150% Increase in ARR Over Two Years

How Segment Aligned with their Buyer to Elevate
Their Product-led Growth Strategy

 

The Client

segment-logoSegment enables customer-focused growth with good data by giving their customers a single API to collect, clean, activate and orchestrate all of their customer data. Segment’s solutions enable customers to become data-driven decision makers, move more efficiently with modern marketing tech stacks, reduce customer acquisition costs, increase lifetime value, and manage customer data in a secure, compliant manner.

Since its founding in 2011, Segment has grown rapidly, going from a smart startup to the leading customer data platform. The organization garnered significant attention in the marketplace and was recognized as a future unicorn company by CB Insights in 2019. In late 2020, after working with Force Management, Segment was acquired by leading cloud communication platform, Twilio for $3.2 billion. Segment provides the data platform to add intelligence to Twilio’s digital engagement channels, which currently power one trillion interactions per year. 

Segment’s tremendous growth is an example of what it takes from C-suite executives, board leaders and companies as a whole to get to the next level. Segment’s Chief Revenue Officer during the engagement, Joe Morrissey launched a company-wide transformation initiative to complement the organization's product-led growth strategy and improve alignment with their most influential buying audiences. Segment’s journey addresses many challenges companies face when looking to scale PLG success and support their go-to-market (GTM) approach with a value-based sales motion.

The Business Challenge

In his first 90 days at Segment, Morrissey did extensive research, holding interviews with stakeholders across the organization, from board leaders to C-suite officers, front-line managers and salespeople. Insights from cross-functional contributors during those interviews helped Morrissey to prioritize Segment’s biggest opportunities to improve retention, expansion and overall company efficiency. Segment’s cross-functional leaders recognized that while the product-led growth model was driving success for the business, there were opportunities to elevate their approach. Morrissey notes, “Companies can scale dramatically using that model, but at some stage, most companies realize that they have to start investing in their GTM approach, customer success and value-based selling.”

Segment's overall GTM approach often required the product engineering team to spend significant amounts of time working on product escalations for current customers, and not enough time on product-related priorities, like developing the roadmap. Additionally, as customer usage matured, the owner of Segment deployment within that customer organization moved upstream, creating a massive shift for the sales team. Through conversations, particularly with front-line salespeople, Morrissey found that, “As Segment became more deployed in customer companies, the sales team often had to go back and resell our deal all over again to a completely new buyer at the time of renewal and expansion. That buyer and their value drivers were completely different from what we originally sold on.” 

Increasing annual recurring revenue became a challenge for salespeople because their conversations were focused heavily on low-level features and functions that weren’t relevant to the new decision makers they were working with. Morrissey shares, “These were big problems, and I needed a transformative way to address all of these issues holistically.”

Segment's leaders prioritized clear opportunities to improve retention and efficiency, not just within the sales organization but in ways that also impacted marketing, customer success and product development. With support from these leaders, Morrissey planned to use the sales organization to reduce inefficiencies across the company and scale sales growth. He shared,  “When you're looking at evolving product-led growth it’s really about accelerating the flywheel. Use your sales force as a point of accelerating that flywheel, rather than a point of friction.”

The Solution

By prioritizing a company-wide transformation initiative to up-level efficiencies in sales and marketing capabilities, Segment significantly elevated their product-led growth approach. Morrissey says, “There are lots of different ways you can drive transformation, but it was clear that getting everybody on the same page and getting alignment was probably the first thing that we had to do. I knew from working with Force Management in the past, that this was an opportunity to do that. I know you also only get one shot as a sales leader at this level, so that’s what prompted my call to Force Management."

Partnering with Force Management, Segment launched Command of the Message® to solidify alignment around the value and differentiation their solutions provide to their most influential buying audiences.  

Leveraging a buyer-focused professional service motion, Segment's salespeople are able to focus on customer outcomes and set measurable expectations. Morrissey says, “I knew our sales team needed to be able to operate in a different manner with customers and align our solutions to problems that they were looking to solve, all without bombarding our product engineering team with customer issues on the backend.” The customized training and frameworks support the sales team in creating and capturing value for prospects, and most importantly, ensuring positive customer outcomes. Morrissey notes, “That’s where the Value Framework became so critical for us. It gave us a common language, not only to talk internally about the problems we solve for our customers but to talk to our customers about their problems.”

During the engagement, Segment’s leaders participated in workshops to build a Value Framework, enabling them to align cross-functionally around their solution’s business value and differentiation. Morrissey notes, “Getting that alignment across the company is not an easy thing to do. But the Value Framework is such a critical part of that. It doesn't work unless everyone is bought in. It gave us really clear focus and alignment, it was really impactful.”

Now, the sales team drives clear expectations with their customers, helping their buyers to define and agree on what success will look like after deployment. As a result, sales is able to establish clear handoffs to the customer success organization, and reduce customer confusion after deployment, minimizing the need for product engineer support. Of these impacts, Morrissey says, “One of the most dramatic results for me and for our Chief Product Officer is the transformation we see on the product side. The product team is now freed up and has more time to focus on building the product roadmap and improving product quality.”

The Results

Generating cross-functional alignment on their solution’s value and differentiation and rolling out a consumable sales methodology to operationalize that alignment, supports Segment in accelerating their flywheel. Talking through why it’s critical to capture commitment for your initiative from board members and cross-functional leaders, Morrissey shares, “We got Force Management to talk to the board. I also exposed this transformation to every board member, and I focused on getting the board bought in. That was immensely helpful. Once the company sees that the board, founders, CEO, and all of the executive team are bought into this as the biggest transformation initiative that you’re driving, that's how you get everybody bought into it and how you make change stick.”

Segment’s leaders are seeing significant improvements in productivity and efficiency across the company. These improvements include a lift in expansion and retention rates and also improvements in the sales team’s ability to land new customers, as the transformation has helped to drive efficiencies within the product organization.

Of their ongoing journey Morrissey says, “I really made a big bet as to what was the highest impact thing that I could do to drive transformation. It came down to getting alignment across the company and getting everyone bought into solving that. That’s where the Value Framework and Force Management really came in and had a great impact.”

Measurable Outcomes:

  • $3.2B acquisition by Twilio
  • 150% growth in ARR over a two-year period (which includes 2020)
  • Increased efficiency within product and customer success organizations
  • Significantly increased retention and expansion rates
  • Significantly increased sales productivity and net new growth
  • Enabled the flywheel

Morrissey's advice for CROs looking to scale PLG success is, “It’s all about committing to your transformation, big bet, and delivering the outcomes. We had a rigorous board who was clear on ensuring I had defined success metrics and that we could tie this engagement back to improvements in retention, efficiency and sales productivity. I am very happy to say that we delivered on those.”

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