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Rethinking Segmentation for Middle Market Customer Success

Any company, whether it has 100, 1,000, or 1,000,000 customers, needs to adopt a customer segmentation strategy. Resources are scarce; there’s simply no possible way to deliver on a 1:1 customer care promise. On the other hand, you’re going to vastly underserve customers if you take a “one-size-fits-all” approach. That’s where segmenting comes into play.

Essentially, this is a method of grouping similar types of customers together. It allows you to develop solutions tailored to the specific needs and wants of each segment, targeting and appealing to them with more accurate marketing campaigns, distribution strategies, service support, and pricing. This is all done to become more competitive, deliver more value, and achieve maximum cost-efficiency.

So, what does this mean for your Customer Success strategy?


79%

of businesses segment their customers. This can be done by geography, lines of business, or products. However, the most popular way is by account size, which is used by more than 80% of companies.


According to the Technology Services Industry Association, 79% of businesses segment their customers. This can be done by geography, lines of business, or products. However, the most popular way is by account size, which is used by more than 80% of companies.

Organizations that elect to segment by account size typically have a grouping called the “middle market.” It sits in-between enterprise giants generating billions in revenue annually and startups just getting off the ground.

When it comes to customer success, the enterprise companies are typically the highest-touch. This means they receive dedicated Customer Success Managers (CSMs), around the clock support – the works. This makes sense, right? The largest customers generating the most revenue should get the most attention.

In reality, this way of thinking couldn’t be more wrong.

Resetting Your Strategy

If you are struggling to find new ways to grow, step back and ask the question: If your top enterprise customers are important enough to merit their own CSMs, why not those in the middle market? Sure, the enterprise likely makes up the majority of your revenue base. Because of this, you’ll always need to keep them satisfied, happy, and coming back for more. However, those companies are usually in a more mature stage and typically on a much slower growth trajectory than those in the middle market.

Following the classic Pareto Principle, you might think of the middle market as 80% of your customers making up only 20% of your revenue. But viewed from another perspective, they’re actually the majority of your margin and – here’s the kicker – as much as 100% of your future growth potential. 

That’s right; you absolutely NEED to have your middle market customers stick with you as they continue on their paths to expansion and higher revenues. CSMs ensure this loyalty by managing and consistently improving customer experiences, which becomes ever more critical as product technologies become increasingly complex and require additional guidance. A good CSM will find ways to increase product usage and engagement, reduce churn, uncover the right upsell and cross-sell opportunities, and build customers for life. In addition to all of these benefits, you’ll also relieve some of the burden of managing customer relationships, allowing you to focus more resources on improving your product or service for the future.

Interested in hearing more about this topic? Watch our webinar to learn how you can take the next step in segmenting for the middle market to grow your customer revenue retention and increase your future revenue opportunity.

Author

Nick Herff