October 30, 2023

Use customer segmentation to unlock unsuspected growth with Fincome

Vincent Gouedard
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In the current economic climate, it is more important than ever to understand the structure of your customer base and customer behavior to derive actionable growth levers. Segmenting your customer base into target groups (segments) according to plan, pricing, geographic origin, or even the size of the customer account can enable you to derive key insights to optimize the management of your business. This is known as customer segmentation. It uncovers hidden trends in your data that unlock unsuspected growth levers.

1. The power of customer segmentation: identifying hidden trends

When you rely solely on consolidated indicators such as annual recurring revenue (ARR), churn rate, or LTV, many specific trends remain drowned in the mass of your data flows. Customer segmentation can help you take advantage of data granularity to derive insights:

- channel and plan performance: analyze the performance of the marketing channels and the best-performing subscription plans

- customer lifetime value: sort customers into high LTV and low retention segments

- geography: identify the regions where your growth, churn, or ARPA are strongest.

2. Optimize your pricing strategy

The benefits of customer segmentation go beyond a fine-grained reading of your revenues by activity, geography, or acquisition channel. By segmenting your revenues by plan, market, subscription type, or product category, you can identify growth levers arising from the optimization of your price mix:

- optimize your plans: segment ARR or MRR by plan to detect performance trends based on your plans' features or duration, so you can focus on the most profitable plans

- fine-tune your pricing strategy: analyze the performance of your plans to adapt your pricing strategy more closely to your customers' preferences, while still optimizing the revenue generated.

3. Evaluate the effectiveness of your distribution model (GTM)

Whatever the distribution model for your services, assessing the efficiency of your route-to-market enables you to determine the most optimized and profitable distribution method over the long term. Customer segmentation is once again very useful in this respect:

- direct or indirect sales: segmenting your MRR according to these two approaches will inform you about the efficiency of your distribution models and enable you to allocate your resources more effectively

- improve customer experience: determine whether "product-led-growth" or distribution with a demo of your solution is more effective, and adjust your approach accordingly

4. Measure the efficiency of your acquisition strategy

CAC configuration on Fincome

Now that you've identified the most profitable plans, you can optimize your customer acquisition strategy. At Fincome, we provide several indicators that can help you prioritize acquisition channels according to efficiency. In particular, you can segment revenues to:

- analyze the efficiency of marketing channels: identify which marketing channels perform best to optimize your marketing spend

- optimize your marketing spend: when certain channels underperform, adjust your marketing spend and strategy to optimize your CAC.

With Fincome, you can fully measure the efficiency of your acquisition efforts by channel using two critical complementary indicators:

- CAC: the CAC enables you to measure the cost of each new customer and understand why this cost changes. It's proof that the money you spend on customer acquisition makes financial sense. It also immediately alerts you to any deviation in acquisition costs.

- payback period: by dividing your CAC by your average revenue per customer (ARPA) over a given period (month, quarter, or year), you can determine the minimum length of time a customer must subscribe to your services to cover CAC and turn a profit.

5. These are the benefits of customer segmentation

By segmenting your data using customized filters or attributes, you can identify hidden trends to maximize the efficiency of your acquisition and distribution models and accelerate your future growth. Fincome is here to help you harness the full power of customer segmentation to make informed, data-driven decisions that catalyze the growth of your company’s business.

Customer segmentation is a strategy that can unlock powerful growth levers by helping you to focus on the most promising segments of your business. With Fincome's customer segmentation features, you can unlock the full potential of your SaaS. Want to see a live demo? Contact us to see how customer segmentation helps your company grow.