Customer segmentation is an established way of targeting messages and offerings to a subset of the current or new customer base. In short, customer segmentation is the process by which you divide your customers based on common characteristics.

In traditional segmentation, companies generate their customer segments based on:

  • Customer demographics (e.g., industry, company size, location)
  • Operating variables (e.g., usage, customer capabilities)
  • Purchasing approaches (e.g., customers’ purchasing patterns, power structures, nature of the relationship)
  • Situation factors (e.g., urgency, size of order)
  • Personal characteristics (e.g., buyer-seller similarities, attitude towards risks, loyalty)

However, in a fast-changing environment where many products/services are bought through channels with low transparency and consumed/used across many value chains and applications, it becomes increasingly difficult to use the traditional segmentation methods to generate meaningful customer segments. Moreover, many companies often base their segmentation on past (old) experiences with customers or interpretations of experiences which may not reflect reality.

Therefore, leading companies have begun to embrace data-driven segmentation; a much more future-proof and dynamic way of looking at customers. In data-driven segmentation, you retrieve information from your self-service portals, webshops, CRM platforms and social media feed to generate insights into the common denominators among your (prospective) customers. These include their behaviours with/around your product, their expectation to your (and your competitors’) products, interaction with manufacturer/supplier, customer-to-customer dialogues as well as viewpoints and reviews.

Data-driven segmentation can help you to:

  • Focus on your customers’ actual way of talking about, procuring and using your product/service, which reduces the risk of using outdated perceptions about your customers
  • Generate an up-to-date interaction with your customers through continuous adjustments to segments and your commercial approach and dialogue with them
  • Reduce the costs of segmentation work, as less work is required for generating and reviewing customer insights

 

Now it’s up to you!

Start your journey towards data-driven customer segmentation by being curious about the existing data in your organisation. One way to get started is to:

  1. Explore the data from your self-service portals and webshops. What type of customers stays? What do they do? Where do they navigate?
  2. Explore the behavioural data from tools like Google Analytics to learn what your customers talk about online. Where do they go for information about your products or service? How do they compare your products or service to others online?
  3. Compile the insights from above into a challenger workshop where you talk about the need to change your marketing approach, commercial model, pricing, account dialogue, etc.

If you want to know more about data-driven segmentation, please reach out to Anders Gantzhorn at anders.gantzhorn@valcon.com.