Almost every discussion of segmenting customers for customer success includes the ‘position’ of the author.

“ARR is absolutely the wrong way to do it.”

“To be truly customer centric we must segment by need.”

“Industry vertical expertise is a must have.”

Every one of these positions is missing something. Segmentation options aren’t exclusive. In fact I’d go as far as to say if your segmentation strategy isn’t considering how to address multiple dimensions simultaneously you’re missing a big opportunity.

The answer to this lies in how you breakout your customer base along three separate axis: Segmentation, Allocation & Attention.

Segmentation : This is the highest level of grouping and here the fundamental question you need to answer is not ‘how should we segment’ but ‘why do we want to treat groups of customers differently.’ As you answer this you will find there are lots of valid ways to do this initial step.

Allocation : This is the next level of decision and determines how you divide up the customers in any given segment and give them to CSMs. Depending on how you approached step 1 this might be by geography (all UK customers north of Watford), by vertical (all of our finance customers), by number, by value our even by a combination of these factors.

Attention : This is the final level and reflects the amount of effort provided to each customer within a given CSM’s allocation. It’s often a mistake to think that time should be evenly distributed across all customers. The more accurate your understanding of your customers the better you’ll be at doing this. The obvious option here is by need, which providing it’s done intelligently (i.e. using data based health scores and well founded CSM sentiment). However, other options are available as you’ll see below.

If we work this model into an example you can see how flexible this can be.

Segmentation : By ARR

Customers > $750k in our global segment

Customers > $150k and <$750k in our enterprise segment

Customers < $150k in our at scale segment

Allocation : By Vertical & Number

Finance customers (up to 6 per global finance CSM, up to 15 per enterprise finance CSM, up to 40 per scale finance CSM)

Telco customers (up to 6 per global telco CSM, up to 15 per enterprise telco CSM, up to 40 per scale telco CSM)

Other customers (up to 6 per global CSM, up to 15 per enterprise CSM, up to 40 per scale CSM)

In this case our biggest two verticals merit CSMs with specific domain expertise but our other verticals are too small currently to merit this specialisation.

Attention : By Expansion Potential

Typically this is likely to be by need. Customers doing well with little support getting less attention than those customers who are struggling to drive value from their business outcomes. This is best enabled by strong insights from your health scoring.

However, in a very strong renewals business (super sticky product) decisions could be taken to distribute attention by expansion potential, or in a new business desperate for references by advocacy value.

How This Plays By Customer

To take a specific example at the level of an individual finance customer worth £2M with high expansion potential you have a highly targeted model driving the amount of CSM time delivered, entirely appropriate to their value today, future potential and specific vertical needs.

Relevance To Team Sizes

This approach gets more relevant, and more powerful, as the size of your CSM team grows but the principles can be applied as soon as you start to segment.

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