Turning Customer Segmentation On Its Head
For years, marketers have used customer segmentation as a tool to make their jobs easier. By “lumping” large groups of customers together, based on what those customers have in common, marketers can send mass messages to those groups of customers, and make use of broad media outlets.
The problem: This is convenient for marketers, but it doesn’t do much for customers. While marketers are focusing on what makes one customer like many other customers, each customer is focused on what makes her different from everyone else.
This out-moded view of customer segmentation was valuable in an advertising-based world, because advertisers could look for media habits that customers in these segments shared. Problem #2: We don’t live in an advertising-based marketplace anymore, and media habits are not a very good proxy for purchase intent.
If you want to connect with your customers, and create strong, sustainable relationships with them, it’s time to turn the traditional model of customer segmentation on its head. It’s time to focus on what makes customers unique, not what makes them interchangeable.
Is this easy? No. Is it necessary? Yes. Why? Because this is the way your customers see themselves.
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Since internet marketing is my thing, not traditional advertising, when I think of segmentation, I don’t think of lumping, I think of splitting.
In internet marketing, you focus on a tight niche, usually. When you grow numbers in that niche, if you’re paying attention you will become aware of the “niches within the niche,” and you can then split those off and build them. This means that only highly relevant communications are happening, instead of a large group getting noise that isn’t relevant.
When I think of segmenting, that’s what I think of. Used in this way, segmenting increases greatly the relevance of marketing communications, which increases sales.
Sorry, but customer segmentation has other benefits beyond targeting for advertising purposes. In the B2B world, segmentation can also be used to identify purchase behavior to create decision making models amongst groups of customers. This information can then be used to fine tune sales channels, support mechanisms and the supply chain. Also, I have used it with some clients to identify relative strengths & weaknesses between one company’s product/service offering and that of their competitors.
No beef at all with your point, David … but to me, the question is what you do with that information. Customers care, first and foremost, about themselves, and so every time you “lump” them together with others they could see it as a compromise. Do all of the analysis you want (I’ve done it and used it many times) but then be sure that you use it in a way that helps the customer recognize that you see her/him as unique, not as a member of a group.