This document discusses customer segmentation and provides details on its various phases and processes. It is divided into the following key sections:
1. It outlines a three phase customer segmentation framework: customer segmentation, planning and execution, and institutionalization.
2. It then provides more details on the customer segmentation analytics process, including defining objectives, identifying relevant variables, data preparation, modeling, scoring, profiling segments, and identifying segment strategies.
3. Various statistical tools for segmentation like cluster analysis and CHAID are mentioned. Example attributes for segmenting banking customers and IT company customers are also listed.
Efficient customer segmentation in Google Analytics (Blueffect 2013 Warsaw, Poland) - examples and best practices of accurate data analysis and advanced segmentation principles in order to improve revenues of your business.
- What makes you wrongly evaluate marketing campaigns: do you know, what is the real conversion rate of your website?
- How to prioritize content sections of an e-commerce website.
- What customer segments and cohorts are useful.
Customer segmentation is the process of dividing customers into groups based on common characteristics so companies can market to each group effectively and appropriately.
Segmentation allows marketers to better tailor their marketing efforts to various audience subsets. Those efforts can relate to both communications and product development. Specifically, segmentation helps a company:
Create and communicate targeted marketing messages that will resonate with specific groups of customers, but not with others (who will receive messages tailored to their needs and interests, instead).
Select the best communication channel for the segment, which might be email, social media posts, radio advertising, or another approach, depending on the segment.
Identify ways to improve products or new product or service opportunities.
Establish better customer relationships.
Test pricing options.
Focus on the most profitable customers.
Improve customer service.
Upsell and cross-sell other products and services.
Customer Segmentation for Retention StrategyMelody Ucros
IE Business School
Marketing Intelligence Project by Group F:
Melody Ucros
Jina Kim
Andrea Blasioli
Adedeji Rodemade
Fergus Buckey
Alex Kyalo
Louis Rampignon
Data Source: http://archive.ics.uci.edu/ml/datasets/online+retail
What is customer segmentation and what are some best practices around segmenting your mobile app users? This Slideshare presents 4 best practices for effectively grouping your customers into actionable segments.
To know more, visit: https://clevertap.com/blog/customer-segmentation-examples-for-better-mobile-marketing/
Chadwick Martin Bailey’s Brant Cruz and Jeff McKenna presented best practices of market segmentation based on their years of experience working with clients like eBay, Electronic Arts, Plantronics, and Microsoft.
Efficient customer segmentation in Google Analytics (Blueffect 2013 Warsaw, Poland) - examples and best practices of accurate data analysis and advanced segmentation principles in order to improve revenues of your business.
- What makes you wrongly evaluate marketing campaigns: do you know, what is the real conversion rate of your website?
- How to prioritize content sections of an e-commerce website.
- What customer segments and cohorts are useful.
Customer segmentation is the process of dividing customers into groups based on common characteristics so companies can market to each group effectively and appropriately.
Segmentation allows marketers to better tailor their marketing efforts to various audience subsets. Those efforts can relate to both communications and product development. Specifically, segmentation helps a company:
Create and communicate targeted marketing messages that will resonate with specific groups of customers, but not with others (who will receive messages tailored to their needs and interests, instead).
Select the best communication channel for the segment, which might be email, social media posts, radio advertising, or another approach, depending on the segment.
Identify ways to improve products or new product or service opportunities.
Establish better customer relationships.
Test pricing options.
Focus on the most profitable customers.
Improve customer service.
Upsell and cross-sell other products and services.
Customer Segmentation for Retention StrategyMelody Ucros
IE Business School
Marketing Intelligence Project by Group F:
Melody Ucros
Jina Kim
Andrea Blasioli
Adedeji Rodemade
Fergus Buckey
Alex Kyalo
Louis Rampignon
Data Source: http://archive.ics.uci.edu/ml/datasets/online+retail
What is customer segmentation and what are some best practices around segmenting your mobile app users? This Slideshare presents 4 best practices for effectively grouping your customers into actionable segments.
To know more, visit: https://clevertap.com/blog/customer-segmentation-examples-for-better-mobile-marketing/
Chadwick Martin Bailey’s Brant Cruz and Jeff McKenna presented best practices of market segmentation based on their years of experience working with clients like eBay, Electronic Arts, Plantronics, and Microsoft.
How to Create a Customer Segmentation ModelMark Haubert
Are your sales and marketing teams focused on the right customers? Learn how to define your Ideal Customer Criteria, create a Customer Segmentation Model, identify your Key Accounts and focus your teams on customers with the greatest potential for growth.
The Go-To-Market framework is a related set of activities and processes that connect the company’s product strategy to the customer experience. The Go-To-Market framework is cross-functional, spanning product management, product marketing, and sales. It is a strategy and requires operational efficiency.
Sales Impact Academy Coach, Mark Walker gives a preview of this foundational course.
You will learn:
1. How to identify the real pain points in your target market.
2. Which go-to-market model is best suited to your businesses.
3. Learn about the key success metrics you need to track.
Key Points:
1. Don’t be a solution in search of a problem - Consider the demand in the market first and then build a product for that pain.
2. Frame your key competitors as villain’s - it is a great way of identifying a problem and rallying people behind your product.
3. Be a pill not a vitamin - Is your product a ‘must have’ or a ‘nice to have’?
4. Your ICP should be narrow enough that you are able to streamline your entire operation and make your capital more efficient - you will have to say no to people.
5. A genuine go-to-market model considers every stage of the funnel.
Fundamentals and advanced concepts in customer segmentation. CLV (customer lifetime value) and specific implications in Telecoms. Approaches in operational deployment of customer segmentation.
On Friday 22 November 2013 in Stockholm, Implement Consulting Group once again invited the members of the Commercial Excellence Forum to an event of inspiration and discussion with peers.
This time focus was on segmentation – and how segmentation and a better understanding of customer needs and behaviour is a foundation for a more clear differentiation and effective sales approach.
Sebastien Leichtnam talked about his experience in managing sales development within Tetra Pak Technical Service and explained how Tetra Pak has grown their business through the development of segment-specific offerings and services. Tetra Pak has developed a customer segmentation model which is built on customers’ operational maturity as well as their willingness to outsource.
The presentation covers elements of a GTM plan, what makes it disruptive and how does one measure it. The presentation was used at the NASSCOM Product Conclave in Cochin held on 14 Dec 2016 by Sunder Madakshira.
A go-to-market strategy (GTM strategy) is an action plan that specifies how a company will reach customers and achieve competitive advantage. The purpose of a GTM strategy is to provide a blueprint for delivering a product or service to the end customer, taking into account such factors as pricing and distribution. A GTM strategy is somewhat similar to a business plan, although the latter is broader in scope and considers such factors as funding.
How to Create a Customer Segmentation ModelMark Haubert
Are your sales and marketing teams focused on the right customers? Learn how to define your Ideal Customer Criteria, create a Customer Segmentation Model, identify your Key Accounts and focus your teams on customers with the greatest potential for growth.
The Go-To-Market framework is a related set of activities and processes that connect the company’s product strategy to the customer experience. The Go-To-Market framework is cross-functional, spanning product management, product marketing, and sales. It is a strategy and requires operational efficiency.
Sales Impact Academy Coach, Mark Walker gives a preview of this foundational course.
You will learn:
1. How to identify the real pain points in your target market.
2. Which go-to-market model is best suited to your businesses.
3. Learn about the key success metrics you need to track.
Key Points:
1. Don’t be a solution in search of a problem - Consider the demand in the market first and then build a product for that pain.
2. Frame your key competitors as villain’s - it is a great way of identifying a problem and rallying people behind your product.
3. Be a pill not a vitamin - Is your product a ‘must have’ or a ‘nice to have’?
4. Your ICP should be narrow enough that you are able to streamline your entire operation and make your capital more efficient - you will have to say no to people.
5. A genuine go-to-market model considers every stage of the funnel.
Fundamentals and advanced concepts in customer segmentation. CLV (customer lifetime value) and specific implications in Telecoms. Approaches in operational deployment of customer segmentation.
On Friday 22 November 2013 in Stockholm, Implement Consulting Group once again invited the members of the Commercial Excellence Forum to an event of inspiration and discussion with peers.
This time focus was on segmentation – and how segmentation and a better understanding of customer needs and behaviour is a foundation for a more clear differentiation and effective sales approach.
Sebastien Leichtnam talked about his experience in managing sales development within Tetra Pak Technical Service and explained how Tetra Pak has grown their business through the development of segment-specific offerings and services. Tetra Pak has developed a customer segmentation model which is built on customers’ operational maturity as well as their willingness to outsource.
The presentation covers elements of a GTM plan, what makes it disruptive and how does one measure it. The presentation was used at the NASSCOM Product Conclave in Cochin held on 14 Dec 2016 by Sunder Madakshira.
A go-to-market strategy (GTM strategy) is an action plan that specifies how a company will reach customers and achieve competitive advantage. The purpose of a GTM strategy is to provide a blueprint for delivering a product or service to the end customer, taking into account such factors as pricing and distribution. A GTM strategy is somewhat similar to a business plan, although the latter is broader in scope and considers such factors as funding.
Market Segmentation strives to identify groups of customers who share commonalities yet whose characteristics are distinguishable from other customer groups. In this white paper, we outline the various B2C and B2B criteria and statistical procedures to identify those customer groups who matter most.
As one of the more well-known research techniques, market segmentation is an indispensible step for implementation of a successful marketing strategy. The true value of market segmentation lies in differentiating customers into groups so as to effectively reach subsets of customers. Market segmentation strives to identify groups of customers who share commonalities yet whose characteristics are distinguishable from other customer groups.
For every pound you spend, you have to make more than one pound in return. To do this you have to target customers who are most likely to respond, with a product or service they are likely to buy, through a media they are likely to buy from. In our guide, 6 steps to effective segmentation you’ll learn how segmentation can be used as a key tool to help you achieve your business goals.
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Service revamp lean six sigma black belt projectSumit K Jha
Project- Service revamp
Type- Lean Six Sigma Black Belt Project
Outline- To improve the entire process of getting purchase orders, purchasing, manufacturing, warehousing and installation
Tools/Framework- Six Sigma concepts such as SIPOC, fish bone analysis, control charts and hypothesis testing; statistical tools, Microsoft Dynamic AX
Role- Project manager
Outcome- The successful completion of the project yielded in cost savings of INR 1.61 crores
Understanding User Needs and Satisfying ThemAggregage
https://www.productmanagementtoday.com/frs/26903918/understanding-user-needs-and-satisfying-them
We know we want to create products which our customers find to be valuable. Whether we label it as customer-centric or product-led depends on how long we've been doing product management. There are three challenges we face when doing this. The obvious challenge is figuring out what our users need; the non-obvious challenges are in creating a shared understanding of those needs and in sensing if what we're doing is meeting those needs.
In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
• Illustrate how customer journey maps capture activity-level and task-level goals
• Demonstrate the best approach to selection and prioritization of user-goals to address
• Highlight the crucial benchmarks, observable changes, in ensuring fulfillment of customer needs
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A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challengesHolger Mueller
Holger Mueller of Constellation Research shares his key takeaways from SAP's Sapphire confernece, held in Orlando, June 3rd till 5th 2024, in the Orange Convention Center.
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This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
2. Customer Segmentation in Complete Market
Development Cycle
Phase I: Customer
Segmentation
• Identify explicit or latent
customer need
• Outperform the
competition by
developing uniquely
appealing products and
services
Phase III:
Institutionalization
Inputs
Business Context
Phase II: Planning and
execution
Inputs
Inputs
• Divide the market into
meaningful and
measurable segments
according to customers'
needs, their past behaviors
or their demographic
profiles
• Determine profit potential of
each segment by analyzing
the revenue and cost impacts
of serving each segment
• Ideally this should answer
who, where, how, what,
how much and why
Outputs
• Target segments according
to their profit potential and
the company's ability to serve
them in a proprietary way
• Measure performance of
each segment and adjust
the segmentation
approach over time as
market conditions change
• Invest resources to tailor
product & services and
create marketing &
distribution programs to
match the needs of each
target segment
Outputs
Outputs
Project lifecycle is
explained in the next
slide
• Customer loyalty
• Service delivery programs
• Innovation
• Targeted marketing
• Unique customer segments
with defined characteristics
• Product development and
delivery
• Competitive advantage
• Increased share of wallet
3. Approach for Customer Segmentation
Analytics
Understanding
Business
Problem
Identify objective
function
(increasing
customer loyalty,
better marketing
ROI, etc.)
► Envisage
expected results
► Develop ingoing
hypotheses
Consultative% Time
approach spent
required
Activities
►
10%
Develop
Solution
Approach
Define model
specifications
► Expected output
framework
(dashboard)
► Develop project
plan and timeline
►
10%
Collate and
Manage
Data
Data request,
pull, transfer
► Data cleaning,
enrichment and
structuring
► Analysis
database creation
►
50%
25% of the time spent
with consultative
approach
Run
Analytics
Hypothesis
testing
► Multivariate
analysis
► Quality
assurance
►
20%
Deliver
Solution
Preview results
with stakeholders
► Feedback to rerun analytics
► Final delivery
►
10%
4. Customer Segmentation Analytics process
Data Preparation
/Model
Development
/Scoring
Define
Segmentation
Objective
Identify objectives
► Behavioral and
Marketing Segments
► Directed versus
Undirected
Segmentation
►
Segmentation
Variables
► Number of
Segments
►Segment scoring
► Segment profile
attributes
► Statistical tools for
segmentation
►
Segment
Profiling
Explanation of
customer segments
► Characteristics of
customers in each
segment
► Assigning
marketing customer
segment
►
Identification of
Segment
Strategies
Explain who, what,
why, how much,
when, how of
marketing
5. Segmentation Objective
Segmentation Objectives
Improving profitability through more effective marketing
Serving better to high priority customers
Changing the customer mix to provide a greater proportion of high-profit or highprofit-potential customers in the customer base
Provide global vision of company’s customers
Identify valuable customers
Identify cross-sell opportunities
Behavioral and Marketing Segments
Marketing segments - groups of customers who are similar to each other with
respect to some socio-economic-demographic factors like: age, sex, family status,
occupation, living area etc.
Behavioral segments - groups of customers who behave in a similar manner in
relation with the business
Directed versus Undirected Segmentation
Supervised (directed) segmentation – business analyst defines one or more target
variables that should drive the segmentation
Unsupervised (undirected) segmentation – analytical algorithm uncovers hidden
patterns that may be significant and useful for the given purpose
6. Data Preparation, Modeling and Scoring
Data Preparation – Segmentation Variables
Active variables - variables, which are expected to have an influence on clustering.
Descriptive variables - further profiling of the segments that are determined by active variables.
They are used for identification of the main characteristics of the clusters.
Number of Segments
Good Cluster Definition – Clusters whose members are very similar to each other while at the
same time the clusters themselves are well separated (by criteria selected for clustering)
Business Purpose – 5 to 12 segments
Trial and Error Process
Segment Scoring
Process of assigning the segment identification variable for each customer on the basis of some
pre-specified segment structure.
7. Segment Profile Attributes
Segment profiling attributes
Segmentation is normally performed along with the following demographic, geographic,
psychographic, and behavioral variables;
Demographic segmentation variables describe characteristics of customers and include age,
gender, race, education, occupation, income, religion, marital status, family size, children, home
ownership, socioeconomic status, and so on. Note that demographic segmentation normally refers
to segmentation with these demographic variables.
Geographic variables include various classification of geographic areas, for example, zip code,
state, country, region, climate, population, and other geographical census data. Note that this
information can come from national census data. For more, see geographic segmentation.
Psychographic segmentation variables describe life style, personality, values, attitudes, and so
on. Note that psychographic segmentation normally refers to segmentation with these
psychographic variables.
Behavioral segmentation variables include product usage rate and end, brand royalty, benefit
sought, decision making units, ready-to-buy stage, and so on.
Past business history, Customers' past business track records can be extremely useful for
segmentation. This may include total amounts purchased, purchasing frequency, (credit) default
records, (insurance) claims, responsiveness for marketing campaigns, and so on.
8. Statistical Tools Used for Segmentation
Statistical tools
Cluster analysis is a tool commonly used for customer segmentation. In cluster analysis, the
goal is to organize observed data into a meaningful structure. This type of analysis is
different from traditional statistical approaches such as linear regression in that cluster
analysis does not have a dependent variable
The tree building approach, CHAID, is also used for determining customer segments in a
market. A CHAID decision tree uses multi-class splits to segment the data into nodes.
Members of nodes tend to be very similar within the node as well as different from members
of other nodes. This tool often effectively yields many multi-way frequency tables when
classifying a categorical response variable, making it popular in marketing research
9. Segment Profiling
Segment Profiling
Explanation of the assigned customer segments
The result - characteristics of a typical customer within each segment
Utilization in assigning the correct marketing segment for each behavioral segment
The typical explanative variables used in profiling:
Age, Marital status, Occupation, Education level, Annual income, Postal code (or information
derived from that, such as city, town, or village), Activity level of customer, Life cycle of
customer, Customers market segment, Residence status code
10. Identification of Segmentation Strategies
Aspects of
Marketing
Explanation
Who?
Segment description. Differentiation comparing to other
segments.
What?
What products, bundles?
Why?
Segment’s needs based message.
How much?
Pricing rules.
When?
Time for interactions.
How?
Preferred distribution channels.
11. Example for Data Attributes for Banking
customer
Customer demographics (retail/corporate client)
Product information (number and types of
products, loyalty)
Transactional behavior
Balances
Channel usage number (ATM, online, branch) per
given time period.
Complaints
Risk profile
Average, opening and closing balances per defined
time period.
Utilization of distribution channels
Number, amount and types of transactions per
defined time period
Delinquency/claim (number and amount per defined
period)
Household relations
Contact History
Competitive information
Clustering Example- Partition data
into groups with similar
characteristics
12. Preliminary List of attributes to be Used for
Customer Segmentation for a IT company
Who
Where
How
What
How much
Why
Industry
Geography of
sale
Through sales
representative
Type of Product/s
sold
Size of each contract
Unique product/service
matching customer
requirement
Geography
Work place
Through channel
partners
Type of Service/s
sold
Overall sales within
a year
Effective marketing
campaign
Size of the
company
(Revenue,
employees)
Exhibition
Through key
account manager
Type of Software
sold
Share of wallet
Recommendation from
customers or any other
Market share in
the industry
Road show
New purchase
Specification to
product delivery
(Straight/Bundling)
Time taken (sales
cycle)
Relationship brought by
new account manager or
sales person
Public/private
Conferences
Repeat purchase
(Upsell or Crosssell)
Specification to
services delivery
(onsite, off-site)
Profitability of
contract/sales
Discounts given
Line of business
within the
company
Online
Through solution
partners
Specification to
software delivery
(Straight/Bundling)
Discounts given
Product/service
perception
Number of meetings
for one sale
Effective sales pitch
Number of
employees working
on each contract
Product/service part of
larger solution given by a
partner
Credit history
Relationship with
the company
(Integrated
/special accounts)
Through
competitive bids