Why good customer segmentation leads to more sales

How a good customer segmentation leads to more sales

We have coached more than 250 agencies on business scaling in the past 3 years. We have identified one best practice: to segment customers according to their growth potential not on their current monthly recurring revenue (MRR).

New for us is to additionally consider the maturity level of customers in their digital growth marketing funnel in order to realize a stronger customer development as well as up- and cross sales of the agency services.

How do I implement a customer segmentation effectively and efficiently?

Here is our simple DIY-approach, for a good customer segmentation. Just follow the steps and you will recognize great improvements from the first day. 

1. Define Signals that should be included in the customer segmentation

Different signals can be included in the customer segmentation, such as customer size, marketing budget size, customer growth rate (YoY), industry, collaboration, and so on. In addition to the traditional signals, we have also achieved good results with larger agencies in 2019, if we also define the nature of the marketing funnel. Therefore, we differentiated 3 large funnels: (1) Retail (2) Lead Gen and (3) Business & Industry Markets with all possible industries & business models.

2. Evaluate the degree of maturity of the marketing funnel for each customer

Today, traditional publisher channels such as Facebook, Google or LinkedIn can be applied in almost all stages of the Marketing Funnel (Reach, Act, Convert and Engage). The strategy of the advertiser is crucial in order to analyze how an ad format can be directed to which target group and to which goal. An agency can define its services per marketing funnel for both its operations and consulting services per funnel phase. The goal for customer segmentation should be to clearly define the maturity level of the current customer’s marketing funnel.

3. Define the customer segmentation matrix

When all signals have been defined, a smart BCG matrix should be introduced, according to which the cross- and upsell potential of the customer on the one hand, and the marketing/growth potential of the customer (Y-axis) on the other hand, can be seen.

4. Derivate the service levels per customer

It is certain that a service level should be fulfilled to 120%; no matter which segment the customer is currently located. However, it should be defined how much management attention will be provided to which customer in which segment. A customer with a lot of upsell potential should certainly receive quarterly business reviews and strategic annual meetings. A customer with less potential should probably receive fewer.

Where do I find more Informations about the implementation of a good customer segmentation?

We have provided you with the deck from the call, as well as a simple segmentation sheet in Google Sheets. We also provide a link to the video of the call here.

You are more than welcome to apply these tools to your agency. We are looking forward to your feedback, please write to us directly. Until the next call on the 27th of March 2020 when we will talk more about Dynamic Service Maps! Please, do not forget to register via Eventbrite! We are very excited!

If you want to get to know more about us or about what we do and what we offer, please don’t hesitate to contact us at any time.