Customer Success: High/Low/No Touch Customer Segmentation

The traditional Customer Success method of simply looking at what a customer pays us and giving them a particular level of ‘touch’ is old and outdated. It’s time to logically segment customers based on Appropriate Experience (AX).

For context, on Friday, May 19, 2017, I did a Customer Success Ask Me Anything (AMA) on Facebook live. It was awesome. The video is embedded below and below that is the transcript (edited for better readability) that answers the question.

How to implement High/Low/No-touch Segmentation?

Do other companies segment their customers between high touch/low touch, and if so, what is their criteria?

It’s funny when I talk to a company about their Customer Success, I can almost always tell where they learned about Customer Success. And it’s usually a software vendor that they’ve learned from. And you can tell based on the language they use which one it is.

And a lot of its high/low. If its tech touch, I can probably figure out what software vendor you were talking to. Not that that’s a problem, except that it doesn’t, this high/low no touch doesn’t paint the right picture. It doesn’t really give us the accurate way of looking at our customers. You should be segmenting your customers based on their Appropriate Experience. If you’re not basing, if you’re not doing that, you’re doing it wrong.

Three or four years ago, maybe we would have said segment based on Annual Recurring Revenue (ARR) and ARR potential. But we were just kids back then. We didn’t know what we were doing. Things have evolved. Things have changed. Things have matured. We now know what we’re doing.

And you need to be segmenting your customers based on their Appropriate Experience. That’s the only way that you accurately give them the Appropriate Experience. You can have the right coverage levels. And you can have the, you can know what the appropriate ratio between technology and human intervention is. Anything else is just it’s not going to work in the long term. It’s not gonna scale well.

And it tends to normalize and experience across all of your customers which means, best case, you’re simply running at a lower margin than you could be. Worse case, it means you’re going to have an inappropriate experience for some customer segments which is going to be bad enough that they churn. So that’s why this is so important.

We can’t normalize an experience across all customers. That doesn’t work. And what we tend to do is normalize that experience and then add in some QBRs and call it high touch. And that just that’s ridiculous. We can’t think of customers success management as just this really simple thing that we just kind of throw together and make our customers happy. This is a very sophisticated business function.

And we need to treat it that way. Because if we do, we’re gonna see it’s gonna pay dividends in terms of our, the revenue going up. The value of a customer going up. And that ultimately, the value of our company going up significantly. That’s what we’re trying to go for here. This is not simple stuff. It’s effective. It’s valuable. And we need to be treating it that way.

About Lincoln Murphy

I am a Customer Success Consultant focused on Customer Success-driven Growth. I wrote the Customer Success book which you can buy at Amazon. If you need help applying Customer Success-driven Growth principles in your company or would like me to speak at your event, please contact me. Also, connect with me on LinkedIn or follow me on Twitter or Facebook.

Comments

  1. I’ve been pouring over your book and blog – a big fan of the work you are doing to bust these CS misconceptions.

    One question about segmenting by AX is when may be an appropriate time to make that call? e.g. let’s say I have three segments based off of AX. I offer a kick off call and two training sessions to all of them (this is all broad strokes). Would you suggest that during/after that stage that we would know enough about them to determine their segment? I would say it’s something we could bake into the sales process, but I feel like understanding their AX is going to take a CS persons take on things.

    I guess the fear in moving to this AX segmentation model for some people is that there can be a degree of qualitative decision making, rather than the traditional ACV/logo size model that is fully quantitate.

    Again, thanks! Really appreciate the work that you do.

    • By kick off call, I mean a call where we discuss what success means to them, what goals they have, what their timeline looks like for creating first value.

    • Maybe you don’t need to make the call. The call should only be made if it’s appropriate for that customer segment.

      Some segments may require that, but others may not.

      If you can only figure out how to segment based on the initial call, then start there… but I’d look for ways to do it before the call since their AX starts with their initial interactions with you…. as early as sales & marketing, really.

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