Customer segmentation is critical in understanding your customer base and the characteristics the define your ICP (Ideal Customer Profile). As startups begin to scale and your teams begin to grow, segmentation can become a valuable tool to help align your Marketing, Sales and Product teams.
For marketing teams, using customer segmentation to define your ICP empowers your marketing team to build marketing content and target advertising and marketing campaigns to target these customer. Say you find that educational institutions are your ideal target, marketing can tailor value-prop messaging and targeted ad buys at schools and academic institutions. With better segmentation focus, marketing conversion rates should be better and your SQLs (sales qualified leads) should be higher quality, which brings us to your sales team.
We already covered that they now are going to be getting better fitting leads. But where sales teams get a boost in understanding segmentation is how they define value-props to prospects, and how they negotiate contracts. Sales teams that are armed with segment performance data will know that even on month-to-month subscriptions, the education segment still produces 103% NRR so no need to try and negotiate long term contracts with new prospects and potentially loose an opportunity.
How do marketing and sales teams know the right messaging and features to focus on? Your product team, they help the rest of your organization understand which features your customer base, and more specifically, our target segment, utilize most frequently. Product usage data helps uncover the value-prop that your customers are realizing through your product or service. Conversely, the feedback that your sales and marketing teams collect from our target segment can help impact product development timelines and decisions.
Customer segmentation has tremendous value and can have a tremendous impact on cross-functional teams to help align them around ideal customers. Rallying around ideal customer segments can help accelerate growth in increase unit economics for recurring revenue/subscription businesses. It also allows you to experiment with growth segments and new customer groups with a more data driven and efficient approach.