Blog : Customer segmentation analysis

Publication date : 2017-10-29

An Essential Tool

We do not reinvent the wheel, customer segmentation or cluster analysis remains one of the best analytical tools a company can use. Initially the problem is the confusion of terms ... the term "customer segmentation analysis" is well overused ... it does not mean to classify its customers in small, medium and large group...

Based on quantitative variables common to individuals, the approach aims at grouping clients into "homogeneous" segments, where the different segments are the most "heterogeneous" from each other ...

In other words, we seek to group "naturally" customers whose characteristics and behaviors are relatively "similar", and where the segments are also the most "distinct or dissimilar" from each other ...

The Benefits

The deliverable of a good segmentation analysis: a real profile of its clientele to which we attribute a descriptive typology ... We can recode this typology to its customer base. Subsequent applications are numerous and generally profitable in the short and medium term ...

Graphique segments

Two-dimensional graphic representations of the client distribution by cluster using canonical conversion coefficients. Useful technique to gauge the segmentation solution.

One can then apply this information throughout the entire business process. Naturally, we mention the targeted campaigns targeting the most promising. We can also develop all promotional content based on the specific characteristics, discriminating clienteles associated with different segments ... In fact, major banking institutions, insurance companies and many successful companies integrate their customer relationship management program (CRM) to their internal model of customer segmentation ...

What is needed to perform a segmentation analysis of your clients?

  • An up-to-date database of the nominal information of its customers including at least a customer identity code (name, address of its commercial customers and / or consumers);
  • Transactions and different traces of your customer interaction with you (invoice history including date and place of purchase, USG / SKU, purchase amount, merchandise returns, compiled customer service data and the website, history of promotional campaigns, direct marketing, etc.)
  • External databases that can be merged to enrich segment analysis and profile.

Tableau segments

Sample of one of the Summary Table of the client segmentation analysis.

The Secret Is in the Sauce

Once we have this, we have the main ingredients to develop a more profitable home salad ... But we must not forget the magic sauce, the experience that the company has of hits clients ..., we are talking not only quantitative data to be processed, but the experience of the company staff collected over the years .... A host of little things learned in the everyday contact with your customers ... a dormant wealth of great value. In my opinion, this is the starting point of a real customer segmentation analysis ... the wealth of internal experience, make your data speak, but let your people speak ...

An earlier version of this text was published on the blog Analytical Marketing by Guy Mercier WordPress on May 30, 2011.