Category Archives: SaaS

How To: Customer Segment Intelligence Gathering

In a previous post, we discussed the uses for and value of customer segment intelligence in SaaS companies. This post focuses on the approaches to gathering customer segment intelligence and provides a framework for developing an intelligence-gathering approach that meets intel objectives most efficiently.

In EMI’s experience, companies often under-invest in customer and market intelligence because they either perceive that doing research is too expensive and time-consuming or they have done research in the past that didn’t deliver value. With a focused research approach in which methodology is aligned with objectives, however, neither of these should be the case.

Start with an Objective

As the previous sentence suggests, successful research always starts with a clear, strategic objective. Often that objective will emerge out of anecdotal identification of potential gaps in knowledge, for example:

  • Penetration in a particular industry isn’t as robust as you would have expected based on the fit between the industry’s needs and your software’s benefits
  • Sales closes significant new contracts with several customers from an industry not explicitly targeted through marketing
  • A group of customers are not succeeding in implementing the software as quickly as other customers
  • Several larger customers cancel or reduce their subscriptions

In each of the examples above, observations of behavior leads to questions—What is driving less-than-expected industry performance? How did these customers find out about us and can we target more like them? What are the impediments to implementation? Why are larger customers cancelling? These questions can then be turned into research objectives: understand how to increase penetration in an under-penetrated or emerging segment; identify customer experience improvements that can improve time to implementation and retention.

Sometimes the need for research arises when a business begins to pursue a new, untested venture. Common examples would be the development of a new product/service, the enhancement of an existing product/service, or the pursuit of an entirely new market.

While the genesis of the research may be different, the approach must be the same. Discipline around objective definition is vital to avoid trying to answer every question about the de novo opportunity. For example, if the research needs are in the area of product development or enhancement, potential objectives are:

  • Collect “blue sky” input to build a list of potential new features for customer segments with high growth potential
  • Test the value to existing customers segments of new features that have already been defined

Each of these two objectives drives a different research approach. Whatever your objective, defining it and maintaining it as your lodestar throughout the research development process is the key to efficiently capture the insight you need and avoid gathering information you don’t need.

Identify Your Methodology

“Research” does not always mean a survey. In fact, it is likely that customer data analysis, secondary market research, in-depth interviews, and/or focus groups could be better methods for achieving your research objectives.

The key to determining which method will best meet your needs is articulating the kind of insights you need and the most logical source of those insights. For example:

  • Do you need to identify differences between customer segments or find what all customers have in common?
  • Are you trying to gather initial, guiding information to develop a list of potential new features or are you trying to understand the relative value of features that have already been conceived?
  • Do you want to understand what existing customers value or the size of the potential new market for your product?

The answers to questions like these will guide whether you pursue qualitative focus groups, interview or survey existing customer, analyze customer usage data, gather secondary research into industry trends, or conduct broad market surveys.

Know When to Stop

There is a famous quote from French author Etienne de Saint-Exupery: “Perfection is attained not when there is nothing left to add, but when there is nothing left to take away.” Perfection may neither be obtainable nor even a desirable goal in research, but the need to limit and control the compulsion to add—questions, completed surveys, interviews, data—is both strong and vital to research quality and utility. The goal should always be to do the least amount necessary to ensure well-grounded decisions and outputs. If you can’t articulate how a question will contribute to better decisions or outputs or how collecting more data is likely to change decisions or outputs, it’s time to stop.

Customer intelligence is a vital tool for identifying and scoping new market opportunities, grounding product development decisions in an understanding of customer value, and honing in on causes of under- or over-performance. Amassing this intelligence isn’t easy, but when approached in a disciplined, grounded way, it almost always produces a measurably positive ROI driven by new revenue and/or productivity gains.

Customer Segment Intelligence Delivers Balance to Your Customer Success Initiatives

In customer success management, there will always be a tension between treating each customer as special and unique in order to ensure their success, and serving all customers without exploding the CSM team budget. One way to strike a balance between these two poles is the collection, maintenance, and efficient utilization of customer segment intelligence.

Customer segment intelligence is the knowledge base of elements relevant to the sale and utilization of your product/service by companies within a target segment. These elements would likely include:

  • Key “firmographic” attributes of companies in the segment (e.g., size, geography) that might influence purchase and adoption
  • Market trends
  • Decision-making structures and influence networks
  • Typical needs and objectives related to your product/service
  • Propensity for and approach to technology adoption
  • Common objections to purchase
  • Common obstacles to implementation/utilization

Equipped with this kind of intelligence, SaaS companies can develop segment-specific customer success programs and segment “playbooks” that will produce better results more efficiently.  They achieve this by being adapted to align with the particular characteristics and meet the particular needs of companies in that segment. A “one-size-fits-all” onboarding program is almost always better than no onboarding program is likely to miss the mark for some customers.  A custom implementation plan is highly effective but unscalable.  A customer segment intelligence-based onboarding program strikes a balance between these extremes by delivering a template that applies to a group of customers, but is effective because it is built on the foundation of knowledge of the typical operational constraints on the companies’ ability to get quickly to value and capture quick wins.

As is the case with the aforementioned onboarding, most customer success initiatives benefit from segment intelligence. For example, it is much more effective and efficient to have a series of segment email templates for cross-selling and/or up-selling rather than each CSM writing new emails from scratch for every upsell/cross-sell opportunity and rather than using a single, generic “canned” email that fails to be compelling because it doesn’t speak to the specific segment needs. Similarly, understanding when breadth or depth of utilization should register either as a concern (too low) or an opportunity (very high) requires knowledge of the relevant segment-specific benchmarks rather than benchmarks based on the entire customer base, much of which may behave very differently than the customers in one specific segment.

Moreover, this intelligence delivers further operational efficiency gains by enabling lesser-tenured CSMs to ramp up and effectively help customers faster. Playbooks, templates, and diagnostics provide a foundation of proven tools and process that gives newer CSMs with good relationship-building skills the opportunity to succeed quickly.

In an upcoming blog, we will discuss best practices for gathering and distributing customer segment intelligence.

4 Highlights from All About the Cloud – It’s All About the Customer

If you are so inclined, most things can be viewed through a lens that turns them into proof points for the importance of a focus on customer experience. It didn’t require much effort, though, to walk away from the SIIA All About the Cloud conference with a sense that success in the cloud is all about customer experience.

Fundamentally, the SaaS business model necessitates an absolute focus on ensuring customer success and delivering positive customer experiences. Without the traditional lock-in provided by on-premise software – now that it’s installed, they’re not going to switch – SaaS companies are forced to put their money where their name is by delivering on the “service” promise. Delivering value to the customer and gaining their trust is the new lock-in.

Some conference highlights from the point-of-view of a customer success-obsessed observer:

  • Hearing about several “NextGen” companies who built their offerings with the customer experience in mind: Armor5’s value proposition features ease of end-user access and xTuple’s 5 minute rule to gauge whether the customer’s first five minutes using the application will be positive.
  • Affirmation of the idea that whoever in the organization is responsible for customer success should have financial incentives associated with that success: Servoy compensates sales people based on the revenue generated by its clients’ applications; Totango’s Guy Nirpaz suggested that Chief Customer Officers have revenue goals driven by retention and cross/up-sell.
  • Highlighting by Shlomo Weiss of SafeNet of the fact that “shelfware” – the purchased and unimplemented software either on-premise or in the cloud – is a significant opportunity for companies that drive adoption.
  • Dissemination by Nick Mehta of Gainsight of the idea that investment in retention is just as important and vital as investment in customer acquisition marketing and sales.