Is Customer Segmentation Analysis still relevant?

Today, it is possible, certainly in a telecommunications, banking, retail or other online environment, to collect a vast amount of information about your customers. The question is, what sort of survey analysis to apply to it. Additionally, is customer profiling and segmentation still a good approach to organizing this data and to then interacting with groups of customers?

Of course, there are many approaches to using your accumulated data, some of which may be better than segmentation in delivering sales or marketing returns, or improving other areas of customer relationship management.

Nowadays, companies such as Amazon, tailor their advertising to individuals searching for books online: a technique known as ‘mass personalization’.  And for many companies, this approach is gaining more emphasis than traditional techniques.

Amazon is frequently cited as an example of good personalization.  As an on-line retailer, they are well positioned to take advantage of such techniques, but there are remarkably few good examples of mass personalization in an off-line environment (I do not remember any direct mail in my mail-box, for example, which gave me the feeling that I was very targeted).

The truth is, a lot of the time, companies sit on a goldmine of information and fail to exploit the opportunities for powerful communications with their customer base, or the opportunity to create highly desirable products and services based on the information they have available.
Profiling and customer segmentation do work – the problem is, a lot of companies don’t use them effectively and so end up seeking the next big thing.

Personally, I do not believe that companies will totally move from a segmentation based approach to a mass personalization approach right away, but it is true that the targeting power that can be gained by combining traditional segmentation analysis (based on large volumes of historical data), with the real-time analysis of what a customer is doing on the Internet, plus where they are located (when they are using the Mobile Internet) cannot be under-estimated.

So it seems that both traditional segmentation and the newer mass personalization methodologies may have their benefits and while, for some companies customer segmentation may no longer be required, I feel safe in the knowledge that for many, it is still a valuable tool and one that will remain relevant for quite some time.

PAI would welcome the opportunity to demonstrate how PAI’s mTAB™ service can help you to establish and analyze your own customer segmentation of the marketplace.  Please visit the PAI Website to learn more about us, or to schedule a no-obligation demonstration.

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