Customer Segmentation

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What is customer segmentation?

How can this principle help improve your customer experience?

How can it inform your customer service training?

Put simply it is the division of your customer base into types of customers who share similar characteristics in their buying or using behavior.

Segmenting your customer database enables you to gain a more in-depth knowledge of your customers, what they are looking for, and how relevant the messages you send are for them.

Done wisely it can help target your sales and marketing activity with relevant products and services.

It can help your organization understand its customer base, which means that you can provide product offerings and services more suitable to those customer types.

An example of customer segmentation

Just north of the Melbourne Central Business District is Lygon Street, full of restaurants, bars, cafes, takeaways.

If you were highlighting this area for locals and visitors alike, who would your target market be and how would you differentiate them for people.

Would you do this by price, atmosphere, ethnicity (Thai food, Italian, Greek, Nepalese). By child friendliness, a fine dining experience, grab and go, a business environment where meetings could be held and Wi-Fi available.

You would have to promote a range of expectations, price-points and tastes

• Business users
• Families, perhaps with young children
• Tourists
• Wedding or anniversary celebrations

If you think about their needs of your service the groups will each require very different things so buying behaviors are likely to be very different.

A business user might want certain facilities for a meeting, a certain degree of privacy, a lack of interruption, good internet connections, staff who are used to these requirements and know how to provide for and support them.

A family with young children may well look at price, atmosphere, do restaurant cater for perhaps noisy and restless children? Are children's portions available are there crayons and toys to distract them, child changing facilities? Staff who are used to the unexpected behavior that young children can sometimes bring? Staff who engage with the children and make the experience a good family experience and a good experience for other restaurant users.

Tourists may speak different languages and may need explanations and directions given in a different way. Are menu's available in different languages? Are they looking for something familiar from home or want to try something that is from their perspective more exotic. One person's fish & chips is another person's curry or sushi.

For a wedding or anniversary are people looking for something extra special, are they prepared to pay a premium for a more refined dining experience, the crystal glasses, the champagne, the fluid, warm and upscale service. the attention to detail?

How can customer segmentation support customer service training?

Simple, right at the heart of good segmentation will be what it is like in the customers’ shoes.

The more we deliver great customer service by understanding our customers the more we create advocates.

Use customer profiling to help your people understand what it is like for your customers, get them to walk in their shoes during the training, and watch the customer service go up.

• Spending - where people spend their money, what are they buying, where are they doing it?
• Male/Female - do men and women spend differently? Do you understand those difference and how to utilize the information
• Location - You are much less likely to buy horse tack in a major city than you are in the countryside
• Age profile - People have a wide range of interest at different ages, but who has the most spending power - what range of ages are you trying to serve or doesn't it matter?
• Social breakdown - Are there common interests across social groups or are they broken down by employments types, spending, education, income (remember a good plumber can earn just the same as a dentist - a qualified nurse the same as an accountant).
• channels to market - are your messages conveyed through the right channels? Are you trying to route elderly people through the web and social media, when their preference is face to face or by telephone? Are you asking business people to connect by telephone when their preference is by email ( because it's quicker and more flexible)

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