Tips for Successful Customer Segmentation

Here are seven tips to improve your customer segmentation efforts.

1. Put each customer in only one segment. Otherwise, customers can get bombarded with multiple, uncoordinated offers.

2. Be channel-neutral. Customers should get the same offers no matter which channel they use. So custom product recommendations should be available to all customer-facing employees and delivered to customers who go online.

3. Give customer-facing employees specific, action-oriented intelligence. Don’t give them data that’s open to interpretation. Tell them exactly which offer is most appropriate for each customer.

4. At the outset of customer segmentation, give the sales force only the best leads to ensure a very high success rate. Once the sales force sees the value of segment-driven sales recommendations, you can expand the lead list to include more customers, giving a “propensity to buy” score for each so that reps understand what level of receptivity to expect.

5. Give a senior manager P&L responsibility for each segment.

6. Put senior management in charge of driving segmentation. As RBC Financial Group Vice Chairman and CIO Martin Lippert notes, companies may miss part of the customer perspective if only a single line of business is pushing segmentation. Also, segmentation is less prone to budgetary constraints if it’s funded by the enterprise instead of by a single group.

7. Start small, then evolve. First divide customers into a few coarse segments, then gradually break them into smaller, more precise subsegments. But don’t wait until you’ve got it all perfect. Just begin.