One of the first steps to creating or refreshing your customer success strategy is to develop a holistic segmentation approach that allows you to deliver on customer needs in an affordable way. In this webinar, we'll explore frameworks and benchmarks to help you get started on crafting your strategy.

1. Customer segmentation best practices
Ganesh Subramanian, Client Strategy Manager

2. Burning questions:
• Why do we segment customers? What are the objectives, design principles?
• How do our customers segment and structure their engagement models?
• What are best practices for using one-to-many engagement models at scale?
• How does Gainsight segment their customers?
• How do you implement a segmented engagement model?
Segmented engagement models
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3. Why do we segment customers?
What are the objectives, design principles?
In order to execute at scale, segmentation is critical to deliver what each type
of customer needs in a manner that’s affordable for the company.
Customer
Needs
Value to
company
• What do our customers need in order to be successful?
• Are there themes across these groups?
• What is the value of each type of customer to us?
• How can we affordably serve each segment?
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4. Customer base segmentation strategy
Typical considerations
Source: Gainsight customer success benchmark report, 2015
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Customer needs Value to company
• Expected annual customer touch points
per segment
• Avg. contract size per segment /
segment volumes
• In-person vs. remote resources ability to
meet needs
• Potential revenue or expansion
customers in low-$ segments
• Seniority level of required CSM contact • Expected cost-of-sale % of sales
• Cross-functional support required • Expected cost-to-serve % of sales
• Broader partnership needs/opportunities
(e.g., co-selling, marketing)
• Target net renewal rate performance for
each segment

5. Customer base segmentation strategy
How do our customers segment their customers?
2 Tiers 20%
3 Tiers 56%
4 Tiers 18%
> 4 Tiers 7%
Tier
Allocation!
75%of
respondents tier
their customer base
as part of their
contact strategy!
!
23%
30%
47%
Other / Combo
ARR $
Customer ## of customers
Revenue
Other / combo
Source: Gainsight customer success benchmark report, 2015
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6. Source: Gainsight customer success benchmark report, 2015
CSM outreach cadence by tier of customer
Customer touch cadence by tier
How do our customers segment their customers?
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Tier 1 Tier 2 Tier 3
Daily
Weekly
Monthly
Quarterly
Bi-annually
Annually
Never
High touch Low touch

7. Customers-to-CSM Ratio (Median)!
Tier 1! 10 - 25!
Tier 2! 25 - 50!
Tier 3! 50 - 100!
Tier 4! 200 - 300!
Tier 5! <500!
Source: Gainsight customer success benchmark report, 2015
Customer touch cadence by tier
How do our customers segment their customers?
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8. How do companies use one-to-many models?
Lifecycle plan for one-to-many customer success
Build market
awareness & industry
thought-leadership
via Webinars &
Events
Establish efficient
product training and
support via
Communities & User
Groups!
Drive customer
retention &
expansion
campaigns via CSM
Email Marketing!
1! 2! 3!Acquisition! Adoption! Retain & Grow!
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9. How do companies use one-to-many models?
One-to-many strategies
3%
61%
29%
3% 3%
Weekly Monthly Quarterly Bi-annually Annually
CSM Email Marketing Cadence!
5%
15%
33%
47%
50%
52%
65%
Other
None
User Groups
Events
Online Community
CSM Email Marketing
Webinars
Deploying a robust one-to-many strategy is key not only to drive new sales by efficiently expanding your market
reach, but to drive product adoption and customer retention. The below charts show the most popular strategies
being deployed today.!
!
Source: Gainsight customer success benchmark report, 2015
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10. How does Gainsight segment customers4
We carved out 3 segments based on revenue (ARR) and whether or not a
customer represents a strategic relationship.
Strategic Enterprise / Mid-market SMB
Overview
Present a major upsell opportunity
or help us open up a market for a
new use case for Gainsight
Customer above a certain ARR
threshold that do not represent
strategic opportunities
Customers below a certain ARR
threshold that do not represent
strategic opportunities
Customer
Needs
• Need guidance in shaping the
evolution of their CS
organizations
• Want us to support the change
management effort
• Already experts in growing their
team, but need guidance in
executing their CS strategy
within Gainsight
• Starting to build their CS teams
and want to digest all the
information they can get on best
practices
Value to
Gainsight
• Highest potential ARR
customers
• Huge expansion potential
• High retention rates
• Strong brand value
• Significant ARR & high retention
rates
• High advocacy rate
• Substantial product feedback

11. How does Gainsight segment customers
How do we make the ‘tough tradeoffs’
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What you can afford comes down to one number: CSM fully-loaded cost / Revenue
Revenue
CSM Cost
Revenue
Account
# Accounts
CSM
CSM
CSM Cost
Additional
CSM
revenue
• Hire a Renewals
& Expansion
manager to
improve retention
and upsell
• Influence your
sales team to
increase the
average selling
price (ASP)
• Limit time spent
per account
• Run 1:M
programs,
standardize
onboarding,
training
• Pooled CSM
models for
specialization
• Match CSM
background,
location to
required segment
engagement
model
• Charge for
highest touch /
premium CSM
engagement
modelValue
Drivers

12. How do you implement a segmented
engagement model?
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Five considerations for implementation:
1. Ensure consistency in messaging from marketing à sales à CSM
2. Limit “transitions” across segments (ideally, never)
3. When transitions are necessary, emphasize benefits of how the new model
matches specific needs of the customer
4. Consider bundled prices for CSM support
5. Encourage innovation: How can we scale every touch point?

13. Questions?

14. Additional sources
• The secret of low-touch customer success
• Three steps to understand and engage your customers
• How to segment your customers & make tough trade-offs
Segmented engagement models