Understanding your customers is paramount, yet many companies grapple with generic approaches that fail to pinpoint true growth opportunities. Customer Effort Score (CES) offers a precise, actionable lens for customer segmentation. This article explores how we at thrv use CES within our portfolio companies to segment customers based on their struggle to get a Job-to-be-Done, enabling targeted product innovation, focused marketing, and ultimately, accelerated equity value. We will examine how identifying segments with high effort can uncover customers willing to pay more for solutions that make their jobs easier.

Table of Contents

• Understanding Customer Effort Score (CES) for Segmentation
• What is Customer Effort Score (CES)?
• Why CES is Critical for Portfolio Company Growth
• Measuring CES in Our Portfolio Companies
• Interpreting CES: What High Scores Signal
• The thrv Approach: Segmenting Customers with CES Data
• Methodology: From CES Scores to Actionable Segments
• Profiling CES Segments: Understanding Customer Needs
• Unlocking Equity Value: Strategies for High-Impact CES Segments
• Focus on High-Value, High-Effort Segments: The Growth Engine
• Optimizing High-Value, Low-Effort Segments
• Addressing Moderate-Effort Segments
• Personalizing Journeys and Products with CES Insights in Portfolio Companies
• What is CES-Driven Product and Journey Personalization?
• Tailoring Product Roadmaps
• Refining Customer Interactions
• Implementing CES Segmentation for Accelerated Growth (The thrv Way)
• Our Step-by-Step Process for Portfolio Companies
• Common Pitfalls and How Our Methodology Addresses Them
• Frequently Asked Questions (FAQs) about CES Segmentation
• Conclusion: CES Segmentation as a Catalyst for Growth
  
  

Understanding Customer Effort Score (CES) for Segmentation

To effectively use CES for customer segmentation with CES, it's vital to first grasp its core principles and implications for growth.

What is Customer Effort Score (CES)?

Customer Effort Score (CES) is the percentage of customers who report that it is difficult to satisfy a given step in their Job-to-be-Done. We use our proprietary and patented Jobs to be Done (JTBD) method to assess the speed and accuracy with which customers can execute their jobs. A high CES indicates significant customer struggle, pointing to unmet customer needs.

At thrv, we define customer needs as direct action/variable pairs. For example, a customer trying to manage their investments might need to "determine the current market value" of an asset or "calculate potential tax implications." CES helps us quantify how difficult it is for them to accomplish these needs.

Why CES is Critical for Portfolio Company Growth

Reducing customer effort is directly linked to loyalty and increased spending. Our AI-powered platform enables our portfolio companies to identify where customers struggle most, creating clear pathways for product innovation. For our portfolio companies, lowering CES is a direct path to enhanced customer retention and increased equity value. High effort not only drives customers away but also inflates service costs.

Measuring CES in Our Portfolio Companies

We measure CES by surveying customers about the difficulty they experience when trying to satisfy specific needs in their Job-to-be-Done. Our approach focuses on three measurable criteria:

• Effort required to complete the job step
• Speed of execution
• Accuracy of execution

We calculate CES as the percentage of customers who report difficulty satisfying each need. This quantitative measure allows our portfolio companies to track improvements in speed and accuracy over time, directly linking customer struggle to product development priorities.

Interpreting CES: What High Scores Signal

A high CES (indicating a high percentage of customers experiencing difficulty) is a clear signal of customer struggle. This isn't just a problem; it's a significant opportunity. High CES scores pinpoint exactly where product innovation or process improvements are most needed. These are the areas where customers are experiencing friction in getting their job done, and often, where they are most willing to pay for a better solution.

The thrv Approach: Segmenting Customers with CES Data

Our proprietary Jobs-to-be-Done (JTBD) methodology, powered by our AI platform, enables our portfolio companies to move beyond generic CES scores to insightful CES segmentation.

Methodology: From CES Scores to Actionable Segments

We guide our portfolio companies to categorize customers based on their CES scores related to critical job steps:

Low-Effort Segments: These customers can execute their job steps quickly and accurately. They represent efficiency and are likely loyal.

Moderate-Effort Segments: These customers encounter some friction or delays in getting their job done. There's room for improvement in their experience.

High-Effort Segments: These customers face significant challenges, frustration, and difficulty in executing their job steps. They are at high risk of churn but also represent a prime opportunity for innovation.

Crucially, we integrate CES data with an understanding of the value associated with the Job-to-be-Done. This leads to more powerful segments:

• High-Value, Low-Effort: Ideal customers who achieve their high-value job with ease. The goal is to retain and learn from them.
• High-Value, High-Effort: These customers are attempting to achieve a valuable job but are struggling significantly. This segment is a key focus for growth, as they are often willing to pay for solutions that reduce their effort and help them achieve their job successfully.
• Low-Value, Low-Effort: Customers achieving a less critical job with ease. Monitor for efficiency.
• Low-Value, High-Effort: Customers struggling with a low-value job. This may indicate a need to re-evaluate resource allocation or product fit for this segment.
  
  

Profiling CES Segments: Understanding Customer Needs

Once segments are identified, we work with portfolio company teams to profile them by pinpointing the specific unmet customer needs causing high effort. For instance, a High-Effort Segment attempting to "manage a software development project" might struggle with needs like:

• "Determine task dependencies"
• "Calculate project completion dates"
• "Identify resource bottlenecks"
  
  

Understanding these specific needs, formatted as action/variable pairs, is fundamental to developing targeted solutions. Learn more about thrv's JTBD methodology.

Unlocking Equity Value: Strategies for High-Impact CES Segments

CES segmentation allows our portfolio companies to focus resources where they will generate the highest returns.

Focus on High-Value, High-Effort Segments: The Growth Engine

This segment is pivotal for driving growth and increasing equity value. Customers in this group are trying to accomplish something important to them but are finding it difficult with current solutions.

Identifying Unmet Needs: Our JTBD process precisely identifies the job steps where they struggle, such as the need to "ensure data accuracy" or "locate critical information."

The Willingness to Pay Signal: High effort is a strong indicator of unmet needs, and unmet needs often correlate with a willingness to pay for a superior solution that executes the job quickly and accurately. These customers are implicitly signaling a demand for innovation.

Product Innovation: We guide portfolio companies to develop product features or new offerings that directly address these high-effort needs, transforming customer struggle into a competitive advantage. This is central to our approach to product innovation.

Optimizing High-Value, Low-Effort Segments

For customers who find it easy to get their high-value jobs done:

Reinforce Loyalty: Continue to provide effortless experiences to maintain their business.

Identify New Opportunities: Explore adjacent Jobs-to-be-Done or new features that could provide additional value with minimal effort.

Addressing Moderate-Effort Segments

For customers experiencing some difficulty:

Targeted Improvements: Implement specific enhancements to product features or processes that are causing moderate effort.

Proactive Communication: Offer guidance or support for known points of friction to improve their speed and accuracy.

Personalizing Journeys and Products with CES Insights in Portfolio Companies

Customer segmentation with CES provides the foundation for highly relevant personalization of product roadmaps and customer interactions.

What is CES-Driven Product and Journey Personalization?

This involves tailoring product development and customer touchpoints based on the effort levels identified within different CES segments. The goal is to systematically reduce effort where it's high and maintain ease where it's low, particularly for high-value jobs.

Tailoring Product Roadmaps

CES data directly informs product strategy within our portfolio companies:

Prioritize by Effort: Features that address customer needs with high CES scores, especially for High-Value, High-Effort segments, are prioritized. For example, if customers struggle to "configure system preferences" (a high CES need), features simplifying this configuration move up the roadmap.

Inform Marketing and Sales: Product teams can communicate to marketing and sales how new features will "reduce time to complete X task" or "improve accuracy of Y calculation," enabling them to target messaging effectively.

Refining Customer Interactions

Insights from CES segmentation help portfolio companies refine how they interact with customers:

Proactive Support: For segments known to struggle with specific job steps (e.g., onboarding, complex configurations), proactive support, tutorials, or guided flows can be developed.

Process Simplification: Identify and streamline internal processes or customer-facing workflows that contribute to high effort scores.

This strategic application of CES insights is how we create equity value within our investments.

Implementing CES Segmentation for Accelerated Growth (The thrv Way)

thrv employs a structured process, supported by our proprietary AI-powered platform, to implement CES segmentation within our portfolio companies. Our AI capabilities significantly accelerate data collection and analysis, giving our portfolio companies a critical speed advantage. Explore thrv's software platform.

Our Step-by-Step Process for Portfolio Companies

1. Define the Core Job-to-be-Done: We start by clearly identifying the primary job the customer is trying to accomplish.
   
   
2. Identify Job Steps and Associated Customer Needs: We break down the core job into discrete steps and define the customer needs (action/variable format) for each step.
   
   
3. Deploy CES Surveys: Using targeted surveys, we measure the effort customers experience in trying to satisfy each need. Our AI capabilities significantly accelerate data collection and analysis.
   
   
4. Analyze CES Data: We analyze the data to identify high-effort segments and the specific unmet needs driving that effort.
   
   
5. Develop and Implement Strategies: Based on these insights, product, marketing, and sales teams in our portfolio companies develop and implement targeted strategies.
   
   
6. Measure Impact: We continuously measure the impact of these initiatives on CES scores, customer behavior, and ultimately, equity value. See case studies of portfolio company growth.
   
   

Common Pitfalls and How Our Methodology Addresses Them

Focusing on Generic Metrics: Many companies track overall CES without linking it to specific job steps or customer needs. Our JTBD framework ensures CES is tied to actionable insights.

Not Quantifying the 'Why': Simply knowing effort is high isn't enough. Our process identifies which specific needs ("determine eligibility criteria," "calculate total expenses") are causing the effort.

Failing to Act on Data: CES data is only valuable if it drives action. Our operator model ensures insights are translated into product roadmaps and process improvements within portfolio companies.

Frequently Asked Questions (FAQs) about CES Segmentation

Q1: How does CES segmentation differ from other segmentation methods?

CES segmentation specifically groups customers based on the effort they expend to get a job done. While demographic or behavioral segmentation provides context, CES directly measures friction and struggle related to specific tasks, offering a clearer path to product innovation aimed at improving speed and accuracy.

Q2: What is a "good" CES score for a portfolio company?

A "good" CES score depends on the industry and the specific Job-to-be-Done. The key is continuous improvement and reducing the percentage of customers reporting high effort. thrv helps portfolio companies benchmark and set realistic improvement targets based on their specific markets and customer needs.

Q3: How often should portfolio companies measure CES?

CES should be measured transactionally (after specific interactions or job steps) and periodically (e.g., quarterly) to track trends. For high-impact job steps, more frequent measurement might be warranted, especially after product changes aimed at reducing effort.

Q4: Can CES segmentation help identify customers willing to pay more?

Yes. Customers in High-Value, High-Effort segments are often prime candidates. Their struggle to complete an important job indicates an unmet need. If a product innovation can significantly reduce their effort (improve speed and accuracy), they are often willing to pay a premium for that improved experience.

Q5: How does thrv's JTBD methodology boost CES segmentation?

Our JTBD methodology provides the crucial framework for CES. Instead of just asking about general effort, we measure effort against clearly defined customer needs (e.g., "identify the root cause," "determine the next step") within specific job steps. This precision makes the CES data far more actionable for product development and marketing, directly linking customer struggle to innovation opportunities.

Conclusion: CES Segmentation as a Catalyst for Growth

Customer Effort Score, when integrated into a robust Jobs-to-be-Done framework, transcends being a mere metric. It becomes a strategic compass for customer segmentation with CES, guiding our portfolio companies to identify unmet needs, pinpoint high-potential customer segments (including those willing to pay more for less effort), and drive focused product innovation. By systematically reducing customer effort in getting their jobs done, we help our portfolio companies build stronger customer loyalty, accelerate growth, and achieve superior equity returns.

At thrv, we implement our JTBD method and CES analysis to accelerate growth in our portfolio companies. Our AI-driven approach eliminates guesswork and aligns every initiative with measurable growth objectives. To understand how we can help your technology company achieve superior equity returns, request a consultation.