Customer Segmentation Best Practices

Segmentation provides incredible insights about the prospect and the customer. But, the effort and cost that go into segmentation is normally pretty high. How can marketers pursue customer segmentation relentlessly if there is no reliable way to measure its ROI?

There are many segmentation tools available in the market, but these tools merely automate the computing part. Without the marketer taking the effort to define the exercise properly, these tools serve no purpose. As a result, marketers face these key challenges when segmenting or profiling prospects or customers:

Integrating data.

The multiplicity of social and other channels means that data on the potential prospects or customers is scattered all over the web. The first task in segmenting and profiling customers is to aggregate all data into a central console.

Clarity of goals.

So often marketers set out to segment the available pool of prospects or customers without clear objectives. The result is confusion and dilution of focus. Segmentation may be on revenue, profit, customer lifetime value or any other parameter, but it is important to decide on this beforehand.

Analytic tools usually collect demographics, attitudes or preferences and behavior. But, this isn’t going to provide a complete picture. In most cases, it becomes important to understand why the prospect or the customer behaved the way they did. For instance, if the product was packaged in a different way, would the customer have behaved differently?

Undertaking the segmentation exercise is only one part of the overall challenge. Marketers face an even more pressing challenge in identifying the segments to prioritize engagement and then optimizing engagement strategies based on the identified segments. But at the end of the day, it’s imperative that marketers find a way to efficiently segment their customers in order to market their product or service effectively.