CRM - February 2008 - (Page 41)

CUSTOMER SEGMENTATION ahead of the curve even just budgeting-wise.” One SoundBite client, a satellite radio provider, steered away from the one-size-fits-all approach, reducing its marketing spend by 30 percent, simply by not calling those who didn’t want to be called. Hren says that, even within a still-viable segmentation framework, modification can be useful: You may want to encourage the discount shopper, for example, to occasionally pay full price. And customers themselves often change: They’ll marry, have children, or perhaps alter their online behaviors or purchase differently. Even with simple segmentation based on recency and frequency measures, it’s critical that you’re increasing the value of individuals within and across segments, rather than letting them simply drop out because you don’t think they fit anymore. Virginia-based financial services firm Capital One, for example, realized the importance of staying in step with—if not ahead of—its customers. “Over time, the various factors in a credit model evolve as the economy and competitive environment evolve,” said Chief Risk Officer Peter Schnall at the company’s Annual Investor Conference last November. “So one of the tricks of [segmentation] success is keeping the models well tuned.” Many firms are neglecting what Bridge Strategy’s Rheault calls “strategic segmentation.” Most segmentation is based on demographic information; the more sophisticated need-based segmentation compares the needs of different types of customers. But neither of these takes segmentation to the strategic level of introducing a competitive dimension. Decide what you do uniquely well relative to your competitors—focus on what makes you stand out from the rest. (See “Fix What Works,” January 2008, page 10, for more about focusing on your company’s strengths.) microtargeting.” The path has an air of inevitability to it, he says: “We haven’t gotten to nanotargeting yet, but I’m sure that’s down the street.” Segmentation is a key strategy for all. Even those firms doing exceptionally well on sophisticated segmentation systems can never sit back and relax because the competition is just around the corner. The overall market, though, still has a long way to go before being truly customercentric. “I think there’s still a division between, ‘Lets figure out how much money we can extract from them,’ and making sure that you understand what a customer needs and bringing products to market that fit the need,” Pombriant says, adding that even industries doing relatively well with segmentation have a lot more work ahead. And those best at customer segmentation recognize the work is never done in a vacuum. Since segmentation tries to deliver the best possible customer experience, it makes sense that the best advice would come from customers: Conduct research, do surveys, and gather feedback, Rheault says. Put yourself to the test and ask your customers what you do well, how they perceive you relative to your competitors, and how they most want to interact with you. “Get some really solid customer perception and get out of the mode of just presuming that you’re something,” he says. Moreover, be sure to include an objective (thirdparty) viewpoint to offer constructive criticism. THE ELITE: SLICE SURGICALLY For the few who have eaten their cake but want to have it as well, another slice is never too far away. “I hate to say it, but you can always be better,” Hren says. There’s an old logic problem about always walking half the distance to the finish line—no matter how often you cut the margin in half, you’ll never reach the end. Some companies pursuing segmentation, Hren says, are “very sophisticated and doing some incredibly fine micromarketing, microstrategies, and A CRUMBY END? What will differentiate when the world is beautifully segmented? Experts chuckle at the Utopian thought. Segmentation will never quite be a finished project. “It really gets back to the results,” Hren says, stressing the benefits of continual reevaluation. Firms that leverage that assessment and balance it with the needs and capabilities of the business will inevitably come out on top. “Don’t take anything for granted,” Pombriant says: Look at the data, make the comparisons, learn from the analytics—and you’ve got the makings of a long-term relationship. What better time to start? After all, February means Valentine’s Day—and you might learn which segment of your customer base “hearts” you the most. Contact Editorial Assistant Jessica Tsai at jtsai@destinationCRM.com. The fragmentation of the market today is so extreme that even if you wanted to target ‘mass’ audiences, the task is literally impossible. www.destinationCRM.com CUSTOMER RELATIONSHIP MANAGEMENT | FEBRUARY 2008 41 http://www.destinationCRM.com

Table of Contents Feed for the Digital Edition of CRM - February 2008

CRM - February 2008 Contents Front Office Reality Check Customer Centricity The Tipping Point The Loyalty Riddle CRM Drives Down-Market Out of the Gate: Marketers Rate ’08 Traits The Pulse Consultants Adapt to CRM’s Changing Landscape Required Reading Cover Story: CRM Gets Serious Contact Center Solutions Always On Rumble in the Office The Smallest Slice Tying Up Cable’s Loose Ends Burning Up the Paper Trail Sunny Skies for Knology No More Bumps for BlueRoads Secret of My Success Re:Tooling Scouting Report Pint of View

CRM - February 2008

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