CUSTOMER
SEGMENTATION
Its not rocket science
– but done right – it’ll shoot your sales targets over the moon
It’s not hard to understand the
theory that the more you know about your customers – the better
you can find them, serve them and most importantly, keep and grow
them. You don’t have to be a rocket scientist to work out that
customer segmentation is probably one of the most important functions
within an organisation.
This is hardly a new phenomenon,
but the approach to it has certainly changed over time. So too
has its significance within the sales and marketing mix of any
company, particularly given the current market, where products,
services and/or delivery methods are largely interchangeable and
therefore offer less differentiation to a company than previously.
What is customer segmentation then, how is it done and how is
it used to best effect?
At Knowledge Factory we believe
that rather than attempting the formidable task of designing one
marketing campaign to try and please all of the customers all
of the time, a company needs to break both its existing and potential
customer base into smaller segments of ‘similar’ customers, and
tailor its campaigns to each of these segments. It’s kind of like
pleasing each of the customer segments all of the time.
Analysts and marketers of blue
chip companies around the globe will tell you that customer segmentation
is a great tool for understanding customers and connecting with
them, but few companies do it effectively or can boast much success.
Perhaps it’s because they haven’t
thought through the types of segments that would best serve their
objectives? Or perhaps the logistics involved in accurately segmenting
their customer base are simply overwhelming?
Knowledge Factory believes that
smart customer segmentation involves:
- Consolidating customer data
and information from a variety of other sources and systems;
- Ensuring that the data collected
is accurate and in a consistent framework;
- Understanding, identifying
and separating profitable and unprofitable customers;
- Statisticians, analysts and
data miners defining algorithms to analyse the mountains of
data in order to group customers into segments that are meaningful
to your business;
- A robust infrastructure for
aggregating, storing, processing and circulating information
about customers to the people in your organisation who need
it; and
- A process for further information
gathering, measuring performance and learning more about your
customers with every interaction, so your customer segmentation
knowledge improves and works better for you, each time you use
it.
The ultimate goal of good segmentation
is to wholly understand both prospective and current customers
in order to provide them with a product/service/value offering
that they simply cannot refuse – because it meets their specific
needs in a manner that makes them feel good about doing business
with you.
Then repeat the process again
and again, until your relationship transcends mere convenience
and your customers begin to trust you to anticipate and fulfil
their needs, wants and desires - time and time again.
Back to Basics – Prerequisites
for Customer Segmentation
- It MUST be measurable: The
size, purchasing power, potential profit and profile must be
measurable.
- It MUST be large enough: Segments
that are too small are not profitable to pursue.
- It MUST be accessible: Segments
must be reachable on the ground.
- It MUST be actionable: It must
be possible and cost effective to develop separate
- market offerings for different
market segments.
- It MUST be differentiable:
Different segments must exhibit heterogeneous needs, thereby
allowing for the tailoring of different value offerings based
on specific needs and aspirations
As one of the foremost marketing
insights companies in South Africa in collating and interrogating
market and client specific data, Knowledge Factory is able to
provide insights to its clients in the areas of their markets,
channels and customers.
These insights are based on scientific
findings generated through the results of the interrogation of
data and are all actionable, i.e. information is converted into
knowledge which can be acted on.
With a 13 year track record and
a great breadth and depth of expertise and intellectual capital,
the analytics team has amassed in excess of 100 years cumulative
experience in the field of data analysis.
Contact
John Sikiotis, MD, Knowledge Factory,
(011) 445 8100. johns@knowledgefactory.co.za
Geraldine Mitchley, Marketing,
Knowledge Factory, (011) 445 8100, geraldinem@knowledgefactory.co.za
