Segments – Not just for Oranges!

Wednesday, 1st October 2014

Categories: Analysis

There is something rather nice about oranges and citrus fruit in general. You can with a bit of care and patience divide them into nice segments, to enjoy in bite size pieces.

You can do the same with your customer data.

It does require patience and care but you will be rewarded with some juicy benefits, including:

• Identifying opportunities to gain market share
• Identifying opportunities to retain customers
• Profiling customers and finding new ones
• Spotting trends in purchase habits
• Identifying opportunities to increase margin per transaction

This list is endless – if you ask the question and can evaluate the data you have or can purchase with a realistic understanding of the market you serve, segmentation is a useful approach.

Here’s just one way of thinking about your existing customers

Consider each customer you have and calculate:

• Value – the annual profit each customer delivers to your business
• Potential – the possibility of gaining additional sales over a specific period
• Retention – the possibility of the customer staying with you

If you can segment out customers who are highly profitably and have the potential to purchase more these become key and need your focus – and if you can segment out those who have a high possibility of leaving you can do something now to change their perception of you before it’s too late.

Segmentation does require good data skills but the rewards can make a big difference to the bottom line.

Author: Gamze Bilgili