Segmentation - Capitalize on the Differences (1,345 words)
Obviously, RFM variables are most powerful when used in combination, but be careful. Are your one-time buyers so recent they are still trying you out—or has so much time passed you may never hear from them again? When you segment buyers who bought in the last 30 days, make sure you know which are new buyers and which are repeat buyers. Ask the same question when you rent a mailing list with a "hotline" segment.
Segmentation by product or product categories is essential for b-to-b marketers selling multiple products. Product categories can be created by separating your products into groups with similar characteristics, such as degrees of consumability. Segmentation by product category enables you to optimize the behavior that the nature of the product inspires. For example, you may find you retain widget buyers better and therefore choose to limit your promotions to widget buyers. However, beware of self-fulfilling prophecies in all forms of segmentation. When you decrease your promotional efforts to a group, they almost always lose value. Re-affirm your assumptions by re-testing them often.
Channel is another key segmentation variable. It is reasonable to expect that buyers who prefer to purchase on the Internet might be more likely to give you their e-mail addresses and be more amenable to an e-mail promotion. On the other hand, some buyers prefer to interact directly with your sales force.
Whichever attributes you test and find to be best, remember most of them can be measured at both site (physical location of a company) and individual (by name) levels. For example, the type of PC a businessperson uses may be an individual attribute, but the number of PCs at a company will be based on the site. To witness the power of site versus individual segmentation, try a simple test. Divide your prospects into those individuals at companies which buy from you (buying sites) and those individuals at companies which do not (non-buying sites). Promote to each segment. You should find a tremendous difference in how these two segments respond.