How To Identify & Multiply Your Best Customers with Tamara Grominsky, Kajabi

This episode is brought to you by Zendesk. Zendesk makes it easier to support your customers with excellent customer service, engagement and sales CRM solutions. Qualifying early stage startups can get six months free of Zendesk suite and Zendesk sales CRM. Go to zendesk.com startupstoapplynow that's Zen in DSK.com startups.

When we think about our customers, they go on a ton of different journeys, right? And what we want to do is we want to put ourselves in their shoes and actually go through that journey. And we want to say, is this experience that they're seeing a positive experience? Is it a segmented and relevant experience? Or is it a negative experience? Is it fairly generic? And I could probably be delivering this experience to anyone. And this is going to help you understand where along the customer journey you can start to optimize for each of your segments. I need some traction. You need some traction. Let's get some traction.

Hey, what's up, innovators, entrepreneurs, visionaries and disruptors. This is your Traction podcast host, Lloyd Lobo. We're a community of over 100,000 people just like yourself, on a mission to help you get the methods, the money and the madness to explode your business growth. Featuring stories and tactical advice straight from those who've done it before, like Shopify, Twilio, Asana, and many more.

All right, can you name your company's best customer segments? What If I asked 10 of your employees, would everyone give the same answer? What would happen If I asked 100 of your employees? Most likely what I would get back is 100 different answers, even if they were slightly nuanced. And the reality is that most companies don't spend nearly enough time defining and aligning on their best customers. And the result is that there's tons of confusion amongst teams, right? You have different teams who all think they're doing a great job. They're all working on their own goals, but they're focused on slightly different folks. So maybe the marketing team is building some content for SMBs. The partnerships team has just signed a huge automotive client and the sales team is out there pitching enterprise businesses. And again, they're hitting their okrs, but they're not building momentum. And what we see is that this isn't just causing confusion internally. It has extraordinarily external impacts as well. Customers can feel when you're not aligned. 80% of customers actually say that the experience your company provides is more important than the products and services. And so you could have a better product than your competitors. But if you're not providing that relevant and segmented experience, they might still go somewhere else. We also see that when 64% of the times when a customer switches from one brand to another, it's actually driven by this lack of relevance. And so today I wanna chat about three steps that you can take to build a growth focused customer segmentation in your own business. We're gonna start by identifying your best customers, the ones that your company should be focused on. Then we're gonna build segment profiles that are gonna help to align all of your stakeholders and help you build that momentum. And then we're gonna apply your segmentation across the entire customer journey to build those segmented high converting go to market. So we'll start with step one, identifying your best customers. So identifying your best customers and figuring out your segmentation could be a subjective exercise. Oftentimes you're just listening to the founder or the loudest person in the room. But it doesn't have to be. That's why I like to recommend the map model which takes a more objective and data backed approach. So I'll walk you through this. The first step is measuring volume. And this is all about looking at the customers that you have today, as well as any customer that you may have had in the past, or even the ones that might have trialed you in the past. If you have a trial and what you want to do is you want to start to gather information about them and start to cluster these customers based on shared attributes. Once you have an understanding of what the largest clusters on, then you can move to the second step, which is all about validating the performance of those clusters. Which customer segments are actually performing better than the average customer. And then finally, you want to look externally at the market to actually ask yourself, if I were to choose to focus on this customer segment, do I have a chance of winning the market? So we're going to dig into the model a little bit more. So the foundational layer of all of this is a really robust data set. But when I say that, it doesn't mean you have to have some fancy software. This could be just a data set in Excel, as long as you can slice and dice. And what you want to do is you want to take any information that you have available to you about your customers, whether that's demographic information, geographic information, behavioral, whatever it might be, and you want to bring it all together in one place. And if you feel like you don't have all of these pieces of information, that's totally fine. Just Gather the information that you do have and you can always supplement with a tool like click to help you learn more. The really important piece of this though, is that you want to merge it with something that I call account data, which will basically help you connect everything through your unique customer id, Right? And here you can also start to look at some of the business metrics. Are they on a subscription? How many times have they purchased from you? How much have they purchased from you? And so this is what's going to allow you to really understand the value of these segments for your customers. And we're going to need this information in the second step. But right now you're really just starting to look at those different clusters and start to say, who do I have a lot of? Who have I been bringing in a lot of in the past? And so in this example, in this chart, maybe they've discovered, oh, hey, we have a lot of dentist clients or we have a lot of folks in the education industry. But I do want to give a word of warning, which is that you can't just turn up the volume. And by that I mean your largest group of customers might not be your best customers. And that's where that second stage is really important. And so before we move on to the second stage, we want to basically form a segmentation hypothesis about a couple segments that we think could be good for your business. And this hypothesis is going to help you and all of your stakeholders rally behind what you want to research in the next stage. And so, as we move into the second stage of the model, this is where you want to take those initial segments and start to look at the performance data. And what's really important here is you want to know that when you start to bring in more of these segments or you start to retain more of these segments because you can prove that they're better for your business, your business metrics are going to rise overall. And so what metrics you consider might vary based on your business, whether you're in B2B or B2C, a SaaS product or a physical product? In my business, here are some of the metrics that I consider. First one is conversion rate. Are these customer segments more or less likely to convert than the average customer? And once they do convert, what kind of package do they buy? Do they have a higher average revenue than the average customer? Are they expanding faster than the average customer? And once they become a customer, what do those survivability curves look like? Are there major points of drop off or are there major points of Churn. And how confident do you feel that you can actually start to chip away away at that turn? And then finally, you want to line up all of the different potential customer segments based on customer lifetime value and really compare them side by side. And so again, once you have this performance data, you're going to look at the initial hypothesis you had and you're going to start to refine it down a little bit more. And with that refined list, you're going to go into your next step, which is all about turning your eyes outside of the business. And so if the first two steps were looking internally at the data you have now, we want to ask if you were to focus on these customer segments, do you have a chance to win the market? And there's a ton of different ways that you could answer this. Here's three things I like to consider. The first one is addressable market. What's the total addressable market for each of these potential segments? And are those markets large enough to sustain your growth ambitions? You want to make sure that if you're able to capture this market, you will be fueling the right amount of growth for your business. The second one is customer acquisition. And there's two things I consider here. The first one is customer acquisition cost. How much does it cost to actually acquire this customer? And is this something that's scalable for you? The second one is acquisition channels. So where are these customers coming in from today? Are they channels that you can continue to scale? And if not, do you have a good understanding of where these customers live so that you can go out and get more of them? And then third is competitive landscape. So are any of your competitors also prioritizing these customer segments? It's okay if the answer is yes. That just might mean that you have a different go to market strategy, if it's a blue ocean strategy versus a red ocean strategy. And so once you've gone through this final step, you're going to start to bring everything together and you're going to proceed with the customer segments that you've identified. You have a high volume of and are bringing in today the ones that are good for your business and are the markets that you believe can support your growth ambition. But this is really just the beginning of our work. Once we understand who our best customers are, we need to actually empower the rest of the organization to act on that. And so this is where the concept of segment profile comes in. Before we get there, I just want to spend one second talking about why it's so important that we multiply these best customers. And so right now you can take a look at what percentage of your customer base or of the customers that are buying from you fall into these segments. Probably it's not gonna be the majority, since you just discovered that you wanna focus on these segments. But as we think about increasing the ratio of segmented customers and decreasing the ratio of non segmented customers, because we've already proven that those segmented customers are better for your business than the average customer, your overall business metrics are gonna rise as well. And so that's really what's gonna unite all of the teams across the organization. And so I'm sure a lot of folks in the room have used buyer Personas before. They're often like fictionalized versions of a customer. Personally, I don't find them to be particularly actionable. And so here we're going to take a more approach of a quantified buyer Persona, or what I call a segment profile. And what we want to do here is we want to get to the heart of the value that the customer is looking for, how your product delivers that value, and then how we can package and communicate that value to the customer segments in a way that resonates. And it's important to call out here that you're not just doing this for your business overall. You can see here we're going to do it for each and every customer segment. And so I like to start by really understanding what's the value that the customer is looking for. You can do this a few different ways. You could do customer problem definition. You can do jobs to be done. This is a framework I like. So we'll use this as an example here. We just want to understand for each of the customer segments, what's the customer problem or the job to be done. What are they hiring your product to do? So if you are say a landing page builder, a functional job might be I want to build a landing page to sell my product. If it was social job, it might be I want to build a landing page to that converts so that I can impress my colleagues and my boss. And maybe a personal job might be I want to learn a new tool and become better at my job. And then pains and gains are things that can be erased when, when we solve the job properly or introduced if it's solved properly. Once you understand the value that each customer segment is looking for, we need to understand how your product delivers that value or solves their problems. And so what happens is that we usually take a list of all of our features. And we're super proud of everything we've built and we think that everyone can use everything, but that's often not the case. And the messaging just kind of comes really confusing. And so oftentimes we'll send out a survey and we'll say, will you tell me which features you prefer? But you're going to get a chart that looks something like this. And yes, I can see that the top feature is most preferred, but I can't really tell by how much. And so how you ask is just as important as who you ask. And that's why I always recommend that you take trade off feature preference or max differential, which is going to allow you to get much more clarity here. You're going to ask the customer to choose only two features, their most preferred feature and their least preferred feature. And you can see how we can actually start to make some assumptions based on this. The customer clearly prefers the top four features and they actually have negative preference for the bottom features. And so if I were to include these bottom features in a package for this customer, I actually might be deterring them from buying because they don't want this. And then once we understand what are those features that customers, customers want in order to deliver that value, we want to understand on a segment by segment level how much they're willing to pay to have that value. And again, you might go out and you might show them the package that you have created and say, how much would you pay for this? But they're going to give you a low ball answer because everyone wants a deal. And so instead you can use a tool called the Van Westendorf Price Sensitivity Survey. And it's super simple. Anyone can do it themselves. It's four questions. At what price would you consider the product to be so expensive that you would never consider buying? At what price is it getting expensive? But you would still buy at what price is it a bargain and a great deal? And then at what price is it so cheap that you're actually questioning the quality of the product? And you're going to get a chart that looks something like this and that gray bar is your optimal price band. And so for this segment, you're going to try to experiment with price pricing within this band. If you go on the lower end of the band, you'll probably have a higher conversion rate, a slightly lower arpu, and then vice versa if you go higher up. It's really important to note that for each segment you might get different responses. And so it's really important to not just assume that you can charge incrementally more as people move up package, but actually design specific packages for each segment. And so once we have all of these inputs, we're going to go back to our quantified buyer Personas, our segment profiles, and we're going to put everything in one place place so that everyone can action off of it. And then we're going to tie this up in a big bow, which is the core value proposition for each customer. And this value proposition is going to speak directly to them in a way that's relevant and compelling. And then it's this value proposition and all of those inputs from the profiles that we're going to take into the final stage to design those high converting go to market. When we think about our customers, they go on a ton of different journeys, right? And what we want to do is we want to put ourselves in their shoes and actually go through that journey. And we want to say, is this experience that they're seeing a positive experience? Is it a segmented and relevant experience, or is it a negative experience? Is it fairly generic? And I could probably be delivering this experience to anyone. And this is going to help you understand where along the customer journey you can start to optimize for each of your segments. Going to show a couple examples of some businesses that are doing that today. First one is Kajabi. So at Kajabi, we're an all in one platform for creators. You can build community tools, courses, podcasts. And we identified that a really interesting segment for us was actually authors. But if you went to our website, the value proposition that we had in our hero didn't really speak to authors at all. It just spoke to creators. And so what we did is we built a system segmented campaign that would really speak just to those authors. So the ads that they see at the beginning of their journey have value propositions that were designed specifically for them. And as they went through that journey, they then landed on their own landing page where the hero was swapped out to that new segmented value proposition. Another company that I think is doing a really great job at this is Lessonly. So Lessonly is actually baked this into their entire website. As you go to the homepage of Lessonly, you go to the dropdown, they specifically call out lessonly is 4. And then they have a bunch of different segments. And if you were to click on any of those segments, say the sales team or the talent team, you'd be taken to almost identical pages. I put them both up here. You can see from a design perspective they are identical. They even use the exact same product screen grabs. But what is different is the entire higher value proposition and copy on the page. They're telling two different narratives about the same product to different customers. And so before we wrap up, I just want to summarize what we learned today and how you can apply it within your own business. First, we took a look at who your best customers are. So we took a step back and we said who you have today, who are you attracting? Are they good for your business and will they help to drive growth and can you actually go out and win that market? Then we did a bunch of research to deeply understand each of those customer segments, the value that they're looking for, how to price and package that value and then how to communicate it to them in a compelling way. And finally we were able to use all of those inputs to deliver high converting go to market that hopefully will delight, resonate and convert. That's it for me. My name's Tamara. I'm the VP of Product Marketing at Kajabi and if you want to talk more about segmentation, you can find me online at LinkedIn or on my website.

Thank you for listening and we hope you enjoyed this week's episode of the Traction podcast. If you enjoyed the show, please leave us a five star review and you can find all the information mentioned in today's episode at tractioncough IO that's T R A C T I O N C O N F IO.