Customer segmentation

Companies that hold detailed records of customers’ purchases and behaviour are in the happy position of having factual data rather than claimed data with regard to what their customers really do; ie. when they bought, what they bought, how much they spent, frequency of purchase, recency of purchase etc. The beauty of this customer intelligence is that it shines a light on real behaviour that drives profit.

It is almost always the case that a customer base will contain customers exhibiting significantly different behaviours delivering significantly different levels of profitability. A behaviour segmentation reveals the number of distinct buying behaviour patterns that typify a brand’s customer base. Each pattern of behaviour delivers a certain level of profit in a specific way.

Thus, each segment comprises customers who exhibit similar behaviour patterns and have the same type of relationship with the brand. Having identified these behaviours, customer communications can now be tailored to relate more relevantly to a customer’s behaviour and their history with the brand. Hence, they will only receive those communications relevant to them.

Consequently, the brand customer dialogue will be a lot more meaningful, resulting in increased response to sales messages that leads to maximized customer value.