Connecting Customer Data to Decisions Part 3 of 4
- Santa Clara, March 2025This is the third entry in my Connecting Customer Data to Decisions series. Find the other articles here:
1- Sales Teams Need Data, Not Reports
4 - How to Measure Customer Value
You can learn a lot more from data when you slice and dice it by different categories. Take, for example, political data. You learn way more when you slice it by age or religion or education.
And that’s just as true for your customer data; salespeople will learn more when they slice and dice the data by different categories.
Today in part 3 of this series on customer data, I want to show you two of the most helpful categories for customer analytics: service models and sales channels. People in sales and marketing constantly look for new ways to categorize (“segment”) their customers and pivot the data. That’s not an exaggeration; you’ll find at least 1,100 case studies and articles on customer segmentation in the Harvard Business Publishing library.
When you separate customer segments into these service models and sales channels, salespeople can explore the data and make real, operational decisions to improve their sales, answering three key questions about their customers:
How significant is the customer in the market?
- How important is the customer to my company?
- How should my company sell to this customer?
Does your data solution help sales teams answer these questions?
Like most other data strategy insights, I didn’t invent this concept – I only want to help you see the best way to connect data to it.
Common Categories
Regardless of the industry, most companies segment their customers into three simple buckets: big, medium, and small. They use different names for these buckets, like “corporate, mid-size, and SMB,” “partner, key, long-tail,” or “whales, tunas, and anchovies,” for example. I’ve seen this same model in consumer goods, software, semiconductors, and subscription businesses, which leads me to guess that there’s a limit (probably three) to the number of segments that help companies make the most of their resources.
Imagine that an engineer from Apple places an order through your website. That’s the same way college students in Europe buy from you. If you categorize Apple by your sales volume to them, they might be your smallest customer, but if you categorize them by their sales volume, they will be your largest. What rule should you use to categorize their size? It’s not hard to do this for a customer everyone knows, like Apple, but you also need to make that decision for every other customer you sell to, and most of them will be harder to recognize just by their name.
If you hand that problem over to your data team to solve, they’ll write extensive boolean, if-then logic to determine the segment. That’s when things fall apart; you’ll get the report showing customer totals by the categories you asked for, but your sales teams won’t be able to intersect different data points and explore it for new insights.
Two Building Blocks
The key to helping salespeople learn more about their customers is giving them data, not reports. For customer segments, that means giving them two independent sets of data instead of one reporting field that calculates the answer: service models and sales channels.
- People in your company decide the service model they plan to use for each customer, and they should maintain that information in your customer master database.
- Your customers decide which sales channel they’ll use to purchase from you, and that data appears in your systems as transaction data.
Service Models
Choosing a service model for a customer is a strategic decision about how you will serve them. It describes how much time and money your company plans to spend helping customers purchase and use your products.
Business teams, like your Customer Service department, should assign a service model to every customer when they set them up in your systems. That happens before the customer buys anything from your company.
Sales Channels
Sales channels describe how customers purchase from you and how their orders flow into your systems. Customers for Broadcom (the world’s second most valuable semiconductor company), for example, might use three sales channels:
- Apple negotiates a deal directly with Broadcom executives and sends a purchase order directly to them, making that a “direct” sales channel.
- A small European startup company purchases Broadcom’s chips through a third-party electronics distributor. The distributor negotiates the terms of the sale and processes the purchase transactions.
- College students might buy directly from Broadcom's website. They'll buy small quantities at the full price in the online catalog.
These examples show a simple way to understand sales transactions: they flow through direct and indirect channels. The customers decide when and where they’ll buy from you, but you influence their buying decisions.
Explorers Make Decisions
The connection between service models and sales channels is a “fuzzy” connection because they don’t always match up. They’re separate datasets created by different people in different places. Aligning them requires operational decisions, not logic in reports. For example, you might direct that Apple engineer (who bought through your website) to talk directly with an account executive.
You’ll see the same relationship between sales channels and service models in many industries:
- A film company contracts with theater chains and streaming platforms but also sells directly to consumers on a pay-per-view basis.
- A clothing brand sells directly to consumers through its retail stores but also to major retailers (like Target), discount chains, and its website.
- A university collects tuition directly from students but might also receive income through Coursera (the world’s largest online education platform).
- A SaaS software company sells directly to a large customer (like Coca-Cola) or through a partnership with Microsoft (like Teams applications).
Don’t lock people into a definition of customer segments that’s hard coded into your reporting systems, but also avoid a free-for-all approach that leaves these definitions up to every analyst to decide on their own.
That’s how you help explorers (like salespeople) use the data for decisions.
Frictionless DataWho Are Your Customers?A sales executive recently explained to me an embarrassing situation he encountered while closing a deal with a new customer. The customer mentioned hearing about his company’s product from their sister company. He quickly scrambled for the data and found he was about to give this “new customer” a far better deal than his…Read morea year ago · 1 like · Zane Hall