Why Do YOU Segment Customers?

The marketing department at a large firm (with a strong sales-driven culture) was trying to get sales’ support to launch a customer segmentation effort. In one meeting, the market research consultant presented her psychographic analysis of consumers, outlining seven segments. She recommended, based on the company’s “brand positioning”, that the firm disregard three of the segments and focus their advertising efforts on the other four.

At this point, one of the sales execs piped up and said “if the purpose of our segmentation effort is to exclude potentially profitable prospects, I can’t support this.” The project was dead in its tracks.

What mistake did marketing make? They didn’t start by clearly defining — and communicating — WHY the firm needed a new customer segmentation approach. “Understanding differences in consumer behaviors and attitudes” isn’t good enough. That’s an academic exercise, few outside of marketing really care about. Successful segmentation efforts start with a definition of what the firm needs to do a better job of — e.g., targeting, offer development, product design — and how a customer segmentation scheme will help the company improve those areas.