Advanced Segmentation

April, 2005

How many of us know exactly what our customer base looks like? We’ve done a pretty good job of understanding financial performance (probably because our CFO requires this!). We know which customers are likely to respond to our direct marketing campaigns. We can even predict what they’re likely to buy from us. We may have also invested some money in external demographic data and we’ve spent time profiling our customers in terms of their lifestyles and family composition.

However, commonly, what we see as we’re working with our clients is that all too often the entire customer base is treated the same. They are all presented with the same offer and the same creative package. Now we all know in our hearts that not all of our customers are created equal. Intuitively we know that there are distinct groups (or segments) that buy from us very differently—with different motives, demographics and financial characteristics.

We see opportunities, then, to take direct marketing to the next level of sophistication through the application of Advanced Segmentation. The new opportunity, in our opinion, is two-fold:

1. Use custom clustering techniques to identify those disparate customer groups that live within your overall portfolio. Really maximize available data—examine using credit data combined with demographic data to isolate those segments.
2. Then, do something about it! Why not tailor your offer to meet the needs of each group? Or, certainly your creative message could be ’tweaked’ based on demographic traits of each segment. For example, if you know that one segment is predominantly made up of families, why not include a photo of Mom, Dad and the kids. Just this simple change is bound to make your piece more likely to resonate with the recipient. And if they can relate, they’re more likely to respond.

RRW Consulting has put together our “Advanced Segmentation Game-Plan” that provides practical ideas and a game-plan to help you create, employ and then act on segmentation results. We’d be happy to send it your way.

Of course, if you’d prefer to chat with us directly about your segmentation and targeting strategies, just call us at (503) 206-5255, or visit our website: www.rrwconsulting.com for more info.