Customer segmentation implementations are often extremely time and resource intensive projects. In most cases, those that fail to meet expectations simply lack the initial planning and strategy that is the key to success.
Unclear goals compel marketers to leverage their segmentation into areas where it wasn’t initially designed or intended to inform. As a result the segmentation fails to perform and companies abandon the scheme as a failure or spend additional time and money to build second systems with different “views” of the customer inside the organization (often while the first is still being adopted).
The key to success is in the planning. The number one tip? Start backwards, think about how you want to execute the system and get key stakeholders on the same page about how they want to “view” customers. Below are the 5 key questions to consider when developing your customer database segmentation strategy:
1. What aspects of our business does the segmentation need to inform?
Good segmentation needs to be highly actionable. Knowing, before you start, what you want it to do and establishing key performance indicators against those actions will be crucial for measuring the value of the segmentation.
2. Will the segments be used purely for strategic planning or for tactical execution?
This question will help define what type of segmentation you need. Execution for media messaging, product development or customer psychology will be a survey based approach discovering the needs and attitudes of the customer. A more tactical execution will often lead to demographic or lifestyle segmentation.
3. Who are the stakeholders in the organization that will use the segments and get their input?
Input from all the stakeholders, including the mid level employees who need to implement it, will be critical to adoption and success.
4. Do we need to find these segments in our database, a third party database or both?
This question will help you identify what data assets can be used when building your segmentation. The data elements that assign the segments need t be available where you want to execute the scheme.
5. Do I need to size the segments for local markets or are national perspectives ok? How local?
This question will also assist to determine which approach you use for segmentation and what data assets you will need.
Answer these questions before you start to look for companies to help you with your segmentation and you’ll be on your way toward a successful engagement.