Entrepreneur and investor says that if you have 1 customer in a segment, you can get 10. Jason Lemkin With user segmentation and a bit of data, you can find your business’s best customers to double down and find more. In this post, we look at how entrepreneurs can use data to find their product’s best customers. Whether your product attracts the customers you were initially targeting or not, you want to make sure that won’t limit its ability to grow. the segments your business focuses on How Poppulo Used User Segmentation to Find its Best Customers Late last year, I caught up with Andrew O’Shaughnessy, the founder of Newsweaver, now . We talked about the early days of the company. Poppulo Newsweaver started as an email marketing platform. They had customers, revenue, and were growing. Looking through data and interacting with customers, they noticed that a very small number were using the tool for internal communications — to send announcements to employees, internal surveys, etc. Looking closer, they realized that the internal communications segment was one of their most engaged and profitable. This realization led them to rethink their product focus and target that market exclusively. The transformed their business. They went from a Red Ocean — an hyper competitive market like email marketing — to , a market with very little competition. customer pivot a Blue Ocean Making the non-obvious decision paid off for Poppulo. It’s important to and . Even if you think you’re already acquiring great customers, strategically exploring user segmentation and customer segments can help solidify your positioning (and keep you from leaving money on the table). follow the money trail find the biggest opportunity for your business How I Found Lean B2B’s Best Customers with User Segmentation We don’t need to look very far for another example… ; the book and its marketing made that fact pretty obvious. Yet, evaluating buyers a few years after publication, I realized that innovation consultants loved the book, found value, and were extremely willing to refer it to their peers. I wrote Lean B2B to help B2B entrepreneurs For an author with limited time and resources, it made sense to use this insight to prioritize promotion efforts. How to Use Data to Find Your Product’s Best Customers You probably already have a sense of whether you’re or not, and you know what great customers look like. It’s the perfect time to dive into user segmentation. targeting the right customers To find the best customers from your customer base, we’ll look for signals within your data or analytics. Your first task will be to . We’ll then use that definition to segment your customer base. codify your definition of what a great customer is Depending on the areas of focus of your business, you can look at: : Cancellation rate or monthly churn; Retention / Churn : , word of mouth or virality; Advocacy Net Promoter Score : Repeat visits, time on site or activation rate; Customer engagement : Customer lifetime value (CLV) or average revenue per paying user (ARPU). Revenue or profitability You’ll convert these inputs into a recipe; . a form of customer value score It’s important that this score is a very close proxy for customer value and customer success in your business. Key Thresholds for User Segmentation Once you have your recipe, you’ll define 3 thresholds (buckets): : The first percent atop your rankings; Your best customers : Customers ranked within the first 2 to 10%; The next best : The last 10% at the bottom of your list. Your worst customers Depending on how technical you are, you might be able to find these customers using SQL, your CRM, database exports or people analytics in tools like Mixpanel, Amplitude or Intercom. The reason why you focus on these 3 groups is that: represents your . Your “fans”. your top percent best fits If you do this right, this segment will include the customers most likely to . advocate for your business gives you a good comparison point. It can also reveal some of the lowest hanging fruits to help you create an exceptional product experience. The next 10% — and this one is optional — helps you define who you be targeting. There’s a lot to learn there as well. The last 10 shouldn’t With these customers, you’re looking for the characteristics and habits of the people that were never really a proper fit for your company. You can use those to create — an archetype or profile. less-than-ideal a negative persona Going Beyond User Segmentation to Home in on Your Best Customer Segment To dive deep and understand the breakdown of each of those segments, you can do , doing interviews to refine your segmentation. a market segmentation analysis Since you’re targeting people you’ve already sold to — or have already convinced to try your product — it should be easier to get them to engage with you. Depending on your customer base and how deep you want to go, evaluating your customer segments can take anywhere between 2 weeks to 2 months. This may seem like a lot of time, but it’s definitely worth it if you are to make an important focus decision. 👏 Clap and get other people to discover it! Enjoyed this story? Want to Build Products Businesses Need? The Lean B2B Course 🎥 includes 5 hours of and on the . High-Quality Video Lessons, Worksheets Templates expanding Lean B2B book The Lean B2B: Build Products Businesses Want Video Course Curious? Sign up for our Free 2-Week Email️ Course 👇 Further Readings on B2B Customer Development I publish articles on B2B customer development every week : on my blog Can The Lean Startup Techniques Work in B2B? How Much Time Do You Need to Get to Product-Market Fit in B2B? 16 Tips for Better Customer Development Interviews in B2B Originally published at leanb2bbook.com .
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