The goal of customer segmentation is to learn which customers both gain the most value from your solution and provide the most value to your company. But to determine which segments provide the most value to you, you need to consider more than just monthly recurring revenue (MRR) or annual contract value (ACV).
For example, if one segment has really high contract values and high maintenance costs, a segment with lower contract values and lower maintenance costs could be better for your company.
To get a holistic understand of customer health, take into consideration feedback surveys, ACV or MRR, cost of acquisition and cost of servicing the account, retention rate, ACV or MRR growth and product usage.
Once you understand the health trends of different segments, rcs database you need to act upon those insights.
High ACV is a very attractive metric for your sales team, so if you have a segment that results in large deals and poor customer health post-sale, you need to find a way to de-incentivize selling to that segment.
Or if you find a customer segment that has a high churn rate within the first 90 days but produces evangelists who expand significantly and refer new business to you, your onboarding probably isn’t meeting that segment’s needs. So, by improving your onboarding, you can increase the performance of that segment.
High customer health should be the output of customer segmentation. By analyzing the different segments within your database, you can gain a better understanding of how your company provides value to your customers and which types of customers benefit the most.
Changing the way you run your business based on that understanding will enable you to have a healthier customer base consisting of clients that have solved their challenges through your offerings and want to continue their engagement with your company for a long time.
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