Customer Segmentation

It is important to know who your most loyal and profitable customers are. Ultimately, you will want to identify prospective customers who are likely to have the most positive impact on your business and you will want to maximize the lifetime value of each of your customers.

Key in understanding this is to correlate customer revenues, profits and longevity with other factors that will help you identify and target your brand’s most advantageous customers. Those factors include demographics (age, income, gender, relationship status, presence of children in the household, etc.), beliefs, attitudes, values and lifestyle, and for B2B customers, job function or title. Product usage and customer benefits may also be factors. Depending on the category, there are several other dimensions on which you may want to segment customers.

The trick is to identify those factors that correlate with increased purchase rates or amounts or greater loyalty over longer periods of time. It is important to spend time thinking through what those factors are for your brand and its category. For instance, the beliefs, attitudes and values to be tested vary significantly across categories.

All of this can be designed into quantitative research studies of current and former customers.

I wish you great success with your customer segmentation efforts.