How segmentation accelerates growth
A real-life example on how to evolve your segmentation to take action and accelerate your growth
This is a real-life example of how we evolved the segmentation of sevdesk - a German accounting SaaS company - to accelerate new customer growth.
Hint: I will not share our final segmentation in this article
Table of contents
Why did we start a segmentation project and you should too
I joined sevdesk in March 2023 as Senior PM. Initially, the company targeted micro-businesses with less than 10 employees. However, these businesses vary widely in accounting and tax setups, goals, needs, and problems.
Unfortunately, we lacked insight into the differences and their distribution among our customers. Also, we didn't understand how our new signups varied in these aspects. This made it challenging for us to prioritize features and select the best marketing channels.
Questions we regularly have been confronted with:
How much guidance do our users need?
Do we need to build more advanced accounting features or should we invest in simplification and education?
How do we influence subscription rates?
What are their goals when signing up?
How good are we at solving their pain points and helping them achieve their goals?
This is why we started a segmentation project together with Brigitte (UX Research) & Armin (Director Product).
Is this the situation you see yourself in as well? Then keep on reading!
Next up - Switch interviews
Understand who your customers are and what job they hire you for
There are multiple ways to segment your customers - Geographic, demographic, …
We decided to go with Job-based segmentation. We wanted to understand why they are hiring us and how we can help them achieve their goal and provide the best product for their needs. But also how they got to know us and what made them decide to buy.
Leverage switch interviews to identify the jobs of your customers
We started each interview with the customers' business, legal setup, and how they are currently doing accounting & taxes.
Then, we used switch interviews developed by Bob Moesta & Chris Spiek. This part helped us understand new customers' switch timelines. We learned why and where they sought a tool. Also, we found out which competitors they considered and their issues with our product
I highly recommend you listen to Lenny’s episode with Bob Moesta on JTBD (Job-to-be-done).
Interview users until answers feel repetitive
When we started interviewing we randomly interviewed 10 customers that subscribed 2 weeks ago.
In our first cohort, we experienced an overrepresentation of customers who founded their companies or started their freelancing careers within the last couple of months.
However, we knew we also had other demographics in our customer base. So we decided to explicitly include them (e.g. large customers with lots of employees), to see if they had different jobs.
Form your hypothesis while summarizing & synthesizing
In total, we conducted ~25 interviews. We used the Customer Forces Canvas to summarize the interviews and conducted a workshop where we discussed patterns and eventually aligned on 4 distinct segments.
Synthesizing the information you gathered is more art than science - trust your gut, share early to get feedback & iterate until it feels right.
Verify & quantify your segments
Now it was time to verify our segments. We designed a survey to send out to our customer base targeting to get ~1000 responses.
Besides verifying our segments we wanted to understand the distribution in our customer base and to get more insights into common characteristics like accounting & tax setup, their feature usage like VAT-filling and tax accountant collaboration, or what they have been using before becoming customers.
We received 900 responses - full of interesting insights & opportunities to improve our product and tailor it to our largest customer segments.
Additionally, we created an onboarding questionnaire to see which user segments we are attracting. It also shows how well they convert. These insights helped us improve our acquisition & onboarding boosting customer growth.
Share your segmentation with your company
The most important step is to take these insights & opportunities to the bank! Everyone in your company should know your segments - to improve the product and services and tailor marketing and customer service to your segments.
There are multiple ways to spread the information and it is important to repeat them often to make them stick.
Some tools/places we used to share what we learned:
Central space for all information - wiki
Brownbag
All-Hands
Every strategy presentation & doc
Repetition is everything!
Tips to make this initiative a success
Small project team to move and iterate fast
Don’t spread the initiative over a longer period but focus and execute it within a few weeks
Keep your stakeholders informed on your progress
Don’t overthink as you might need to see your segments in action to see if they are working
Iterate over your segments - they are not set in stone