Our 6th episode of Vitally’s Scale or Fail webinar series happened last week, so we’re coming in hot with a brand new recap blog to share all the goodness on customer tiers and considerations for your segmentation strategy. Starting with our incredible lineup of expert panelists: 

• Annie Dean, CEO & CoFounder at RecastSuccess
• Julio Franco, Chief Customer Officer at Zappi
• Preeti Nalavade, VP of Customer Success at Informed K12
• Parker Moore, Head of Customer Success at Vitally

The four panelists have extensive Customer Success experience working with SaaS companies of different sizes and complexities. In this webinar, together, they offered their insights on the best ways to approach tiering your customers and some pros and cons to consider with different customer segmentation strategies. 

Suppose you missed it or want a refresher. In that case, this blog post has you covered, providing key takeaways from our expert panelists and tips and tricks we hope you use in your own business. Plus, you can access our on-demand webinar recording here (and in many other places throughout this blog).

Question #1: When and at what stage of growth should companies start considering tiering customers, and what is the simplest way to start off doing that, especially for a small team?

It's tricky to know how and when to start putting customer tiering and segmentation strategies in place. However, no matter the strategy for customer tiering or segmentation, it is critical that your engagement with a customer is relevant to them, and take the time to understand the best-fitting customers for your product or service. Better understanding your customers will help you define the best strategies for your organization. 

Julio: I recommend starting to segment and tier customers "as early as possible. Doing experiments at a small scale and then making sure that you expand on those" can be an easier route to take. As the company grows, "waiting too long and having the vendor change a lot of behavior from customers used to operating in one way" can be very challenging. 

Annie: "It's really important to tag your tag. To get useful information out of the testing [and] have a really well-defined strategy, you need to find that go-to-market fit." You also "need to have repeatable processes so that you can get a statistically significant data size to tell which strategies work. So, before you actually start segmenting the customers, you may want to start just collecting the data on what's working." 

Question #2: How does customer segmentation and tiering align to hiring?

Oftentimes, companies starting out tend to only think about aligning hiring with their customer segmentation and tiring strategies once it becomes a pain point. So, instead of being reactive, consider the type of customer success model your organization drives (i.e., mid-touch, low-touch, high-touch, or tech-touch) because each model requires different skill sets from your Customer Success Managers. 

Annie: "If you're thinking about changing your segmentation and tiering strategies, do a deep dive into a skills analysis of who's on your team, what skills they are going to need for the new construct, and what skills already exist on the team?" Also, think about "how you can either bring in some new fresh perspective onto the team or upskill the people that you have to really set them up for success."

Julio: "As leaders, it's important to realize what drives the people in your team." Besides a skillset, it's important to look at a person's personal profile. For instance, you can have someone with a strong desire to build relationships, but "because you put them in a world where they need to do digital touches, they'll fail because that's just not what they want to do. If you don't have the skill set on your team already, I think hiring somebody with the appropriate skill set is really key."

Question #3: What does it mean for Customer Success Operations when tiering changes?

When changing customer tiering strategies, there is a lot of work that has to be done by CS Ops following these changes, and the customers are often facing their own set of challenges as they adjust to these new changes as well. The biggest recommendation for CS Ops is to provide a lot of time so that it can be a smooth transition into a new tiering strategy and keep sight of the customer throughout this transition period. 

Parker: There is a large order of operations for these changes, so ultimately, "give CS Ops a lot of time. There's going to be a lot of workflow updates, and there will likely be some enablement needs as well." This transition "will change things for the CSMs, potentially some account transitions, so they will need to know the answers to 'What's changing?' 'How do I position this?' 'What changes for my customers?'" Lastly, "find ways to still make this a good experience for [the customer] and a place where [CSMs] can get more value out of their relationships." 

Julio: "If your CSR team is not involved in the decision before the decision is made, you're making a mistake. Theoretically, what you should do is understand the data first, and your CS Ops team can help you so you can guide the way that you're tearing. If you don't have that data, start putting a data layer in place first so you can figure out what the right thing to do is because the last thing that you want is to cause a bunch of disruption and make some changes and get it all wrong." 

Question #4: What strategies do you recommend for communicating changes to your tiering approach to current customers?

It's so important for customer success managers to understand how to effectively and positively communicate a tiering strategy change to their current customers. Like CS teams, it's a difficult change for customers to experience, too, so figuring out how to communicate this change in a way that showcases how they can benefit from it and still feel valued by you and the company is key. 

Preeti: "When you're moving from a white glove service to something less than customers, you know, internally, we know that you're going to be doing less for your customers. But when you're communicating it to your clients, you want to make sure you're focusing on what they are getting from it. What are the benefits of that motion?" Other questions to consider would be "How are you empowering them? How are you making it more efficient for them?" 

A great example from Preeti (that we just had to include):

"If you're going from monthly calls to quarterly calls or semiannual calls [with your customer], talk about the efficiencies they're going to gain. Instead of needing to talk about topics every month, we will have a quarterly meeting with them, so they get time back. You're actually still going to be providing the same amount of value, but it's going to come in one call that is more efficient for our time together. Ultimately, "we're still making sure that we're still providing that level of value to the customers."

Question #5: What are the pros and cons of segmenting by industry? Contract size/potential LCV? Geography? Any interesting/nuanced considerations you’ve heard of for segmenting?

Regarding segmenting your customers, our panelists had some interesting insights on the different segmentation strategies one could take on. Type of user, geographic, and industry type are a few segmentation strategies mentioned during the webinar, but there will always be a list of pros and cons that come with each. Ultimately, it should be no surprise that CS teams should put what's best for their customers at the forefront of their chosen segmentation strategy. 

Julio: One segmentation strategy is "type of user. As an example, we have a customer that is a large organization with users across the globe. Some of those users are more sporadic and utilize our platform four times a year. But on the other hand, there are users coming into our platform on a daily basis. So we're starting to experiment tiering, within the same organization, by type of user, being more white glove to the users that come every day and a little bit more tech touch to the ones that come more sporadically."

Annie: "If we're taking a one size fits all strategy to customer segmentation," that only caters to users who are "logging in all day, every day" vs. those users who don't log in as often or don't need to utilize your service every day. "How we service those accounts [and types of users] needs to be very different, even if it's a similar spend or even if it's similar industry." 

Question #6: Does it ever make sense to segment by maturity? 

Segmenting by maturity may not be the first segmentation strategy a company will go for, but it is one to consider, according to our panelists. Companies should look into the maturity of the customer's business or the maturity of your product at that business. These factors can help companies evaluate their customer impact and also help them find some common customer traits that could lead to an effective strategy to segment by maturity. 

Preeti: "Maturity is something that you should look at and what stage the client is at in their journey with you." The type of skills that a CS person is going to need when you're at an early stage versus in a later stage maturity is also going to be different." Ultimately, "how you work with someone in a different maturity level is going to play a huge role in what skills are needed for that CSM to be successful with that client." 

Parker: The first one to look at is the maturity of the customer's business. "At Vitally, we look at organization size, how long they've been in business, how specialized their roles are to help dictate their usage of our tool and our engagement with them." The second type to look at is "maturity with our products. There are certain customers where we see a critical mass of adoption take place, kind of across our suite of tools [that let us know] they are a solid customer who is very mature, regardless of how mature they are as a business, so to speak." 

Recap Wrap Up

We know that was a lot of information! But if you’re craving more, you can watch the on-demand recording of our webinar, where all of this goodness is broken down in detail by our expert panelists. So if you made it this far, we thank you for sticking with us throughout this long blog post (and hopefully watching the recording and/or scheduling a demo with us to learn how Vitally can help you optimize your customer tiering and segmentation strategy).