Should you segment your clients? How to do it correctly

Every MSP knows that no two clients are the same. So, you might be wondering if there’s really any point in segmenting your client base into different sections, especially if you’re still in the early stages of your business.

Though every account will come with its own specific needs and profiles, grouping clients together by similarities can actually make your life a whole lot easier, help to scale your business, and refine key workflows.

If you haven’t already, it might be time to think seriously about segmenting your client base.

In this guide, we break down the different ways you can go about it and why it may be very beneficial for your MSP business.

How to segment your clients

As we mentioned, there’s no single formula for segmenting your clients. There are a few main characteristics that you can use to categorize your clients:

Product / Needs-based

The first way you could choose to segment your client base is on a needs-basis. Group clients that have similar needs or use the same type of products together.

Geographic

If you work with a global portfolio of clients, it may make sense to group similarly located accounts together. This could be by specific country or by time-zone, depending on the number of clients you have.

Industry

Another way to group your clients together is by their industry or sector. If you find that you cater to particular niches, it will make sense to segment by industry. This will make it easier to assign points of contact and technicians that have industry-specific expertise.

Spend

Another logical approach to client segmentation is by the amount they spend with you. Looking at total revenue makes sense, because there will be a clear difference between your biggest and smallest accounts. If you have a tiered pricing structure, this segmentation method will be easy because you simply have to group clients depending on which subscription they have. This should help you to ensure you focus your energy in the right places and hone in on key upsell opportunities.

Why you should consider segmenting your clients

You may be wondering if there’s actually any benefit to segmenting your clients. And though it’s definitely not necessary, there are a number of business advantages:

Invest the right amount of energy

Segmenting your clients gives you a high-level overview of your client portfolio. This should help you to focus and optimize key strategies to ensure you’re getting the best outcomes with the most efficient investment of energy. For example, it’s in your best interests to retain your highest-paying customers. Thus, by segmenting your clients, you can ensure your customer retention strategy focuses in large part on the high-revenue segment.

Additionally, if you choose to segment by industry, for example, you can assign technicians and points of contact that have experience working with clients in similar sectors. This will amount to a more personal and specialist service for everyone.

Gain a deeper understanding of your clients (and your business)

Segmenting your clients is an important exercise because it gives you key insight into who your business is serving. Understanding exactly what types of clients you’re catering to should help to inform your brand strategy and development.

In addition, by profiling clients with similar characteristics, you should be able to recognize key behaviors and purchase patterns. You’ll be able to actually organize your client data and gain a granular level of knowledge about their needs and wants. This in turn should help you to identify and create lucrative upsell opportunities, maximizing the CLV of each and every client.

Optimize your marketing & client retention strategies

By understanding how your clients fit into your business at large, you should be able to create effective profile-based marketing and retention strategies.

Cons of segmenting clients

As we outlined above, segmenting your client base can bring numerous benefits to your business. That being said, it’s easy to see why there are some perceived negatives – especially when it comes to offering all your clients exceptional service.

The important thing to understand is that segmentation isn’t about dividing your clients into high and low priority. It’s a focused exercise that will ultimately help you to serve each client better.

With a better understanding of their individual profile, how they relate to other clients, and fit into your business, you’ll be able to ensure you’re meeting all their needs whilst also maximizing the revenue they bring to your business.

Tips for segmenting properly

Remember that though not all clients are the same, they should all be treated equally. In terms of the quality of service you provide, that is. In order to ensure that you follow through on this, it’s critical to draw a line between your marketing and account managers and your technicians. Your technicians are solely responsible for delivering the best outcomes regardless of the task at hand.

It is your marketing, sales and account teams that need to ensure that your service offerings are also properly segmented. This will ensure that you can upsell to lower paying customers, without giving too much or too little away.

Segmentation looks different for everyone

By nature, segmentation will look different for all MSPs. As we said earlier, there’s no one-size-fits-all approach when it comes to understanding your customers. But for smaller and medium sized MSPs, segmentation can be the key to gaining critical understanding of your clients that can help to scale your business to the next level.