If you have customer segments that read like the drink sizes on a fast-food menu, then this podcast is one you really need. The fact is many organizations get customer segmentation wrong. So, we came up with some critical questions that can get it back on track.
One of our listeners is in a pickle and it has to do with their firm’s segmentation. Vijay Patel’s sales haven’t been what he hoped, and he wondered if the problem might be targeting the wrong customers. We think they might be, too, but probably not for the reasons Patel thinks.
Many organizations use databases to segment their customers based on easy-to-collect data, like demographics, industry vertical, or total annual sales. While this information is useful, it is incomplete. We discuss what needs to be included to make these numbers mean anything for targeting.
In this episode, we explore what are critical questions an organization should be using to create customer segments that lead to effective targeting. And to be clear, they don’t use the words “small,” “medium,” or “large.”
Key Ideas to Improve your Customer Experience
I have had a terrible time with UPS recently. I sent a package 2-day priority international and ten days later, I still don’t have it. Plus, I have had no luck getting answers about what happened to it. In part, I am to blame because I don’t have a lot of experience with shipping things via UPS. However, part of the problem is UPS because they don’t have a targeted experience for inexperienced shippers like me.
Here are a few key moments in the discussion:
- 05:12 We share a pickle from Vijay Patel who asks us how to ensure that their customer segmentation is correct.
- 07:27 Colin talks about one of the best segmentations he has ever experienced in Hartsfield Airport in Atlanta, where they separate leisure and business travelers.
- 11:42 We lead into the first question about segmentation and how it should serve your organization.
- 14:25 Colin poses the next question about the data used to segment customers and whether it is meaningful for this exercise (spoiler alert: if it involves small, medium, and large, then it isn’t).
- 18:18 Ryan explains selection bias and how it can doom your efforts by missing an enormous opportunity for your business.
- 21:04 We explain how using databases can lead to stereotyping and how that is sloppy marketing.
- 25:18 We discuss psychographics and how it applies to segmentation, and why it might not work either and what we know will work better.
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Customer Experience Information & Resources
LinkedIn recognizes Colin Shaw as one of the ‘World’s Top 150 Business Influencers.’ As a result, he has 290,000 followers of his work. Shaw is Founder and CEO of Beyond Philosophy LLC, which helps organizations unlock growth by discovering customers’ hidden, unmet needs that drive value ($). The Financial Times selected Beyond Philosophy as one of the best management consultancies for the last four years in a row. Follow Colin on LinkedIn and Twitter.
Click here to learn more about Professor Ryan Hamilton of Emory University.
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