- On this blog post, you'll learn:
- Why you should think about customer segmentation;
- The meaning of needs and profitability-based segmentation;
- How to deal with different segments of customers.
Reaching the right customer is a concern for every company in the world, from B2C e-commerces to factories (like BIC), from SaaS companies and startups to traditional B2B distribution and traders. Each one will have a different client, a different economical scenario and different market opportunities. But they all serve a purpose: solving a problem for a specific group of customers.
BIC, for example, produces and sells pens, razors, lighters, which are very well known in the entire world. But they also have the branch BIC Sport, focused on water sports gear, such as SUP boards and kayaks. Now, can you honestly say that they sell all of their products to the same client? Of course not, even though there might be intersections.
It's a mistake to believe that an entire audience has the same needs, it's willing to use the product without any questioning, knows exactly how to use it and behaves the exact same way in different situations. Our example is a B2C business, but the same logic applies to a B2B company.
Not only do they have specific products that will serve an equally specific type of business, but these businesses might not be searching for the same solution at the same time. Therefore, it's necessary for a B2B company to map out every possibility and develop strategies accordingly.
The solution, thus, is thinking (breathing, dreaming…) about customer segmentation.
Successful segmentation is a process of changing the way your people think about your customers and how they behave as a result.
Knowing that, it's necessary to take some time to create customer segments. This process (and the way it's done) can greatly impact activation, retention and customer churn metrics and it should happen in every company, both B2B and B2C. But, at the same time, it requires research, patience and, honestly, an open mind. After all, people might surprise you.
The main objective of this blog post is showing you the importance of customer segmentation, how CRM and Customer Journey Automation platforms can help and improve this, the most common customer segments for B2B companies, especially SaaS and startups, and tips to improve their experience with your product.
Why you should think about customer segmentation
It doesn't matter if a company is developing a product for a specific group of people (regional reach) or a wide global audience: believing that all its users have the same identical needs, pains, and buying habits can be very risky.
Even more risky is choosing random attributes from customers and wasting time and resources on segmented communication strategies with unfunded data. It's like throwing out money. You should know exactly what, how and from whom you're measuring this information.
Having an efficient customer segmentation is important for two main reasons:
- You'll have more information to reach specific marketing segments, personas and decide on what tone to use when communicating with them. With that in hands, you'll be able to develop the most assertive approach according to the stage of the customer lifecycle they're actually in;
- Feedback from the right audience can get you more relevant insights to understand your personas' needs, how your product can be improved to solve their pains more effectively and develop your pricing and market strategy (product/market fit).
Needs and profitability-based segmentation
One of the pillars of marketing are customers, and for companies, the representation of these potential and ideal customers are personas. They're essential to plan out a good activation and retention strategy. By the way, every other product and digital marketing strategy should also be made towards the persona(s). Just saying.
Personas anchor product design and development, marketing and sales, and even customer success to tangible user archetypes.
However, it's not right to assume that each company must have one single persona. Many marketing and social media management platforms, for instance, can have up to three personas (and some even more!), each one with their own needs and pains.
Usually, companies use two kinds of customer segments: needs-based segmentation and profitability-based segmentation.
The needs-based segmentation takes into account the needs (of course) of different groups of customers and develops different marketing sections according to them. Some questions should be answered when creating the customer's profile:
- What kind of problem(s) are they looking to solve?
- What kind of product are they looking for?
- Are they searching for a complete platform or just one feature? If so, which one and do you have it?
- How many times a week will they be using your product?
- Are there more than one registered user (lead) from the same company? - This is B2B, of course.
- What's the ideal job of your desired lead or registered user?
On the other hand, the profitability-based segmentation weighs on the way users purchase and use your product, and is thought out as a projection. This marketing segment is anchored to the pricing strategies, which are very important to SaaS companies since they are based on MRR.
This strategy allows you to identify the most profitable users on the long run, either by potential of retention or upsell, and those who don't invest that much on this type of product.
There are some very important points that must be analyzed when segmenting customers according to their profitability:
- Will they go or have they gone through the trial period or free version before buying the product?
- Which plan are they most likely to choose or have they chosen for their first purchase?
- How much time will they take to upgrade?
- Are there more than one registered user from the same company?
- If you already have an established company and are working on a strategy remodel: how much time do your clients take to churn?
Acquiring this kind of information isn't that hard. If you have in your hands a good CRM or a Customer Journey Automation platform, this process can be quite simple.
When you combine event tracking and a metrics-focused dashboard, it's easier to map out the customer journey and create better customer segments based on their contact info and behavior inside your own system.
Choosing the right customer segmentation
Okey-dokey: with all these precious information in hands, it's time to determine which customer segments you should keep an eye on to target your product and marketing strategies.
When choosing a customer segmentation to analyse, you have to make sure it is:
Do you have enough data to extract valuable metrics from the segment? Are your leads and customers generating enough data to keep this segment measurable?
To make sure that your segment is measurable and that you have access to these metrics, be sure to use a platform that offers insights on customer behavior and analytics. With it, you'll be able to acquire valuable data and reliable metrics from your desired marketing segments.
Do you have the right ways to reach this customer segment? Other than analyzing its corresponding metrics, you have to be sure that you'll be able to communicate and engage with this segment.
Think of user engagement strategies that include email and in-app messaging, so you can be able to connect with your customers on a personal level, one-to-one. Don't forget to follow the email marketing best practices for more results.
Is this segment stable during different periods of the year? Be aware that segments can be affected by seasonal matters and other external factors.
For instance: when Mailchimp announced that Mandrill, their transactional email solution, wouldn't have a free version anymore, Maildocker, a transactional email platform, got plenty of new customers on a couple of days. After a while, the number of new subscribers decreased and went back to what it was before the unusual event.
Choose a customer segment that isn't easily affected or caused by external factors, and it'll certainly give you reliable data.
Are you able to measure the marketing segment the same way from start to end? Remember that if you change the way you measure and calculate your metrics in the middle of the way, it can nullify all the value from your earlier discoveries.
That way, you should use the same method of measurement from the very beginning and keep using it. The segment consistency is highly related to the segment's stability.
Dealing with different segments of customers
It's a fact that each company has their own personas and customer segments. But still, it isn't hard to spot some similarities between them, including in SaaS companies, both B2B and B2C.
The needs and the behavior of your customers vary from segment to segment, and the way you must address your communication and engage with them changes as well. That's why we've selected some different kinds of customers you may find through your SaaS journey:
The "undecided" customer
This customer visits your website, blog or social profile, discovers your product, signs up for it, starts using its free or trial version, but as the last moment choses not to purchase the product.
How to improve this customer journey: this lack of security to purchase might be caused by issues on the conversion and activation stage of the customer lifecycle. Make sure that the user onboarding is showing and providing value to your users right from the beginning to give them the security they need.
Also, create an objective communication on your owned media, such as blog, to show exactly what your product can do for them.
The "growth-focused" customer
This kind of customer goes through the free or trial version for a couple of weeks and purchases the product on the last day. They keep using it for a couple of months and then upgrade it to a higher plan.
How to improve this customer journey: this is a customer segment you should retain to your company. After all, they perceived the value of your product and purchased it. After using its features and benefiting from it, you may want to focus on post-conversion and post-activation engagement.
With it, you'll build a strong relationship with customers as they discover more about your product, new features and its benefits. Everything to keep them close to your company.
The "hasty" customer
After sign up, this customer segment uses the product for a couple of days on a free account or trial version. Shortly after that, they purchase the Business or Professional plan right away.
How to improve this customer journey: such a behavior may indicate that this segment has a problem or pain, and they're sure your product is able to solve it. It's time to acquire valuable feedback from them and know more about their needs.
With it, they develop a strategy to make the best of this opportunity. But also, do your research to find out if it's a stable and consistent segment of customers. Your focus, in this case, should be on retaining these customers by actually solving their problem. The result will be making them feel like they need to keep using your product to get better results.
This is your most valuable customer: be careful of the way you treat them!
The "hard-to-get" customer
This tough customer reads a lot of blog posts, downloads ebooks, attends webinars, visits the Pricing, Features and FAQ pages, signs up but barely uses the free or trial version of the product.
How to improve this customer journey: analytics and event tracking show that this customer segment is interested in your content, but is probably looking at different options.
First of all, discover this segment's needs and see if it fits with your product's value proposition. Then, think of improving your communication with this segment, develop special content targeted to them and show your value at their first contact with your product.
After conversion (that can be greatly improved with a drip marketing campaign), foolproof your activation strategy with an outstanding user onboarding or a guided tour through your product.
This kind of customer can make you spend more resources for conversion and activation, but as soon as you improve these customer lifecycle stages, you'll make it easier for them to take advantage of your product and it won't be a problem anymore.
The "sleepyhead" customer
With baby steps, this segment visits your website and blog for a couple of weeks, or even months without converting, signs up for your product, starts the trial period and purchases it with a very low engagement rate.
How to improve this customer journey: quick, grab your engagement and retention strategies right away! You must make this customer love your product right away. To do that, show you're dedicated to them. Suggest interesting and dynamic contents using email marketing and in-app messaging, show them your newest features and what they can accomplish with them.
Follow the customer's pace and take it easy, but at the same time, make the most to not lose them. It's important that you have an open communication channel with them, so they can provide you with feedback and talk about their experience with your product. Again, a great first impression with your product is crucial.
The thing is segmentation is a must-have for startups and established SaaS companies. Customer segmentation and management can be quite tricky, and that's why you need the right tools for the job.
Consider using a Customer Journey Automation platform for integrating the entire customer lifecycle. With it, you'll have more resources for acquiring and measuring the right marketing segments and their metrics.
And finally: personalize your communication. We cannot overstate that no one likes to feel like talking to a robot. Putting a personal touch to the way you engage with your users can bring you excellent results!