Segment your Customers

by Oct 30, 2019

Your customer base contains a diverse population of customers each with distinct needs and expectations.

Similarities between customers’ needs, expectations and general business characteristics can be described by using common classifications and attributes.  Develop a system to organize customers by these common characteristics. 

Define a service segmentation model to organize customers by shared characteristics.

  • Shared characteristics may include service needs, usage, product adoption or life cycle stage and business characteristics.
  • You should identify a minimum of 4 distinct service-centric segments to defined to describe unique attributes such as customer needs, expectations, or business characteristics. 

Conduct customer studies to understand the defining characteristics of your customers.

  • Determine what customers need and expect from services.
  • Define how customers may use the services.
  • Establish how customers prefer to buy services – all-inclusive portfolios, base offers with add-ons or catalogs of available services to select from.

Align customers with common needs or expected business outcomes.

  • Assign all existing customers to one or more service-segment.
  • Note that customers may belong to one or more customer segment.

Develop service offerings and value propositions aligned with the needs of identified customer segments.

  • Target sales and marketing strategies and messaging to the unique needs of segments.

Evaluate service-segments each year to align current and prospective customers and to assure segments are up to date and relevant.

  • Customer needs change so make certain that your portfolio keeps pace with changing expectations.

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Featured: Service Segmentation Strategy Playbook

Not all customers are created equal nor do they represent the same value to your business. Nearly two-thirds of support and maintenance revenue comes from less than one-third of the customer base. It seems illogical to view all customers the same way, yet only slightly more than a third of companies (36%) have a formal customer segmentation strategy for managing support and maintenance sales and renewal activities. Companies that indicate that they have a formal service segmentation strategy have an average attach rate nearly 60% better than companies that do not. This playbook describes the steps necessary to define and implement a formal service segmentation strategy.

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