IntroductionIn the world of business and marketing, understanding your customers and catering to their needs is crucial for success. Account segmentation is a powerful strategy that allows businesses to organize their customer base into distinct groups, based on various criteria such as their purchasing behavior, demographics, or preferences. One essential aspect of account segmentation is "Account Tiering." In this blog, we will explore the concept of account segmentation, delve into the significance of account tiering, and highlight how it can drive business growth and customer satisfaction.
Understanding Account SegmentationAccount segmentation is the process of categorizing customers into groups with similar characteristics and needs. By dividing a diverse customer base into manageable segments, businesses can develop targeted marketing strategies, personalize customer experiences, and allocate resources more effectively. Account segmentation helps companies identify high-value customers, understand their unique requirements, and ultimately foster long-lasting relationships.
The Importance of Account Segmentation
- Personalization and Customer Experience: By segmenting accounts, businesses can tailor their offerings, promotions, and communication to cater specifically to the preferences and needs of each group. This personalized approach enhances the overall customer experience, increasing the chances of customer satisfaction and loyalty.
- Resource Allocation: Resource allocation is a significant challenge for any business. Account segmentation allows companies to prioritize their efforts and allocate resources efficiently. By focusing on high-value accounts and potential growth opportunities, businesses can maximize their return on investment and increase profitability.
- Retention and Customer Loyalty: Understanding different customer segments enables businesses to proactively address customer concerns, identify pain points, and improve customer satisfaction. Satisfied customers are more likely to become loyal advocates, promoting positive word-of-mouth and fostering a loyal customer base.
- Targeted Marketing Campaigns: With account segmentation, businesses can develop targeted marketing campaigns that resonate with specific customer groups. Tailoring messages to address the unique needs and preferences of each segment significantly increases the effectiveness of marketing efforts, leading to higher conversion rates.
Introducing Account TieringAccount tiering is a specific method of account segmentation, where customers are classified into different tiers or levels based on their value to the company. The criteria for account tiering can vary depending on the industry and company objectives but often include factors such as revenue generated, purchase frequency, customer engagement, and potential for future growth.
Account tiering typically involves three main tiers:
- Tier 1 - Strategic Accounts: Tier 1 comprises high-value accounts that contribute significantly to the company's revenue and growth. These accounts are strategic partners and deserve personalized attention. They often have long-term contracts and require dedicated account managers to ensure their satisfaction and retention.
- Tier 2 - Growth Accounts: Tier 2 includes accounts with the potential for substantial growth and increased revenue. These accounts might not be as large as Tier 1 accounts, but they show promising signs of development. Businesses focus on nurturing these accounts to move them into the top tier.
- Tier 3 - Standard Accounts: Tier 3 consists of standard accounts that are important to the business but may not generate the same level of revenue as Tier 1 and Tier 2 accounts. While they may not require the same level of attention as higher tiers, providing them with excellent customer service and support is essential for retention.
The Benefits of Account Tiering
- Strategic Resource Allocation: Account tiering allows businesses to prioritize their resources effectively. Tier 1 accounts receive personalized attention and premium services, while Tier 2 and Tier 3 accounts receive appropriate levels of support based on their potential and importance.
- Enhanced Customer Relationships: By tailoring interactions and solutions to each tier's specific needs, businesses can build stronger relationships with their customers. This level of personalization fosters trust, satisfaction, and loyalty among clients, ensuring they stay committed to the company in the long run.
- Upselling and Cross-Selling Opportunities: Account tiering can identify opportunities for upselling and cross-selling based on each tier's unique characteristics. For Tier 1 accounts, businesses can offer advanced solutions or exclusive packages, while Tier 2 accounts can be encouraged to upgrade their purchases.
- Improved Customer Retention: Satisfied customers are more likely to remain loyal to a company. Account tiering enables businesses to meet the diverse needs of their customer base, reducing churn rates and improving overall customer retention.
Implementing Account Tiering Successfully
- Data Analysis: Collect and analyze relevant data to classify accounts into appropriate tiers. This data could include revenue generated, purchase history, customer engagement metrics, and potential for growth.
- Define Tier-Specific Strategies: Develop individualized strategies for each tier to ensure that customers receive the appropriate level of attention and service. Tier 1 accounts might have personalized account managers, while Tier 3 accounts may receive regular updates and promotions.
- Continuous Evaluation: Regularly assess the performance and growth potential of each account. Customer behavior and needs change over time, and businesses must adapt their tiering strategies accordingly.
- Communication and Transparency: Be transparent with customers about the account tiering process. Explain the benefits they will receive based on their tier and demonstrate the value of their business to the company.
Before we jump in, Segmenting your accounts into Tier 1, Tier 2 or Tier 3 comes down to your specific interest or your business interests. You can segment according to priorities like revenue to be generated, the number of employees, Industry, growth etc. Depending on what qualities you choose, you can then place your accounts in tier 1, tier 2 or tier 3. For example, if revenue is your priority, place the accounts in your ICP (Ideal Customer Profile) with the highest revenue in tier 1, with medium revenue in tier 2 and so on.
Here the highest revenue can be 1 billion or 1 million that totally depends on your company's ICP.
Tier 1 (High priority)These accounts get the “full” Account-Based Marketing treatment – meaning each one gets deep research, a customized plan, personalized content, bespoke campaigns, and a lot of 1:1 attention.
You map out each buying centre, understand where there may be revenue potential, build out the organization chart and see which contacts you know and which you need to know, research key business priorities and individual motivations, and identify relationships and connections to the account.
You publish detailed account dossiers, maintain them quarterly, and even have internal chat groups or forums dedicated to each account.
You put together marketing plays that are designed for that account specifically, and you involve your entire organization, from the CEO down, to land and expand these accounts.
This style of ABM works great and here are some generalized traits of tier 1 accounts. Number of accounts: 10-20 Strategy:
- Focus on Account plans
- Deep research and 1:1 Personalisation
- It involves Sales+SDR+Marketing+Executive support
Tier 2 (Medium priority)While you can probably count the accounts getting Style 1 (TIER 1) on your fingers and toes, Style 2 lets you apply much of the focus and benefits of account-based marketing to a broader list – usually measured in the low hundreds of accounts.
Some folks call this “ABM Lite”.
Tier 2 accounts segmented also get individual research, but perhaps it’s limited to a few key talking points for each account (e.g. spending three minutes to find three key selling points).
Since these accounts are often smaller, mapping out individual buying centres may not be as challenging. But no matter what, you still want to spend time making sure you have quality data at the account level, as well as for each of the key people in each persona in the organization – and you’ll want a process to keep those insights fresh, at least annually.
These accounts may not get completely customized marketing plays and content, but they should still get highly relevant touches based on their industry and persona.
Instead of 1:1 campaign, these accounts get 1: Few campaigns.
Instead of fully bespoke content, perhaps you take content written for their industry and customize it with their logo on the cover and a personalized first and last paragraph. However, here are the key characteristics of Tier 2 accounts in general. Number of accounts: 100-500 Strategy:
- Focus on Segment plans
- Industry/solution level Personalisation
- It involves SDR+Marketing
Tier 3 (Low priority)This style covers all the accounts that you want to target but doesn’t have the resources for personalization and customization. These will often be smaller accounts and can be counted in thousands. You may target these accounts with specific outbound tactics, sometimes account segmentation by industry or solution, but the rest of the time you’ll simply use broad demand gen tactics but target specific accounts, including ABM advertising, content syndication, and events.
Programmatic account-based marketing is basically traditional marketing with account-level targeting. The key difference from demand generation is that instead of scoring leads, you track account-level engagement and wait until the account hits a sufficient threshold to label them a Marketing Qualified Account.
Importance of Account SegmentationNo one style is better than another and all three tiers of account based marketing play a role in your business. Most important is that you answer these three questions...
- Which accounts go to which tier?
- How many sales and marketing effort goes into each tier of accounts?
- How much revenue and pipeline you expect to drive from each tier?
ConclusionAccount segmentation, particularly through account tiering, is a powerful tool that enables businesses to better understand their customers and cater to their unique needs effectively. By dividing customers into distinct tiers and offering personalized experiences, companies can enhance customer satisfaction, drive growth, and boost customer loyalty.
Implementing a well-defined account tiering strategy can lead to optimized resource allocation, improved retention rates, and increased revenue, positioning businesses for long-term success in today's competitive marketplace.