How and why to segment your market – Step 2

My last blog looked at segmentation for marketing purposes. This post gives some suggestions on how to segment your customer list.

Your customer segmentation plan:

1. Analyse your own customer list (both past and present). 

Find out who your best, most profitable customers are. (Generally the 80/20 rule is likely to apply here: A 20% segment that delivers 80% of your profits.)

Do they fit into different segments, or are they a segment on their own?  

How can you find more like them?  

2. Cluster together customers with the same profiles. Profiling helps you to identify what characteristics differentiate your customers from the rest of the population.
3. Research which combination of criteria your customers are using to select the business they buy.  Why are they choosing you?  Why are they choosing your competitors? Your survey is best done by telephone, by mail, or by email or even a third party. I would suggest that this could be included in your regular review with the clients.
4. Now understand their different needs (See previous blog)
5. Review their buying processes.
6. Consider their common worries and concerns.
7. Agree how the 'Threat' and 'Opportunities' from a SWOT analysis might affect each segment. Example shown below.

8. Decide if they should also be segmented geographically. I use Batchgeo for mapping which is quick and easy.
9. Then create your segments - as many or as few as you desire.
10. If useful, give each segment a name.
11. Create a pen portrait of each type. This is a way to represent your customer profile target audience as a fictitious character. By creating a fictitious character you will be able to speak more directly to him/her. The more fleshed out and based on reality this portrait is the more effective the tactic will be.
12. Understand which segment is most profitable to the business.  Most loyal?
13. And finally, segment your customers on your client bank.

Some other examples are available 
Example 1 - Advisor Impact - Client segmentation workbook
Example 2 - Mind of marketing - What is customer segmentation?
Example 3 - Why most client segmentation models don't work.

There are many ways in which you can segment your customer lists and I hope that these two blogs have helped in creating some ideas on how and why to segment your client bank.