So, here we go. In my view, any segmentation starts out with business goals. What is the company itself trying to do with its customers? Are we trying to grow profit? Grow revenue? Are we trying to do it in a specific area? Do we have multiple goals? What are their priorities? Ignoring these questions and just going down the path of segmentation without context is a big problem. So start by understanding business goals. The two Bobs would be proud of you, even just doing this.
- Product. What customers want and need from a product or service. Sometimes called "needs-based segmentation"
- Creative. How customers respond to different visuals, animation, etc. Some of the cool things going on in biometric research are very useful here.
- Promotion. How customers respond to different types of incentives... price, points, free shipping, etc.
- Channel. Which customers use which channels, and which they prefer.
- Targeting / Finding. Where to actually find customers wherever they are
This is represented in my little "segmentation tree" as a continuum, and that's deliberate. This is because the left side of the tree--needs-based segmentation--is really hard to combine with the right side of the tree. Also, making a segmentation scheme do all five things at once is almost impossible. There are two reasons for this:
- A statistical problem called "assignment" which means that you can't make one segmentation based on needs, generated from a survey, fully predict or "find" individual customers
- A scope problem that in any one study, you can't possibly combine all elements of "segmentation" into one uber-model. It's just impossible.
One way around this is with behavioral segmentation, or "deterministic" segmentation. This means you just start out segmenting your customers into groups 100% defined by their behavior, and then define the six attributes in the tree post-facto. This way, you're always certain you can target a customer. It might not be perfectively descriptive, but it's guaranteed to be perfectly actionable.