Divide and Conquer A Primer on Needs-based Segmentation
You may identify only one segment, your full universe of target customers and prospects—or to be able to recognize several clusters who share similar acts of unfulfilled needs and buying behavior. In either case, there are two key questions:
* Who are those most loyal customers, those most interested in those service values that best differentiate you from your competitors?
* What differentiates them from the mass of customers?
When you have those answers, you'll be halfway home.
Critical to effective segmentation is making each segment as unlike any other as possible. And this is the point at which the process becomes more of an art (of interpretation) than a science (of data analysis). A well-constructed knowledge-base when analyzed with a strong business intelligence tool yields you a wealth of actionable information. Actionable is the operative descriptive. That means it must include a customer profile that enables you to assign customers to one or another of your defined segments.
Start with a list of identified needs and buying behaviors. Then query your database as to how many customers cluster into groups that care about each of various combinations of those needs. Where you find larger numbers, you have identified "need clusters" that are common to particular segments of your marketing universe. And that's the raw material for needs-based segmentation.
Now, what easily identifiable characteristics do the customers in each cluster have in common, in addition to those needs? Here's where firmographic data comes into play. You may, for instance, discover that many of them share geographical, SIC code, company size, or some other combination of characteristics. In other words, this approach permits you to define very specific need-based market segments—into which you can divide your entire customer universe, present and potential.
Step 5: Grade customers within each segment