Segmentation and the New Customer Mindset

by os_admin

They might not use the same words as a marketer would, but your customers are growing to expect segmentation, if not 1:1 customization, from the companies they do business with. The effective use of customer data to increase the relevance of offerings has now become so commonplace that people are bound to start expressing frustration with companies that are slow on the uptake by spending their money elsewhere. The question they will start asking: Why does this company persist in wasting my time with irrelevant offers when we all know they have the information they need to change that?

This was brought into clear relief for me on a day when I shopped at two unrelated online merchants. One was an online bookstore (among other things) that we all know and love. My shopping trip that day started with an email communication. It was a relevant note to me with a few suggestions for books that I might be interested in reading, based on the kind of books I had purchased in the past. What a nice idea! Yes, I think that might be an interesting read - I’ll check it out. And I did. Along with that purchase, I was reminded of a few things I had expressed interest in before but didn’t buy; not today, thanks, but it’s nice that you remembered! I don’t buy books at a store any longer - this merchant has a 100% share of my requirements because they provide a valuable service to me and never waste my time.

Contrast that with online merchant #2, a purveyor of wines and spirits. We like wine in our house; we drink it routinely, and we probably buy a lot of it compared to the average household. They have a ton of observed data about me: the brands and types of wine I have purchased in the past, the pages I have clicked on, how often I buy, etc. They could easily acquire a lot more data (such as demographics) with my street address, and finally, they could learn a lot about my attitudes toward wine if they just asked. You would think that with the amount of data at their disposal, segmentation, if not 1:1 marketing, would be a no brainer for these guys. Nope. We get the same “buy one get one free” or other price related discount via email at about the same time each month. Never a suggestion based on the type of wine we like or the fact that we tend to seek variety but also have reliable stand-by brands. No helpful suggestions based on prior purchases - if you liked that, maybe you will like this! Nothing.

This wouldn’t bother me if retailer #1 had not set such a high bar. I can’t help but make comparisons and wonder when retailer #2 is going to finally get its act together. So in the meantime, retailer #2 probably gets about 50% of my business. By failing the comparison to a favored retailer who is not even their competitor, they leave me wanting more and are leaving the door open for me to shop elsewhere.

This happened to be in the online world, but the same story can translate to the offline world and the world of business to business; the pattern will hold whenever there is a direct relationship of any kind. Companies that do not embrace the use of data to develop smart segmentation plans that drive toward a more relevant relationship with their customer base do so at their own peril, even if none of their competitors are playing at that level. People are smart and observant, they make comparisons among the companies that serve them and they vote with their wallets. Be sure you are investing in the targeting and segmentation practices your company will need to get their vote!