.

    1. Grow account (low risk, high growth potential) - get sales/AM involved, build account plan to realize growth
    2. Invest account (high risk, high growth potential) - swarm to get back on track, hypercare to reduce risk
    3. Sustain account (low risk, low growth) - nurture to reference program, make the customer exec/admin heroes
    4. Protect account (high risk, low growth) - pragmatic approach to try to get back on track but not overinvest
    Appropriate experience playbooks

    I think the broader point here is that customers are not rows in an excel sheet.  Firstly because we should have customer data in a CS tool or CRM and NOT EXCEL :), but more importantly because they change!  Their company strategy changes, their budget changes, the need for our technology changes.  One of the main outputs from a EBR/exec touchpoint is to always reconfirm they are in the right segment!  This points to a larger challenge in creating playbooks and segmentation in general.  I'm a big fan on Lincoln Murphy's concept of Appropriate Experience, which basically states we have to take a customer-led view to segmentation (and is similar to what Effie's described above).  We design 3-4 segments for our customers and then decide which one would be appropriate for each customer.  Is it a small ARR customer but high-growth and really ambitious, their AX is high-touch!  Is it a massive blue-chip that's happy with what they have and has more important things to deal with?  Their AX isn't a biweekly meeting because THEY won't get value from it.