The why, when, and how of customer (re-)segmentation with ChurnZero CCO Alli Tiscornia

Does your Customer Success team have the right structure, workload, and engagement model to hit its goals? If (nearly) missed targets are becoming the norm, it might be time for you to dust off and customer segmentation. Re-segmenting your customer base is a natural evolution of your company, product, and team’s growth. All CS leaders eventually undertake this exercise to scale engagement and improve the customer experience. In our webinar, “Lessons learned from a big a$$ book shift,” ChurnZero’s CX team pulls back the curtain to share the methodology, approaches, and lessons learned from shifting CSM books across our entire customer base. The Q&A portion of the webinar covered a range of topics you’ll need to reevaluate when re-segmenting your customer base including CSM competency models, customer engagement models, book size, and much more.

How to transition your CSMs’ book of business with Alli Tiscornia, CCO, ChurnZero

Q: When launching new customer segmentation, should you use a big-bang or phased approach?

Alli: I firmly believe that you need to do a big-bang approach. You’ve got to rip the band-aid off. It does not work if you are trying to phase it out. The reason why is that there’s too much back and forth between CSMs. There’s too much confusion. It’s better to set yourself a hard deadline and go for it.

Q: What were the major lessons learned from re-segmenting your customer base?

Alli: Make sure that you talk about pay. It comes up a lot, especially when you’re changing segments. The way we did our segmentation, there was a lot of concern about title changes. Would there be title changes? Who gets to go into enterprise? Again, we looked at our segmentation based on business unit as opposed to a hierarchy. We also had to think about how we were doing their variable compensation to incent fairness across the team. We didn’t want people to be penalized because they got a different book than they had in the past. We were very lucky that our specific customer base is CX professionals. We had a customer base that understood that book shifts happen. I recognize that for a lot of you, your customer base may not always understand that, and so that’s why it’s critically important for your leadership to be out there talking to your customers, discussing the “why,” and explaining how this is going to be a better service model for them. Then make yourself available as much as you can to customers. The other big lesson for me was to be prepared to repeat yourself. I felt like I had covered the “why” multiple times with my internal team, but I found myself having to repeat the why and communication multiple times, which actually didn’t turn out to be a bad thing. I just wasn’t prepared to keep going over and over the same statements, but it ended up being really great. I did encourage the “ask us anything,” which was a really good session. Make sure you understand that there’s a lot of work that goes into a book shift. Prepare as much as you can upfront. I was really impressed with the team that we were able to pull off as large a book shift as we did in six weeks with minimal escalations. Related reading: Five lessons in communication from ChurnZero’s big a$$ book shift

Q: What is an “ask me anything” session, and how do you host it?

Naomi: AMA stands for “ask me anything.” We wanted to make sure that there was a particular avenue for any individual contributor to ask questions and have them answered by our chief customer officer. We sent out a form that they could fill out to enter questions. We made sure they had adequate time to do so and sent many reminders. Then we held a live meeting where we answered them all. Alli: It was really good. I did, again, have to repeat myself, but I thought that the session was really well attended. The questions that folks were asking were very thoughtful. It gave everybody a sense of confidence that we knew what we were doing, and it was actually going to be in service of our customers, not just in service of the company, that we were doing this book shift. Once that was understood by all the CSMs, they felt a lot more comfortable about what we were doing.

Q: How did you respond to customers who were unhappy about getting a new CSM?

Alli: We have the benefit of our customer base being CX professionals, so they understand that book shifts will happen. But yes, we did have a couple of customers who really did not want to change their CSMs. I absolutely handled those escalations myself, and I felt very comfortable making those decisions. You’re going to be in a different situation than we were, but I would recommend as much transparency and as much communication with your customers as possible.

Q: How did you decide which segments would have a high-touch versus tech-touch engagement model?

Alli: This is going to be based on your business. We are a Customer Success platform, so it’s very important that we still have a one-to-one model. We defined our engagement model around how often we were talking to our customers as opposed to who was going to get a CSM versus who wasn’t going to get a CSM. We don’t have a one-to-many model because we are a Customer Success platform. That’s how we specifically did it. At other companies I’ve been in, you have to define what you want that engagement model to look like. It tends to be based on the value of the customer. Every single customer is valuable, but that doesn’t necessarily mean that the value of each customer is the same.

Q: Were the sales projections based on a white space analysis?

Alli: Sales projections were based on both white space and sales forecast.

Q: What data did you use to determine segments by employee count? Was there a CSM workload increase at each of those thresholds?

Alli: We set thresholds for book value and book size.

Q: Did you develop a CSM competency model for each segment?

Alli: We have a skills matrix and SOPs for our CSMs. Our skills matrix is generic to the entire team but SOPs are specific to segments. We did not choose to make our segments based on a hierarchy of skills. Our segments are treated more as business units. In other words, we did not make “enterprise” the segment that CSMs level up to. We want highly skilled CSMs in each segment.

Q: Why was customer employee count the best indicator? Why not use revenue or multiple factors to segment?

Alli: Customer employee headcount aligned well for us with contract value and customer revenue. For us, the multiple factors were baked into one variable.

Q: Did you know the LOE required for each CSM to maintain a customer of a specific size? If yes, how did you track this?

Alli: The best way to do this is through a time study or capacity planning analysis based on what you expect a CSM to do. We want our CSMs focused on adoption, optimization, and retention. Our CSMs are also responsible for upsells.

Q: Do you track the number of CSMs a client has had?

Alli: Yes, but we did not specifically factor that into our shift. We did however look to have every CSM retain all customers possible with consideration for their new segment.

Determining a manageable book size for CSMs

“How do you find the ideal number of customers per CSM?” was by far the most asked question during the webinar. Many CS leaders struggle with knowing the right headcount they need to run their operations efficiently while avoiding CSM burnout. Learn how to perform a bottom-up analysis to get a customer-to-CSM ratio that’s uniquely fitted to your company’s customer experience in our “Customer Success capacity planning and budget guide.” Kristen Hayer of The Success League shows you step-by-step how to calculate the expected workload of your CSMs and build a Customer Success budget for headcount.