Importance of Customer Segmentation

A cyclone has hit marketing: the web.

The rules are being remade. Customers are in charge, completely!Old ways are being jettisoned; new ways are all the rage.

In the new marketing world is the importance of customer segmentation irrelevant?

Is market segmentation just one more old rule that needs to go?

Okay, here's a hedge. Maybe.


Out With The Old; In With The New (market segmentation)


Old school customer segmentation probably does need to go. A lengthy process, averaging a year or more to complete, with a static model that was meant to have a working life of five or more years. Clearly, no longer viable.

However, the concept of customer segmentation, altered by the new marketing environment, is more of a necessity than ever.

The key here is that customers are in charge.

In the new marketing world, where the web is rewriting the rules, customers make the decisions. They need to be attracted, listened to, cajoled, and informed. They are never more than a click of the back button away from disappearing, potentially forever.

Now certainly the impact of the new marketing world can be overstated. Traditional marketing channels still work and still, in some ways, dominate. But the trend is relentless and the lessons of the web are coming to traditional marketing, not vice-versa.

In this new world, knowing your customers, and talking with them almost personally is an imperative. In the old school, marketers often behaved as if their main role was to tell customers what to do, and how and when to do it.

No longer.

The old school is out forever.

In the new marketing world, marketers and companies must know and understand their customers..............or perish.


The New Rules of Customer Market Segmentation

Customer Market segmentation gives marketers the information to speak more and more directly to the needs of specific groups of customers, with similar behaviors, tastes, styles, and opinions. Moreover, the sheer quantity of information available about customers, their preferences, habits, and yes, demographics, allows segmentation to be even more potent.

So what, exactly, does customer market segmentation bring to the new marketing toolbox?

With the explosion of data available on customers (and potential customers), customer market segmentation allows marketers to identify discrete groups of customers with a high degree of accuracy based on demographic, behavioral, and geographic data. Market research adds psychographic (attitudinal) and enriched behavioral and demographic data.


Customer Market Segmentation Is Now Primarily An Analysis Of Internal Customer Data


In the old school, market research drove the segmentation effort. Data on customers was relatively scarce, so market segmentation required market researchers to analyze survey data for attitudinal and behavioral characteristics and then map the resulting segments of customers primarily on the scanty demographic data available in internal company databases.

Now, market researchers can begin with robust internal databases brimming with behavioral and demographic data, using surveying to add psychographic and attitudinal variables, can classify segments with much greater precision.


The Criticality of Market Segmentation


Marketers can develop, hone and deliver products that fit these groups and niches with a much higher degree of accuracy than ever before. They can easily test market. And they can communicate directly with segments, using the self-selection capabilities of the Web.

Market segmentation leads to more precisely designed products and services for customers, communications that speak directly to these customers, and from both these outcomes, increased sales and revenue.

And that's what we're all seeking, right?