Segmentation Secrets! (1,517 words)

by Alan Weber

Profitable customer segmentation requires treating different segments differently. If different segments are treated the same, what is the point of having different segments? Knowing why and how to treat each customer segment requires understanding of the secrets in marketing data.

The most valuable data for marketers is buried in their own databases. The problem is that marketers may not know how to look at their own data to unlock the secrets that will help them communicate more effectively with their customers and prospects.

Finding the secrets is half the challenge. The other half is knowing how to use them to improve profitability. Fortunately, once the secrets are understood, knowing what to do with the knowledge follows almost naturally.

Here are 19 of the most common secrets and how to use them to improve profitability. All of them won't apply to any one company, but some of them apply at every company.

Secret #1: It costs eight to 10 times as much to make the first sale to a prospect as it does to make another sale to a customer.

In fact, we often find this is even higher! Spending 20 times as much to sell a prospect as to re-sell a customer is not uncommon. Consider this if you contact prospects and customers the same way.

Secret #2: A re-mailing or re-contact can get 50 percent of the response of the initial contact.

Segments that are responding at twice break-even or above should be contacted more often, even if the communication is basically unchanged. A re-contact to top-performing segments is often the best way to utilize overrun materials.

Secrets #3 & #4: Two-time buyers respond 40 percent to 60 percent better than one-time buyers. And three-time buyers respond 40 percent to 60 percent better than two-time buyers.