Customer Segmentation
Customer Segmentation is the process to divide the customers into different groups where members of same group have some similarity in characteristics like buying behavior, profiles, value to company etc. At the same time having significant difference from member of different segment or clusters. Traditionally segmentation was done by business managers based on their business acumen and gut feeling. It is always easier to make assumptions and use “gut feelings” to define rules which will segment customers into logical groupings, e.g., customers who came from a particular source, who live in a particular location or who bought a particular product/service. However, these high-level categorizations will seldom lead to the desired results. As renowned management Guru Peter Ducker has rightly said” The Customers rarely buys what business thinks it sells him”
Due to the same reason companies are now turning to the data mining tools and techniques which are more capable to handle large number of parameters and removing the noise from the actual information. These data mining tools or techniques like cluster analysis or Decision tree are able to not only create meaningful clusters but also identify the characteristics of these clusters with easy to interpret graphics.
A good customer segmentation or market segmentation should be able to answer the questions like:
- Who are my customers and what are their characteristics?
- If a new customer or prospective customers comes I should be able to identify him as my future good/average/bad customer?
- What aspect of my services or product appeals most to my customer?
- What is needed to be done to increase profit from each customers or to retain profitable customers?
Any business with budget not sufficient to cover entire population needs segmentation. Even when the budget is sufficient there is no point in pursuing the customers who are not likely to buy or are not profitable in long run. A smart business manager would always prefer differential treatment to different kind of customers. This is reason that makes customer Segmentation a must for any business process. The sole objective of customer segmentation is to enable the companies to identify the most profitable customers and to target them with focused marketing efforts to maximize the ROI of different campaigns.
ScoreData Corporation applies advanced analytical techniques like cluster analysis, decision tress, Random Forest, Regression models etc. to create meaningful clusters from the client’s customer base. We conducts advanced statistical modeling on customer’s transactional , profile and appended data to divide customers into groups based on shared characteristics like profitability, customer life time value, loyalty index, customer requirement and transaction history. Our customer segmentation solution are customized to client’s need and creates vital insight to focus on most profitable customers throughout the life time – from customer acquisition to cross sell to long term retention. We keep our solutions very simple and easy to interpret and are guided with the motto of “simple and elegant “.
For more details on our customer segmentation solutions, please talk to our experts.