February 18, 2010

Customer Segments of 1: an Illusive Dream?

Traditional marketing has been self-absorbed in the notion of market segmentation.

The segmentation objective is to identify market clusters that exhibit similar characteristics in terms of common variables such as demographics, lifestyle, political and buying preferences, product usage behavior and so on. Once a segment with similar appropriate attributes has been identified the marketing role is to develop programs to exploit the revenue opportunity in each segment.

The assumption made in the marketing program is that each person in the segment ‘looks the same’. Each has the same demand characteristics. Each has the same needs, wants and desires.

The ‘average’ peson becomes the target and there will be sales hits when the target actually does behave like the average and there will be sales misses when they don’t look like the average person at all.

Nothing wrong with the Marketing 101 approach. But its not DiFFERENT.

Consider the following aspects of BE DiFFERENT Market Segmentation that sets it apart from the commonly-used methodology.

- BE DiFFERENT segmentation considers segmentation as a strategic exercise asking the question “How should I segment the market in order to expose as many opportunities as I can?” comon segmentation variables such as demograhics and geographics are given mild attention only: the focus is on determining the appropriate variable that will unlock the growth key for the organization.

- BE DiFFERENT segmentation is a process of segmentation that is driven by the intent to find differences in customer clusters in order to expose as many customer clusters as possible. The axiom followed is that opportunity comes from differences NOT similarities, and that the greater the number of clusters defined the more intelligence you have on every person in the cluster AND the better the ability to match a product or service with their specific needs. In other words the Customer Learning Factor increases with the number of customer clusters defined and with it the revenue opportunity.

- BE DiFFERENT segmentation, as described in the previous point tries to define as many different customer clusters as possible. The Customer Learning Factor increases as does the probability of making a sale due to the fact that you are better able to match your offering with the more precise needs. wants and desires of the individuals in each cluster.

- Finally, BE DiFFERENT segmentation is a continuous process of going deeper and deeper into a customer cluster. Obtaining more and more information on the individuals in the cluster. Looking for differences until the end result is a cluster of one. If you have one million customers, the result would be one million clusters or segments of 1.

What are the implications of a million clusters of 1?
- you would BE DiFFERENT as few would undertake the journey
- you would have deep intimate knowledge of each of your customers - Customer Learning Factor = infinity
- your sales potential would be off the charts
- you would outperform your competition
- your customers would love you - matching your solutions exactly to their needs
- you would thrive
- AND you would survive any unpredictable body blows you might suffer in an ever changing world.

All because you choose to change the way you look at Market Segmentation.

Final word. Its not really about achieving Clusters of 1 status. Its about putting in place a BE DiFFERENT marketing philosophy to treat segmentation as a continuous learning process of driving our knowledge-gathering down to the individual. If you define 1000,000 clusters of 10 are you on track? ABSOLUTELY! Keep on segmenting is the point.

Cheers, Roy Osing
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Posted 2.18.10 at 10:54 am by Roy Osing | Read Comments (0) | Leave a Comment