The problem Customer Segmentation solves

Customer segmentation is one of the most powerful customer analytics tools in marketing, however, it is also the most misunderstood.

Segmenting allows you to more precisely reach a customer or prospect based on their specific needs and wants. Segmentation will allow you to:

• Better identify your most valuable customer segments
• Improve your return on marketing investment by only targeting those likely to be your best customers
• Increase customer loyalty by tailoring your services to your best customers
• Improve customer service
• Positively impact revenue and reduce waste across your organization

Challenges we ran into

Before we deep dived into various customer segmentation techniques and start creating complex segments, the biggest challenge was to understand the reason why we want to do this at all – our “why”.

Based on our experience, we can provide you with a list of different customer segmentation drivers, some of which are:

Correct budget allocation into marketing and selling activities that generate the highest revenues;
identifying customers that are more willing to buy a product than the others;
increasing customer satisfaction and boosting “member gets member” schemes;
finding a profitable niche or fighting the competitors.
Each “why” will result in different segments setup and different variables used for filtering.

Challenge 2: customer segmentation in the context of marketing channels

Challenge 3: correct identification of one-time buyers