Using ICP and Segmentation in Good Faith

By Russell Bourne

A little professional vulnerability here: I want to share a story from my past about a time when the ball didn’t bounce in my favor. 

As the saying goes, I never lose; I win, or I learn. And there are some learnings I’d like to put out there for you.

A while back, I was working with an executive whose company had a churn problem. In the past, they experienced several instances of customer churn due to customers being dissatisfied with Tech Support, and they were convinced the current churn was due to more of the same. So, in order to put some structure around the situation, I analyzed every ticket from every customer who had churned in the last 12 months. I researched with curiosity and an open mind. I truly had no idea what I’d find, other than hoping I could put Support-related churn into subcategories, and I figured I might find some other churn reasons too.

It turned out, going back a full year, not one customer had cancelled because of Support. Instead, I was able to compile a list of churn reasons, ranked by how often each one happened. Sure enough, if you’re a believer in the Pareto Principle (also called the 80/20 rule), there were about 3 reasons that stood out from the rest. The best part was they were reasonably actionable by either the Product or Enablement teams, and would be impactful if taken on.

I should pause here to mention besides my open curiosity, I didn’t have any other agenda. I wasn’t trying to defend anyone or point the finger at anyone. I was trying to help make the company better by finding the truth. What a big mistake!

What I overlooked was, for reasons I won’t get into, the executive wanted Support to be the churn reason. I had listened to the issue seriously and openly, and investigated it genuinely. I even went to lengths to use great storytelling while delivering the results of the study, but the presentation fell flat because the outcome was predetermined. Because I researched with an open mind, the executive accused me of being dismissive of their hypothesis. I think the exact quote was, “Why didn’t you just accept what I said as truth?”

Could I have done something differently to allow this person to admit churn was due to something else? In retrospect, probably not and my lesson is I should have known when to fold ‘em. 

So, what did I learn?

You can’t use data to change someone’s opinion when they didn’t use data to get there in the first place. People don’t make commercial decisions - buying, renewing, and expanding - logically. They make them emotionally. That’s true even if their personality skews more data than feelings, for those of you who follow DiSC or Meyers-Briggs models. Again, this particular executive was determined to take the position that their Support team was the churn reason. The fact that new data came to light didn’t matter because there was an underlying agenda. Did they have a real churn problem with reasons they chose to turn a blind eye to? Yes. As painful as it sounds, you have to let the situation play out until it becomes enough of an issue to spur change.

Use your Ideal Customer Profile model all the way to the end of the sales cycle. We usually think of ICP in terms of things like vertical, use case, or potential revenue to us (the vendor). Our Marketing teams generate top-of-funnel leads based on those things, but our Sales teams can and should use other ICP factors throughout the sales cycle. If they get the sense a customer might be too un-technical, too demanding, or otherwise misaligned, there are levers to pull. 

I’m not necessarily suggesting a salesperson should end a bad-fit opportunity, though that’s an option for another article. As one alternative, a salesperson can “blow up the bomb” ahead of time by mentioning to a prospect that maybe the future relationship won’t work due to the customer trait. Doing that can actually increase sales win rates and motivate customers to self-correct the behavior. And when customers invest time and effort, they have a bigger stake in making it work, and are more likely to stay.

Segment. Quite often, post-sales segmentation involves sorting customers by Gross Revenue and, among other things, creating a top tier of the most strategic or enterprise customers. The idea is, your highest revenue customers are a) most important to protect as specific logos, and b) most likely to have complex deployments and contact relationships, both necessitating a more high-touch customer experience. However, sometimes these customers require so many interventions from CS, Support, Product, Professional Services, and so on, that they become unprofitable in their own right, or worse, disruptive to the other customers in the segment. If a customer becomes unprofitable for its revenue tier, what’s wrong with moving them to a segment with more of a self-service customer journey? Whether they eventually churn or thrive, you successfully aligned your cost of delivery with the revenue they generated. A bad-fit customer who self-selects their way to churning isn’t necessarily a bad thing when it comes to profit.

Don’t get me wrong. When customers surface real issues in good faith, that’s a gold mine of feedback and deserves action and recognition. Input into your product, sales, onboarding, and enablement functions are customer feedback nirvana. But feedback has to be rooted in reality in order to be usable, and unfortunately it’s not always that way. By applying the ideas laid out above, you can take emotions and agendas out of equations where they don’t belong, appeal to them where they do, and manage your time in a wise, customer-first way.

The Success League is a customer success consulting and training firm. We offer individual coaching programs, as well as consulting on a myriad of topics, including Customer Segmentation Strategy and more. Visit TheSuccessLeague.io to learn more or contact us here.

Russell Bourne - Russell is a Customer Success Leader, Coach, Writer, and Consultant. In a Customer Success career spanning well over a decade, his human-first approaches to leadership and program management have consistently delivered overachievement on expansion sales and revenue goals, alongside much friendship and laughter. Russell serves on the Board of Gain Grow Retain as co-lead for Content Creation. He is passionate about equipping individual contributors and business leaders alike to lean on their Success practices to grow their careers and help their companies thrive. He holds a BA from UCLA, and in his free time plays guitar semi-professionally.