The second part of a two part article on how to scale customer success, including a discussion on how to segment customers based upon customer outcome-related criteria rather than (or in addition to) supplier-related criteria


Customer Centricity Instead of Supplier Centricity

The question we posed at the end of Part One is whether or not the standard approach to customer segmentation followed by the delivery of different types and/or levels of customer success services to each segment that we have described in the first two clips is a fair way to deal with customers, and regardless of this whether in any case it is a good idea commercially speaking, and whether it really does make the best use of those precious resources of “real human beings” as CSMs.

It may not be fair (in fact to be blunt it isn’t), but perhaps a better question to ask ourselves is, is it reasonable? Or perhaps better still, even if reasonable, is it a good idea from a business standpoint?

Again, the point here is that by their nature commercial companies must act in their own best interests. However, alongside the short term value that might be gained by providing more favorable services to some customers and less favorable ones to others, the supplier should also think of long term value. Long term value is not about the specific “win this time” but about winning in the long run, and of course one aspect of this is corporate brand and reputation, and therefore the sentiment for the company from both existing and prospective customers, and indeed more widely from existing and prospective investors and employees too is also important for the supplier to consider.

Think about it from the perspective of the customers’ stakeholders. Does a customer want to get a “less good” service simply because they are a smaller sized business, or because they are less useful for a case study, or because they are further away from the supplier than other customers who therefore get a “better” service, even though they are all paying the same price?

If we stop to view things through our customers’ eyes, we can often get a different and very important perspective on things.

Being the type of company that customers want to do business with, which investors want to put their money into and that employees want to work for is very important. So the short term benefits of giving preferential treatment to some customers over other customers because it happens to suit the supplier to do so needs to be carefully weighed up against the pros and cons of simply doing what’s best for all customers, regardless of the short term profit or loss from doing so from the supplier’s own standpoint.

So the first issue with the standard segmentation approach is the issue of customer experience and of customer perception, and this is where we may feel we need to ensure that all customers feel that they are getting as good a customer experience from us as they should expect to be getting, rather seeing us treating some customers more preferentially than others to suit our own needs but at the expense of failing to deliver an equally good customer experience to the less preferentially treated customers.

The second and equally important potential problem with the standard segmentation approach is that for some CS teams, it can lead to reduced performance levels and to lost opportunities. This is because by providing all higher revenue customers (for example) with a higher level of CS service, a CS team may well find itself performing unnecessary or even unwanted CS related activities for a customer that happens to fit into a “High Touch” segment but that is perfectly willing and able to perform those activities for itself and may not even desire the help and assistance of the supplier’s CS team for some of those activities. Meantime, by providing all lower revenue customers (for example) with a lower level of CS service, a CS team may not provide the types of help and assistance that some of the smaller, less experienced and/or less well-resourced companies really need from them, which could make a big difference to the success or failure of those customers’ initiatives.

In reality of course there needs to be a blended approach, where the company has a strong corporate ethic that informs its company policies and its corporate culture for “how we do things around here” and it needs to also maintain a flexible and creative attitude to spotting opportunities for things like a great reference case study from a particular customer and taking action by trading value to gain that opportunity, be that through a preferential service or a discount or some other way. At the same time it also needs to take into consideration the individual and potentially quite diverse needs of each customer or even perhaps of each customer’s individual initiative, which is hard or perhaps even impossible to achieve using the standard segmentation criteria we have described thus far.


The Customer Centric Alternative

In summary then, to my mind the “trading of favors” is perfectly reasonable and it makes sound business sense, so long as it is all above board and open (ie not kept a secret, and not offered preferentially to some but not to others). What I think is wrong however, or perhaps if not wrong then just simply poor judgement is to lump all customers of a specific type (eg by size, or by revenue, or by any of the other options described in the table above) into a category and then treating all customers within that category the same way. This is because it is very frustrating for those customers who end up on the wrong end of such a segmentation strategy, and potentially not good use of the precious CSM team’s time and efforts, as illustrated by the examples we described earlier.

So can this be fixed, and if so how?

The answer is to turn the problem around 180 degrees and look at it through the customer’s eyes rather than through those of the supplier. To do this, the supplier must forget (for the moment) about existing or potential revenue levels, about advocacy potential, about delivery costs due to regional differences and about risk of churn. These are all “the supplier’s issues” and are of little to no consequence to or significance for any customer. What is important to the customer is their own business, not the business of the supplier. It is of no consequence to a specific customer that “most customers like them” have a different onboarding, adoption or value realization requirement than that which they happen to have. And that customer with those different needs is not going to thank their supplier when the supplier provides them with what is effectively the wrong CS service to meet their needs.

This customer centric approach can be achieved, but to do so requires the use of quite different segmentation criteria than those that tend to get used currently and that we reviewed in the previous table. Let’s take a look at some alternative criteria that can be used to create more customer centric segmentation.

Option Description
Adoption Requirements This is the level of requirement for adoption sophistication that the customer has. For example if a customer has 100 users with the same training requirement this might be easier to provide than say another customer with only 50 users, but whom 10 speak a different language to the rest, 15 live in far flung places, 20 do something very different with the solution than the other 30, 25 have never used a similar product or service before and need ground-up training on the basic concepts, 5 are complete new starters to the customer’s company who don’t know their own job as yet, and so on.
Solution Complexity This is the relative complexity of the solution (ie the product, the service or the mix of all products and services) that the customer has purchased from the supplier. By its very nature some products and services are simpler to adopt, use and realize value from than others. Complex solutions will probably require more effort to adopt than simple ones.
Customization This is the amount of unique configuration, customization, development or other alteration that the solution undergoes for this specific customer. This is important to understand from the CS professional’s perspective because more highly customized solutions tend to be harder to treat with generic assets and resources (eg such as a standard training course or FAQ sheet that turns out not to be relevant to the non-standard solution that has been provided).
Customer Maturity This is the level of experience that the customer has in consuming the types of products and services contained within the solution they have purchased, plus the level of internal resources and capability to help themselves. So for example an experienced company with a dedicated training department might fare better than a company that has no experience with this type of solution and no internal training capability.


An additional consideration for segmentation is Lifecycle Phase: The concept here is that newer customers might need more help than older ones, since they are inherently less likely to be familiar with the product or service and thus may require more help to get over the “hump” of initial onboarding and adoption, after which they may require less intensive assistance on an ongoing basis.

Lifecycle Phase is different to the other segmentation criteria in that the customer initiative does not stay permanently in one segment but instead it will (of course) move between the different segments for this criteria over the course of its lifecycle, ie starting out with onboarding, moving into full adoption and ending up in ongoing value realization, for example. Although of course as with all lifecycles it’s not always that straightforward as there may be multiple phases of an initiative that require onboarding and adoption to take place again at later stages in the overall lifecycle, and so on, and these requirements would also need to be taken into account.

Option Description
Lifecycle Phase The concept here is that new customers might need more help than older ones, since they are inherently less likely to be familiar with the product or service and thus may require more help to get over the “hump” of initial onboarding and adoption, after which they may require less intensive assistance on an ongoing basis.


The “Mixing Desk” Approach to Scaling

The use of customer centric segmentation criteria to group customers by instead of the more traditional supplier centric criteria we first looked at solves one problem, which is the problem of delivering the right CS service to all (or at least as many as possible) of our customers, rather than only reaching the “Pareto principle” 20% as we discussed in Part One. However it still leaves us with the other challenge, which is how to scale with efficiency – in other words how to reach that other 80% that are not the customers that provide such profitable or chunky revenues and hence that we cannot afford to throw a lot of expensive CS assets such as CSMs at.

So we’ve kind of fixed the side problems of fair and even handed and above all sensible segmentation, but we haven’t really fixed the main challenge of how to scale our CS services, which of course is the entire point of going through the process of segmentation in the first place. So have I wasted your time? Maybe… but hopefully not, since now that we have a potentially more suitable way to segment our customers, and what is left to do is to allocate our precious customer success resources to each segment according to need (and by this of course we mean customer need rather than, or perhaps it’s better to say as well as supplier need).

I’m going to propose three basic models for scaling CS services based upon customer centric segmentation. These are all quite similar in their nature, and it really is simply a matter of selecting which one works best for the particular circumstances that a CS team finds itself in. Any of them will work with any one or any mix of the customer centric segmentation criteria previously discussed in this article, or indeed with any of the more standard, supplier centric segmentation as well or instead.

The AB Model

The AB model is the simplest of the three models, and is therefore probably more suited to smaller CS teams with less differentiated ranges of assets, resources and service levels. In fact the AB model assumes just two CS service levels – for example the CSM and the automated service, or the “High Touch” dedicated CSM and the “Low Touch” CSM that manages multiple customer accounts. The system works exactly like a DJ uses their mixing desk to blend the next track in with the current track in order to provide a continuous experience for the listeners.

What follows next is a very quick lesson on how to be a DJ. Bear with me whilst I slightly indulge myself, but I promise that there is a point to the analogy…

To be a DJ all you really need is a couple of record decks, a simple mixing desk and a pair of headphones. You plug the outputs from each record deck into the mixer’s inputs, plug the output from the mixer itself into the room’s PA system, plug in your headphones, switch everything on and you’re good to go.

The simple mixing desk has three faders (or volume controls) – two vertical ones plus a horizontal one in the middle. The vertical fader on the left controls the volume of the music from whatever record is currently playing on the left hand record deck, which goes into Track A, and the vertical fader on the right controls the volume of the music from whatever record is currently playing on the right hand record deck, which goes into Track B. Having separate faders (or volume controls) for each track enables the DJ to match the volume level coming from the upcoming track that listeners will get to hear next to that which is already coming from the current track that they are now hearing, since a difference in volume will generally speaking make for an unpleasant listening experience.

The secret to all of this is the use of the central, horizontal fader. What this does is it controls which of the two tracks gets sent through to the mixer’s outputs and on to the PA. In other words it controls what the listeners can hear. If the horizontal fader is set all the way to the left then only Track A is heard. If the horizontal fader is set all the way to the right then only Track B is heard. Finally, if the horizontal fader is set anywhere else (such as to the center) then both Track A and Track B are heard together simultaneously.

In the illustration above, the horizontal fader is set all the way to the right, so we know that the listeners can currently hear Track B. Meantime, the DJ is busy listening to the next track on Track A, queuing it up to the right spot and setting its volume level to the desired position. At the appropriate moment just as the record on Track B is ending, the DJ can slide the horizontal fader all the way to the left to “fade out” the current track and “fade in” the new one. Of course they can choose to do this with an instantaneous flick across from B to A< or they could choose to do it more slowly, or even to let both tracks play together for a while if that sounds cool.

So there you have it – how to DJ in what, five minutes? Easy! In case you’re interested, yes I have tried it and no in my opinion it’s not easy, and for the record (if you’ll pardon the pun) I was truly hopeless at it!

OK, back to the topic of customer success services. The analogy here of course is that the CS Leader is the DJ, and the listeners are the customer segment. Based upon the segment’s needs, the CS Leader sets the overall levels of access to both the CSM (Track A for example) and the automated service (Track B for example). Then for each individual customer within that segment and at any time within that customer’s lifecycle either the CS Leader him or herself or the assigned CSM if authorized, can set the position of the horizontal fader between the two types of CS service in order to give the customer the right level of CS service to meet their current needs – either completely CSM, completely automated or an appropriate blend of the two, but without ever touching the vertical faders that ensure that overall the services do not become overextended.

OK I am hoping that’s clear! If not please reread and if necessary ask me any questions you like and I will do my best to re-explain.

The AB Plus Model

The AB Plus model is the next simplest of the three models, and again I will use a DJ analogy to explain how it works because – well why not!

For many years, DJs were content with just two record decks, but in more recent years and with all the new technology available to them, DJs started using other devices such as CD players initially, MP3 players soon after, and now of course computers that can store and play whole databases of music whenever required. The idea of the AB Plus model is that if we had a simple switch box, we could set up one of the inputs – for example the Track B Input – to be switchable between two devices, for example between a record deck and an MP3 player on a smartphone. This is illustrated in the image below, and in the example shown, the DJ has switched over to the MP3 Player, so that is what now comes through to Track B on the mixer.

The analogy here is that it takes very little effort for a growing CS team to move from just a blend of two options (A and B) for customer service delivery to being able to offer a blend of one or two more options (A1 or A2 plus B1 or B2), without needing to seriously re-organize.

The AZ Model

The final model is the AZ model. Again if we use the DJ’ing analogy then this is like the modern and up-to-date DJ who is a fully paid up member of the digital age. All of the above equipment can still be bought as physical devices – record decks, mixers, etc – but can now also be purchased in the form of software to run on a laptop or desktop computer. In this model it’s easy to have as many inputs and outputs and as many tracks as your computer’s power and memory resources can handle, so the DJ is no longer limited to just two tracks, or four tracks or indeed any number of tracks. And of course sound engineers have for many years used huge mixing desks with multiple tracks to mix all the sounds of for example each instrument within an orchestra in such a way that every instrument is harmoniously balanced with all the other instruments to make an overall listening experience of the highest possible quality for the listeners. This might require a more full-on re-organization of how the DJ works and the purchase of and time spent getting familiar with new equipment, but the overall result is that the DJ becomes far more versatile and creative, and can provide a wider range of musical experiences that can be more tailored to the needs of any particular audience.

This fully digital, multitrack approach is analogous to what might be appropriate for larger CS teams that tackle a wider range of customer needs and perhaps have multiple specialist sub teams within the wider CS team, such as vertical industry specialists, product specialists, licensing and renewals specialists, change management and adoption specialists, and so on. Each of these services plus each automated service can be provided with its own track and then the fader for each track (or each service type) can be set appropriately for each customer’s unique situation, making it a truly agile customer success services, yet at the same time the overall volume going to the PA (analogous in this instance to the overall cost of the service) is still set at the pre-determined level, so that again the service can be customized, yet remain within the boundaries of acceptable cost for that customer segment.


The Need for a Blended Strategy

Ultimately then, what I am advocating is a blended strategy, where “hard” limits can be set based upon things like recurring or potential revenue for example, but yet where enough overhead and agility is provided within the system to blend the necessary amount of more expensive and less expensive CS service elements to hopefully meet the needs of all or at least the vast majority of customers whilst at the same time ensuring that these precious resources are not wasted where they are not needed.

One potential downside to this strategy is that it may well require more effort to set up and to manage than the simpler, traditional approach of “High Touch for you, Low Touch for you and Tech Touch for you and if it isn’t what you need then tough”. However on the up side it provides for a much better control and allocation of resources to where they are truly needed, which in turn should result in better results from the activities of the CS team.

In essence then, this blended approach is what I understood my friend Jason Noble, the VP for Customer Success at Vinli to have meant in his talk at the European “SuccessCon” CS conference in London recently when he advocated a “Tech Assist” or  what I’d describe as a “Tech Enabled” approach over a “Tech Touch” approach. Whether or not it’s what he meant, that is certainly what I got out of his excellent talk, and I should just say at this juncture that any problems, errors or poor ideas you might have encountered within this article are entirely my fault, not his.

I hope that this article proves useful to others out there who might be struggling with the best way to scale their customer success services in such a way as to continue to provide an excellent CS experience for all customers but without breaking the bank.