Customer segmentation is a major factor in establishing appropriate, successful customer interactions. Knowing how customers are different or the same – and their latent value – enables you to plan, cost, and execute campaigns to drive the highest response, conversion and ROI.Segmentation models can be based on simple demographics such as industry, geography or number of employees. More detailed groupings can be developed by using customer spend, profit, store trips or products purchased.
Segmentation will provide a basis for understanding the overall value of each customer, as well as impacting the assignment of each to the proper customer strategy: Retain, Grow, Maintain or Dismiss.Segmentation enables you to:
- Target segments according to their potential and the company’s ability to serve them in a proprietary way;
- Invest resources to tailor product, service, marketing and distribution programs to match the needs of each target segment;
- Measure performance of each segment and adjust the segmentation approach over time as market conditions change decision making throughout the organization.
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