Segmenting for Success in Today’s Marketplace
No, to create true competitive advantage you need to view customers through several segmentation lenses simultaneously. By overlaying multiple segmentation schemes, marketers can determine not only who is buying, what they are buying and how they are buying, but also why they are buying. The converse is true, too. Moreover, finding and developing the highest potential pockets of customer value (which is, after all, the end game) requires this kind of capability. Here, very briefly, is an example of a company I think is on the right track.
A full-service investment and trading company I am familiar with has developed several segmentation schemes that it now has knitted together for business planning and marketing purposes. It has an attitudinal segmentation scheme, derived from survey research, which enables it to classify customers according to their financial needs and attitudes toward investing. This has been great for the strategic planning and product development departments. It also has lots of demographic data that allows it to slice its customer population into life-stage groups, an additional lens valued by its advertising department.
But the company found out that those segmentation lenses were not enough. To assess specifically who was engaged with the brand, whose relationship was expanding and whose was contracting, to discover who represented the best opportunities to increase its share of wallet as well as decrease where it was dangerously exposed to predatory competitors, and to determine who was driving its profit and who was detracting from it, the company realized it needed to leverage its vast amount of internal customer data on product ownership, financial transactions and channel interactions. So it developed a behavior-based segmentation.
Now it has overlaid the various segmentation schemes together and analyzed the finely cut customer subgroups that have been created. It has used this information in its long-range planning process and to inform its service model, customer experience and direct marketing programs. It has set segment-specific performance goals and has aligned diverse communication themes with the appropriate customer groups. Importantly, too, it has focused customer development efforts on the 50 percent of customers on either end of the spectrum who produce extremely high or low levels of profit.