We often advise our clients to get closer to their customer and their market by offering targeted segment-specific offerings, segment-specific communications, personal experiences. Why? Because targeted products, services, and communications are more valuable to a given customer and develops a longer, more meaningful relationship. This is good for the customer (more a trusted provider, more valuable products and services that are targeted to their unique needs) and for the organization (satisfied customers buy more, shop around less, and are cheaper to sell to, pay premium prices).
So, why, with all the evidence we have that more careful, targeted segmentation is valuable, don’t companies do it? Primarily, it’s cost…or at least perceived cost. And not just purely dollars. It takes money, time, and effort to develop appropriate product or service variations for a small group. When these objections arise I always suggest that segmenting doesn’t have to be a full-blown commitment initially. Start small. Select one segment and go for it. Measure response rates and/or loyalty against everyone else. Or you can even A/B test within that chosen segment (one version being segment-specific and the other being the same version everyone else gets) to see if the response/loyalty rates vary. Once you get comfortable with that segment (assuming it was successful), expand into other specific, high-value segments.
An example: A software company that provides a web presence for job seekers to showcase themselves has several segments that they want to target in particular (nurses, students, salespeople, etc.). They could develop a unique, targeted version designed for each segment. For instance, students could highlight academic achievements and student activities. Only salespeople would include sections that described their sales style, their goals/successes, largest, most complex sale, etc. This, more customized version, would prove to be much more useful for those chosen segments. All other users could use the more generic version. Note that not every segment would get its own customized version immediately – just the first few high-priority segments. Over time, new segments could be added as needed.
A few questions you should ask yourself:
- What are YOUR organization’s high-priority segments?
- How are you striving to provide additional value to them?
- If you were a customer in those segments, would you feel that the organization sees them as “special”?
- Is your organization investing resources to best understand the needs of these segments?
I’d be interested to hear the experience any of you has had with segmentation? Did you take a different approach? Did it prove useful? Were you able to increase customer satisfaction and loyalty in those high-priority segments?
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