Service Segmentation Strategies · Types of Segmentation Describes the market opportunity and / or unique characteristics of doing business with a customer with a customer type Market
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©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
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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
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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
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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
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Service SegmentationA Balance between Products Purchased and Relationship ValueA Balance between Products Purchased and Relationship Value
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Service Segmentation Bias Towards Product Purchased vs. Service RelationshipBias Towards Product Purchased vs. Service Relationship
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Service Segmentation by Relationship ValueThe Value to the Company vs. Support P<he Value to the Company vs. Support P&L
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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
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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
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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
©Copyright 2006 ServiceXRG
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
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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
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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
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The Support Relationship Lifecycle
Sell the value of Support and Maintenance
Deliver the value promised
Deliver Deliver ValueValue
RetainRetain AcquireAcquire
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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
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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
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Segmentation ScenariosApplying Segmentation toApplying Segmentation to……
1. Program Development
2. Contract Renewals
3. Identifying High Value Customers
4. Self-Service Strategies
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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
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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
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Applying Segmentation to Contract Renewals
ObjectivesMinimize objections to renewalsIdentify customers at risk
Segmentation CharacteristicsLast contactRenewal status
GoalsIncrease renewal rate
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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
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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
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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
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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
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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
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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
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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
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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
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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
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