SaaS Segments that Makes Sense

2014-09-28

Have you ever signed up for a web app, and in their communication you get the feeling that they’re treating every customer in the same way?

I have. I keep getting email from web products that promote their latest, most advanced features – although I just signed up once and barely touched the product.

This is hopelessly ineffective, with the risk of the customer clicking the “unsubscribe” link and be lost forever.

Proper customer segmentation is the answer.

Step 1: Segments based on the customer funnel

Here’s the typical “Pirate Metrics”-style customer funnel:

Customer funnel

If you’re in closed beta – as we are with Weld – you actually have an extra signup step:

Customer funnel with private beta

To classify each of these steps in a metrics-driven funnel can be tricky, particularly Activation. See my separate blog post on the matter, “Defining Activation”.

Step 2: Defining the dropouts

So these funnel steps are perfect customer segments in their own right, but what about the customers that fall outside the funnel? They need to be taken into account, too:

Customer funnel with dropouts

…and with a closed beta:

Customer funnel with dropouts - private beta

Step 3: Customized communication

Now, with the segments defined, the fun (and hard!) part begins: writing customized communication for each segment.

First, we need a clear goal with the communication, and the goal is to bump up the customer back to the segment they fell out of. Follow the purple dotted arrows in the images above; “Non-Signups” should become signups, “Non-Activated” should become activated, etc.

Here are examples of communication:

Customer funnel with communication

The key takeaway here is that communication intended for customers further down the funnel, is useless for those who haven’t reached that point yet.