The foundation for building out a comprehensive customer retention plan is to first start with breaking your customers down into segments. Once you have your customers segmented you can then use those groupings to drive your engagement strategies.
Wondering where you should start with your segmentation? Since our end game with customer success is retention, you should focus your engagement efforts based on revenue potential. We recommend first breaking your customers out into three distinct groups – high value customers, medium value customers, and low value customers.
Let’s take a look at the recommended engagement strategies for each of these segments.
High Value Customers
Action: Keep these customers satisfied with high touch engagements.
Your high value customers are your strategic accounts that have a high contract value and also have significant revenue growth potential. If you loose one of these accounts, it will be felt company-wide, therefore you should focus on high touch engagements with these customers.
This typically means in-person trainings with a hands-on consultative approach to their account and success management. You should also stick to what you know works process wise with these clients. You can’t afford to mess up.
Medium Value Customers
Action: Provide a hybrid approach with automated and custom engagements.
Most of your customer base will likely fall into this category of medium value customers, which also means that it would be very challenging to provide each customer within this segment a high-touch experience. However, since this segment accounts for most of your book of business you still need to provide a certain level of engagement to keep your customers happy, on track and progressing forward.
What is recommended is to put in the work up front and guide them through the implementation and on-boarding process very closely. Make sure they are fully trained on the product and set up for success. Then you can slowly transition to a lower touch model and rely on online resources and automation to help guide the customer forward in their journey. You should still be sure to schedule check-ins with the customer instead of just cutting them loose until renewal time.
Also, this segment will represent the widest variety of customers in terms of size and business maturity. Because this group is so large and less homogenous, they are ideal for testing the effectiveness of new engagement strategies and processes.
Low Value Customers
Action: Employ a low touch engagement model and monitor for anomalies.
Since the revenue being brought in from this segment is low, it is not cost effective to dedicate CSM time to these customers. These customers should be enrolled into a fully self-service model. Also, since their product subscription is most likely straightforward in nature they can be easily nurtured with automated messages and alerts.
Although it should be noted that your low value customers are a surprisingly complex segment. Some are truly low margin buyers, while others are just masked as a low value customer. Through the use of automated alerts, you should monitor for approaching product usage limits as well as power users within this segment who might be prime for an up-sell.
Check out this post to continue reading about the importance of customer segmentation.
Customer Success Around the Web
- If Nothing Else – Segment Churn – Find out why you should segment churn and measure it based on revenue retention to get a better perspective.
- Making Customers More Successful is the Key to Revenue Growth – Read this to drive your business’ next growth engine.
- CEOs, It’s Time to Talk About Sales and Customer Success Alignment – It’s time to put a stop to selling to the wrong customers.
Fighting Churn is a newsletter of inspiration, ideas and news on customer success, churn, renewal and other stuff and is curated by ChurnZero.