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Monday
Sep192011

How do you see your customers? 

Very rarely do we see our customers as just one big bunch of people bustling through our door. Ideally we would love to be able to respond to each and every customer as an individual, tailoring service and products to their tastes (really tough to do although becoming easier for technology based businesses).

This is where the the practice of effective 'customer segmentation' becomes an important ingredient of a successful business. Creating a lens that your business can look at your customers through provides the framework for your sales, customer service and post sale strategy.

 

Segmentation typically is about dividing your customers up into groups of buyers who might require separate products, services or marketing mixes. Normally the market is divided up by looking at bases or characteristics that consumers share.

Segmentation is also be very closely related to a business and its industry and in fact how a business chooses to segment and respond to customers can be a very important source of competitive advantage. When done effectively segmentation will support a firms ability to deliver personalised and perceived differentiated value to customers.

There are four criteria that must be satisfied when mapping out your customer segmentation, they must be:

 

  1. Measurable
  2. Accessible
  3. Sustainable
  4. Actionable

 

While advantages of segmentation include improved efficiency and effectiveness, better defined customer needs and a good way to identify gaps and opportunities, managers should also be aware there are some challenges. Disadvantages include increased costs, over segmentation becomes less relevant (don't create too many levels!), management driven rather than customer focused groups and the effort of personalisation can become burdensome to manage.

As always it is important that you 'right size' your effort to your business size, strategy and budget and ensure that you remember that customer segments are not stagnant and should be reviewed.

With all that in mind, when was the last time you stepped back and adjusted the focus on your customer lens?

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