Tuesday, August 25, 2009

revisiting: Actionable, needs-based segmentation

Decisions, decisions, decision. Targeting, Segmentation and Grading are three of the more important decisions any company can make. In fact, Targeting, Segmentation and Grading (i.e., the valuation of customers, prospects and the “universe” from which to choose) are the primary building blocks of an effective CRM and CEM (customer experience management) strategy. These actionable steps represent conscious management decisions based upon business intelligence, corporate memory, and the on-going strategy of the business plan. “Being in Business” necessitates making decisions. The single most important set of decisions any business-to-business enterprise can make are those involving selection - of the products and services you will provide, of the customers for whom you will provide them, and of the channels through which you will market them, differentiation, sourcing, profitability, etc. Segmentation is at the heart of this selection process. I originally presented this idea of actionable needs-based segmentation more than10 years ago. I want to reiterate the validity of this approach and present some simple tools with which to put these principles into action, while recognizing the need to incorporate the additional insight available to us today as a result of new channels such as social media and the heightening of social responsibility. This “toolkit” is comparable to open-source code. Constructed theoretically over the last 15 + years by integrated databased sales and marketing masters, this approach recognizes that: a. No firm can be all things to all people b. The value of the firm is equal to the sum of all the customers with whom it does business (and yes, your CFO will accept this!). c. All firms are constrained by resource limitations: people, time, money, etc d. It makes compelling sense to invest your sales, marketing, channel management, and customer service dollars and effort in direct proportion to the expected return on that investment e. Especially in tough economic times, investing in customer relationship management and customer experience management positions a firm for competitive uniqueness as business improves Accordingly, actionable segmentation to promote selectivity and wiser investment decisions is one of the most valuable applications for your marketing database and your CRM/CEM initiatives.

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