Evolving Towards An Integrated Segmentation Approach
- 1. IIR Conference on Customer Segmentation & Intelligence: Evolving towards an integrated segmentation approach From 27 to 30 October the IIR conference on Customer Segmentation & Intelligence 2008 took place, gathering Telco and segmentation experts from all over Europe and even North-America, Middle-East and Africa. Pieter Lievyns, consultant of The House of Marketing and one of our segmentation experts, esteemed this three days enrichment as leading edge content on when and how to segment… Today a lot of companies, both in B2B and in B2C, struggle with efficiently implementing segmentations (cfr. Yankelovich and Meer, Harvard Business Review). An important question here is: which segmentation to use? Lifestyle, product usage, needs, value based? The answer is not that straightforward. All 4 types of segmentation can bring added value to a company in function of the objective to be achieved and an integrated segmentation approach can therefore be advised to optimally leverage marketing capabilities. On a macro level needs-based segmentation can be used to identify macro segments for targeting, acquisition, sales force organization and management and high-level value proposition development. It can even be used for innovation purposes, if not falling in the needs-trap: customers often state their needs in terms of how to achieve a certain outcome; however, it is not the how that is important for the customer, but the mere fact that the outcome is achieved. As was quoted with the legendary Henry Ford: “If I had asked people what they wanted, they would have said: faster horses”. However, this does not mean that the customer does not need to be involved when innovating! Therefore when trying to identify the customers’ needs it is crucial to identify which outcome is generating these needs. The House of Marketing has a solid experience in this area by means of its needs-based segmentation methodology that identifies behaviors, needs and drivers triggering these needs. Secondly, value-based segmentation mainly ‘lights the road’ when defining service levels for different types of customers, for identifying if they should be given a certain offer or promotion, prioritization for retention initiatives or also for sales force organization and management. Rephrasing with Animal Farm: “All customers are equal, but some are more equal than others”. Ideally value should not be based on revenue, but on profitability which is reflecting the real contribution of a customer to the company’s results. In these times of recession the big challenge is on introducing risk factors indicating companies’ solvability. Finally, usage and lifestyle based segmentations are ideally used on a micro-level in order to split up the macro segments, which are often too broad to address in a single way, especially in B2C-context. These segmentations should be used on a tactical level e.g. for promotions, communications, customer care call centers or churn prediction. Today many companies still confound the use of the different types of segmentations. And even if the use of these segmentations is clear, the challenge to integrate them still remains. A potential solution can be to align the different types of segmentation with the steps in the customer life cycle.
- 2. Are you or your company already using an integrated segmentation approach? Or are you encountering difficulties in doing so? If you would like to discuss this topic, please contact Pieter Lievyns