Service Segmentation Strategiesservicestrategies.com/wp-content/uploads/presentations/thomas...Types of Segmentation Describes the market opportunity ... Service Specific Segmentation

ServiceXRGServiceXRG

Service Segmentation StrategiesService Segmentation Strategies

©Copyright 2006 ServiceXRG

About ServiceXRGMarket research and business consulting firm dedicated to service industry issuesA balanced perspective with views from users, vendors and partnersPerformance benchmarking, competitive analysis, trend analysis and demand drivers Coverage in North America, Europe and ChinaRecent Research Topics: Knowledge Management, Support in China, Customer Retention Strategies, Support SLAs, Service Segmentation


Customer SegmentationWhat is it

Creating filters to view groups of customers that share one or more

common characteristics

Creating filters to view groups of Creating filters to view groups of customers that share one or more customers that share one or more

common characteristicscommon characteristics


IT MaturityIT Maturity

Service LevelsService Levels

Business SensitivityBusiness Sensitivity

Price SensitivityPrice Sensitivity

IndustryIndustry

RevenueRevenue

GeographyGeography

ProductProduct

Support EntitlementSupport Entitlement

Renewal StatusRenewal Status

Types of Segmentation

Describes the Describes the market opportunity market opportunity

and / or unique and / or unique characteristics of characteristics of doing business doing business with a customer with a customer

typetype

Market Market OrientedOriented

Describes the Describes the needs and needs and

expectations for expectations for service and service and

support regardless support regardless of industry, size, of industry, size,

etc.etc.

Customer Customer OrientedOriented

FunctionalFunctionalDescribes the Describes the

status of a status of a relationshiprelationship


A Global View of Segmentation

PrePre--SalesSales

PostPost--SalesSales

What products to offerWhat products to offer How to position productsHow to position products

Business NeedBusiness Need

Service needsService needs

Expected useExpected use Mission criticalMission critical

ResponsivenessResponsiveness

How to Acquire How to Acquire CustomersCustomers

Who to sell toWho to sell to

How to Retain How to Retain CustomersCustomers


Current Use of Service Segmentation


Service SegmentationMarket Oriented BiasMarket Oriented Bias


Service SegmentationA Balance between Products Purchased and Relationship ValueA Balance between Products Purchased and Relationship Value


Service Segmentation Bias Towards Product Purchased vs. Service RelationshipBias Towards Product Purchased vs. Service Relationship


Service Segmentation by Relationship ValueThe Value to the Company vs. Support P&LThe Value to the Company vs. Support P&L


Service Segmentation Today

Not often usedWhen used, biased towards “market oriented” vs. “functional” or “customer”segmentsSignificant opportunity to apply service segmentation to enhance business effectiveness


Customer Oriented Service Segmentation “Filters”

IT MaturityMatureMature LimitedLimited

Business SensitivityMission Mission CriticalCritical

Non Non CriticalCritical

Price SensitivityHighHigh LowLow

ExpectationsStringent Stringent SLAsSLAs

LimitedLimitedSLAsSLAs

Support DemandLarge Large BusinessBusiness

SOHO / SOHO / IndividualIndividual


An Emerging View of the Customer Base

Enterprise

Mid-Market

Small

HighMediumLow

Price SensitivityPrice Sensitivity

Com

pany

Siz

e by

Rev

enue

Com

pany

Siz

e by

Rev

enue

Value Minded Small Business

Value Minded Enterprise

Price / TCO Minded

Enterprise


SmallSmall

HighHigh

EnterpriseEnterprise MediumMedium

LowLow

HighHigh

MidMid--MarketMarketMediumMedium

LowLow

MatureMature

LowLow

MediumMedium

HighHigh

CapableCapableEmergingEmergingLimitedLimitedBusiness Business SensitivitySensitivity

SelfSelf--SufficientSufficientEnterpriseEnterprise

High Reliance High Reliance Basic NeedsBasic Needs

Small BusinessSmall Business

Medium Reliance Medium Reliance Mission SensitiveMission SensitiveSmall EnterpriseSmall Enterprise

Com

pany

Siz

e by

Rev

enue

Com

pany

Siz

e by

Rev

enue

IT MaturityIT Maturity

High Reliance High Reliance Mission CriticalMission Critical

EnterpriseEnterprise

Adding a Third Dimension

• Business hours• Electronic only

• 24x7• SLAs• Remote Monitoring

• Extended hours• Phone

• Knowledge transfer• Training• Diagnostic tools


OpportunitiesOptimize programs to the specific needs of key customer segmentsDevelop segment specific value propositionIncrease the rate of sales and renewal of support programsAllocate staff to meet the SLA’s for most important customersDevelop targeted proactive and self-service capabilities


Segmentation Tips

Segment customers using characteristics that tell you something important and actionableThe types of characteristics used will vary depending upon the stage within the support relationship lifecycle


The Support Relationship Lifecycle

Sell the value of Support and Maintenance

Deliver the value promised

Deliver Deliver ValueValue

RetainRetain AcquireAcquire


Lifecycle Specific Characteristics

Sell the value of Support and Maintenance

Deliver the value promised

Deliver ValueDeliver Value

RetainRetain

AcquireAcquire

The value of customer relationshipFrequency of service useSatisfaction with services

Interaction preferencesService level expectationsExpertise

Business & price sensitivitiesPain pointsIT maturity


Applying Service Segments

Program Program DevelopmentDevelopment

Sales & Sales & Renewal Renewal

StrategiesStrategies

DeliveryDeliveryStrategiesStrategies

Content Content DevelopmentDevelopment

Deliver ValueDeliver Value

Retain / AcquireRetain / Acquire

What support programs to offerHow to price offeringsHow to position the value of supportWhat sales and renewal strategies to apply

How to meet SLAsHow to allocate staff to most important needsWhere to leverage self-serviceHow to allocate account managers and on-site resources


Segmentation ScenariosApplying Segmentation toApplying Segmentation to……

1. Program Development

2. Contract Renewals

3. Identifying High Value Customers

4. Self-Service Strategies


Applying Segmentation to Program Development

ObjectivesCreate programs customers wantStrike the right balance between price and service features

Segmentation CharacteristicsPrice sensitivityBusiness sensitivity

GoalsIncrease support contract sales rate (attach)

©Copyright 2006 ServiceXRGPrice SensitivityPrice Sensitivity LowHigh

Bus

ines

s Se

nsiti

vity

Bus

ines

s Se

nsiti

vity

Low

Hig

h

Business Critical

Extended Needs

Advanced Support

Basic Needs

Buyer Types

©Copyright 2006 ServiceXRGPrice SensitivityPrice Sensitivity LowHigh

Bus

ines

s Se

nsiti

vity

Bus

ines

s Se

nsiti

vity

Low

Hig

h•• Service Level GuaranteesService Level Guarantees•• Root Cause AnalysisRoot Cause Analysis•• UpUp--time commitmentstime commitments•• OnOn--SiteSite•• Account ManagementAccount Management

•• 7x247x24•• Remote SupportRemote Support•• UpdatesUpdates

•• Diagnostic toolsDiagnostic tools•• OnOn--SiteSite•• Account ManagementAccount Management

•• Knowledge BaseKnowledge Base•• DownloadsDownloads•• Discussion ForumsDiscussion Forums

Program Attributes


97.1%

60.8%

0%

20%

40%

60%

80%

100%

Yes No

Impact of Service SegmentationAttach RateAttach Rate

Service Specific Segmentation StrategyService Specific Segmentation Strategy

Atta

ch R

ate

Atta

ch R

ate


Applying Segmentation to Contract Renewals

ObjectivesMinimize objections to renewalsIdentify customers at risk

Segmentation CharacteristicsLast contactRenewal status

GoalsIncrease renewal rate


Last ContactLast Contact< 7 day< 15 days< 30 days< 60 days< 90 days< 120 days

Out of TouchOut of Touch RecentRecent

Renewal StatusRenewal Status< 60 day< 30 days< 15 days30 days< 60 days< 90 days

Back logBack log PendingPending

Contract Expiration

LateLate

Customer Segments to Drive Renewals


86.9% 83.8%

0%

20%

40%

60%

80%

100%

Yes No

Impact of Service SegmentationRenewal RateRenewal Rate

Service Specific Segmentation StrategyService Specific Segmentation Strategy

Ren

ewal

Rat

eR

enew

al R

ate


Applying Segmentation to Self-ServiceObjectives

Develop self-service appropriate to needs, interest and capabilities of customersDevelop audience appropriate content

Segmentation CharacteristicsPropensity to use self-serviceTechnical expertise

GoalsIncrease customer useIncrease self-service effectiveness


Propensity to Use SelfPropensity to Use Self--ServiceService HighLow

Prod

uct E

xper

tise

Prod

uct E

xper

tise

Nov

ice

Expe

rt

Reluctant Proficient

Challenged Willing

Four Self-Service Audience Segments

©Copyright 2006 ServiceXRGPropensity to Use SelfPropensity to Use Self--ServiceService HighLow

Prod

uct E

xper

tise

Prod

uct E

xper

tise

Nov

ice

Expe

rt

Advanced Diagnostic ToolsAdvanced SearchFile Download LibraryBug ReportingSubmit / Review Cases

Full Text SearchBrowse by CategoryAutomated Diagnostic ToolsTutorials / TrainingPersonalization

Support NewsletterE-mail FAQsE-Mail Alerts

Proactive E-Mail AlertsFile Download LibraryExperts Forums

Targeted On-Line Capabilities


Applying Segmentation to Identify High Value Customers

ObjectivesAllocate staff to meet the SLA’s for most important customersRetain

Segmentation CharacteristicsRelationship value

GoalsIncrease high value customer satisfactionIncrease high value customer retention rate


Segmentation Break Points

$0

$250

$500

$750

$1,000

Customer SegmentsCustomer Segments

Rel

atio

nshi

p Va

lue

Rel

atio

nshi

p Va

lue

($00

0)($

000) $500$500

$1M+$1M+

$200$200

$500+$500+

$200+$200+

$675$675

$237$237

$175$175


Percent of Customers Considered to be Strategic


Revenue Contribution of Strategic Accounts


Benefits of Service SegmentationOffers greater insight into the unique needs of your customersProvides the means to develop targeted programs and offeringsHelps to focus finite resources on most important customersEnables the development of audience specific content, processes, and user experiencesIncreases sales, renewal and self-service effectiveness


Getting Started with Service Segmentation

Establish how you intend to use service segmentsCreate the “filters” that will be used to segment customersRemember that customers can belong to more than one segmentStudy the specific needs, expectations and behaviors of key segmentsUnderstand the indicators that will be used to measure the impact of segmentation


Thank you

PrePre--SalesSales

PostPost--SalesSales

What products to offerWhat products to offer How to position productsHow to position products

Business NeedBusiness Need

Service needsService needs

Expected useExpected use Mission criticalMission critical

ResponsivenessResponsiveness

How to Acquire How to Acquire CustomersCustomers

Who to sell toWho to sell to

How to Retain How to Retain CustomersCustomers

Questions & DiscussionQuestions & Discussion

Documents

Service Segmentation Strategiesservicestrategies.com/wp-content/uploads/presentations/thomas...Types of Segmentation Describes the market opportunity ... Service Specific Segmentation