In a recent video titled "The STUPID Reason Why Companies Leave Money on the Table" by Ajit Pal Ghuman from Monetizely, the pricing strategy expert highlights a pervasive problem plaguing fast-growing software and service businesses: the misunderstanding and misalignment of customer segmentation. This critical insight reveals why so many SaaS companies are unknowingly leaving significant revenue on the table.
The Alarming State of Customer Segmentation
According to Ghuman, an astonishing 95% of companies neglect their customer segmentation work after completing it. He observes that even documentation created as recently as a year ago gets abandoned: "The lack of understanding of customer ICP and segmentation is almost 95%, even in as little as a year's amount of time, customer segmentation work that is done once is left on the shelf."
This neglect creates a dangerous misalignment across departments. Each team develops its own isolated view of who the customer is:
- CEOs project their own vision of customer segmentation
- Sales teams move past the original documentation
- Marketing and product teams operate in "ivory towers" with their own segmentation models
- Customer success managers only see the tail end of the business
The result? "Everybody has a different view of customer segmentation," Ghuman points out, creating a fractured approach to the market that undermines revenue potential.
Why Proper Segmentation Is Your Revenue Engine
The financial implications of poor segmentation are substantial. Ghuman emphasizes that the primary opportunity for monetization comes through effective price discrimination—charging different customer segments based on their distinct needs and willingness to pay.
"The number one place that you are going to make money as a company is price discrimination," Ghuman explains, drawing a parallel to airline pricing models. "In an airline setting that means charging more from the first class buyers than the business, than the economy. But what happens when you don't know who the first class buyers are? What happens when there are first class buyers and you are charging them economy prices?"
This pricing mismatch is happening daily across the SaaS industry. Companies without proper segmentation understanding are routinely undercharging customers who would willingly pay premium prices for solutions that address their specific pain points.
The Domino Effect of Segmentation Failure
When organizations don't understand their customer segments, they resort to generic strategies like "good, better, best" packaging without actually addressing distinct customer needs. Ghuman observes that companies "blindly sort features into these packages without understanding the real needs of these segments and their willingness to pay."
This creates a cascade of problems:
- Lackluster revenue performance
- Reactive rather than proactive pricing strategies
- Excessive focus on competitors instead of customers
- Misalignment between product development and market needs
As Ghuman states, "The result is going to be lackluster revenue performance and a reactivity that is all about, hey, what's the competition doing? Then you start to look at competition rather than focus on your customer and their needs."
Breaking the Segmentation Blindness
The industry appears to be in a state of collective denial about this problem. Ghuman doesn't mince words: "This has become so prevalent and I feel like the industry is completely hypnotized. But it's time to wake up."
He suggests the problem is even more widespread than most executives realize: "I'm telling you nine out of 10 companies are not paying attention. So the chances are very likely that you are not either."
The Path Forward
The solution starts with acknowledging the problem and taking concrete steps to address it. Companies must:
- Revisit and update their customer segmentation regularly
- Ensure alignment across all departments
- Use segmentation insights to inform pricing and packaging strategies
- Focus on customer needs rather than competitive positioning
As Ghuman concludes: "Take a look at this, update it, use that to update packaging, and you'll realize that there is money that you had access to that you did not know."
By addressing segmentation misalignment, SaaS companies can unlock significant revenue potential that's currently hidden in plain sight. The question is not whether you can afford to invest in proper segmentation, but whether you can afford not to.