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Best Practices Guide for Setting up Segments

What are Segments?

As a SaaS company grows, customer segmentation becomes an important tool not just for the Customer Success team but also for the entire company. 

Segments help you bucket your customers and users into cohorts with similar characteristics and needs. Segmentation also helps you to run programs, services and prioritizations that are tailored to each cohort. An appropriate segmentation is key to:

  1. Maximising retention
  2. Driving product adoption and increasing revenue from each customer
  3. Take key decisions about the growth of the business by backing it up with solid, actionable data.

What are the Key SaaS Metrics that Segments influence?

Customer Segmentation is the very first step to defining your customer success strategies. They also become the basis for defining SaaS metrics. Here are some of the major metrics they tend to influence:

  1. Customer Onboarding Costs: This is where customer segmentation becomes absolutely critical. How much time and human effort is spent in onboarding a new customer depends on multiple factors such as Contract Value, Plan Purchased, Success Criteria etc.  You wouldn't want to spend hours and hours on onboarding an SMB customer where the implementation is far simpler and can be achieved effectively using automation. Whereas, you'd want to spend more time on onboarding an enterprise customers that has a fairly complex scope of implementation which is difficult to achieve using automation.

  2. CSM Effort/Hours: Similar to onboarding costs, CSMs' time is extremely valuable and you would want to use these limited hours available to you, efficiently. Imagine your company currently has about 50 customers which can easily be managed by 3 CSMs
    (Each handling 15/16 customers). As your company and customer base increases, would you keep adding a new CSM per every 15 new customers that you acquire? It's not a scalable option, right? Hence, as your customer base grows, you need to segment your customers in a way that allows you to use CSM hours wisely and enable automation wherever possible.
  3. Active Users (DAU/MAU): While tracking active users on your platform, segmentation plays an important role since you cannot compare the Active users of two accounts that have a huge difference between the number of licenses they’ve purchased. Hence, the key is to identify specific buckets of Customers based on the number of licenses they have purchased and then arrive at an accurate comparison of DAU/MAU.

  4. Customer Health: This goes without saying that customer health is greatly dependent on the segments that we have created for the customer base. Since no two customers are the same and their expectations and requirements are different it becomes imperative to capture health differently for these customers.

Recommendations for Setting up Segments in CustomerSuccessBox

At CustomerSuccessBox, you can segment Accounts and Users separately. I’m listing down some of the key/primary factors to be considered while segmenting customers:

1. Account Segmentation based on MRR/ARR ($)

The most logical segmentation of customers is based on the amount (Monthly Recurring Revenue (MRR)) they are paying.  Think of this as how do you prioritise your customers in your internal meetings. Here is one of the examples of how segmenting can be useful in setting up Health Parameters :

  • Plan/Pricing Based Structure

    Pricing Plans
    Features Included

    F1, F2
    F1, F2, F3
    F1, F2, F3, F4, F5

    Based on the plans offered to customers, you would want to calculate the health of customers in the Starter plan based on F1 and F2 whereas you would want to calculate the health of Enterprise customers by including F3, F4 and F5 as well. In fact, you would want to calculate health separately if the customer in the enterprise plan is using the features for which they are paying extra. If they are not using those features, they might downgrade.

    So the Segments at CustomerSuccessBox could be:
    • Starter
    • Business
    • Enterprise
  • For a Single Product: If you have a single product and flat product price, you can do the segmentation based on MRR / Annual Recurring Revenue (ARR) (as per your payment terms). If you create Segments based on tiers you could observe your SMB customers and plan to automate few things for them whereas if you have segmented Enterprise customers you could plan a different set of activities like visiting them, setting up Quarterly Business Reviews (QBRs),  creating various other necessary touch points.

    So the Segments at CustomerSuccessBox could be:

    • Tier 1 -with MRR > $Y

    • Tier 2 - with $X < MRR < $Y

    • Tier 3- with MRR < $X

2. Account Segmentation based on Customer Lifecycle Journey:

Every customer is looking at different outcomes at different stages of their journey. You would want to strategically organize Accounts into various segments based on their stage. This also helps the Customer Success team to organize their portfolio and proactively identify off-track customers. Moving forward, you could also create playbooks for making customers successful at each stage.
An example of segments based on stages of the customer journey, criteria for each stage and goals at respective stages.

Stages of Customer Journey

Goal of the Respective Stage


Before signing the contract
Understand the capabilities of the product

First 1 to 3 months (depending on your onboarding cycle)
Customer goes live with the configuration of key features
Nurturing  and Value Delivery

Once the customer is live with the product
Business users are getting value and End-users are using the system
3 months before subscription ends
Ensuring a good relationship with the Power users and if the customer got value out of the product
Customer cancels their subscription
You can have a plan to get the exit interview and then keep sending them some exciting product updates

So the  Segments at CSB could be the combinations of:

  • Onboarding - Enterprise
  • Renewal - SMB
  • Nurturing (Post Onboarding) - Enterprise
  • Enterprise - Renewals

Note: A customer can always be a part of multiple segments.

3. Account Segmentation based on various other Parameters

Although these are the primary customer segments, you can also segment the customers based on various other parameters like:

  • Based on the Industry
    Which industry does the customer belong to? You can eventually start curating best practices for these industries and provide more value to the customers. This segmentation will help you to polish the onboarding process.

  • Based on Use-cases that your product serves
    As a product can be bought for various use-cases, you can segment customers based on their use-cases. You can study the behaviour to get the best practices which can also be useful for generating the cross-selling opportunities.

  • Based on Geography/ Region
    This segmentation helps you in market study and with the planning of resources.

You can create Segments based on various parameters. Your Customer Success Manager at CustomerSuccessBox will help you configure these parameters within our platform.

4. Account Segmentation based on Potential Value - PARR (Potential-ARR)

As a company, you are also looking for expansion. So as a Customer Success strategy, you should segment the customers based on potential value and then strategise on how you can take the customer from current ARR to PARR.

Quick Example: You have a product which can be used by all the departments of a company, but currently only one team is using the product, then you have the potential to expand to other departments as well. If you segment the customers, then you will be able to strategise your efforts and actions to expand that cohort.

Potential can be on the basis of expanding to different geography, use-cases, products, more consumables, etc

5. Account segmentation based on Engagement level (Positive and Negative)

In order to be proactive and focus the attention, you can also segment based on the engagement level of customers. If the customer is highly engaged you can plan some marketing/advocacy activities. Whereas if there is a lack of engagement, you can take proactive steps to re-engage.

Here are a few parameters for lack of engagement basis which you can build the Segments:

  • More than 30 % of the total number of Users have not logged in in the last 10 days

  • Have not conducted QBR in the last 120 days

  • Usage has dropped by 30 % in the last 30 days

  • Have no communication/touch points in the last 30 days

  • Admin/Executives have not logged in in the last 15 days

You can also create various other segments.

6. User Segmentation based on Engagement level

 Sometimes, you would not want to see the Accounts level, but would want to keep an eye on the engagement level of users.  If there are few dis-engaged customers, you would want to put them back on track. Segmenting can also help you to automate communication for certain behaviour.

Segmenting of users can be:

  • Based on the Role of a user within the product like Admins, Users, Co-admins, etc.

  • Based on the Persona of the users within your Platform like Decision Maker, Main Point of Contact, Champion, Sponsor etc.

These were only a few examples of Segmentation. With CustomerSuccessBox, you can segment customers on various other criteria.

Get in touch with your Customer Success Manager at CustomerSuccessBox to configure such Segments for your business and start focusing on the right segments.

Contact Us

In most cases, you would have a dedicated Customer Success Manager who will be your point of contact for any queries or assistance. You can always:

  1.  Initiate a chat directly from within your CustomerSuccessBox. Use the Chat option from the Chat icon on the top right side of the navigation bar.

  2. Create a conversation from here.

  3. Send an email to the Support team.

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  1. Deepshikha Chakraborty

  2. Posted