Why You Need to Revisit Your Customer Segmentation Over Time

customer-segmentation

Nothing stays the same and after a number years a business in rapid growth may experience a plateau or even decline in growth (absolute or rate). When was the last time you looked at your customer segments? Here's why you need to revisit your customer segmentation over time:


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A possible cause for a plateau in your business growth lies in the fact that markets don’t stay the same – customers change, competitors evolve their positions and external influences bring about new market place perspectives.

The issue can be that the way the business segmented its market. If you used response bases generated in proprietary market research when you started out, these may have become irrelevant to the new market place.

So what can you do? 

1. Recheck the response bases

The two commonly used segmentation bases for B2B and consumer markets are:

  • IDENTIFICATION BASES/QUESTIONS, which can identify segments by product requirements, for example, and
  • RESPONSE/ATTITUDINAL BASES/QUESTIONS, which can be more powerful, for example attitudinal can lead to segmentations by purchasing behavior, relationship requirements, brand influence and communications.

Have the identification bases changed?

If you are in the B2B space, have any of the identification bases changed; such as:

  • size of companies
  • growth rates (has the market matured and therefore business growth rates generally slowed from earlier high growth?)
  • location
  • classification codes
  • location.

In consumer markets, similarly, have any of these identification bases changed?:

  • demographics (for example, has the population structure changed significantly – from younger to older!)
  • location
  • life stage
  • socio-economic characteristics
  • product usage

Have the response profile bases changed? 

Response bases underlie why a customer buys a particular product and how a customer goes about buying a product. In the case of business2business, it is about the company’s approach to doing business.

For the B2B sector, have any of these response bases changed?:

  • buying processes
  • distinctive business growth strategies of the company
  • distinctive business competencies (are there new skill sets emerging , such as alternative energy management?)

For consumer markets, response bases might include:

  • brand loyalty
  • benefits sought/desired
  • brand perceptions
  • attitudes
  • motivation (as economies move into recession, people are more motivated by the lower needs in maslows hierarchy of needs)
  • lifestyle
  • purchase behaviour
  • purchase occasion

Conclusion

A contributory factor to growth slowdown or decline, and therefore a potential accelerant for entry into the next level of growth for a business lies in keeping segmentation up to-date and in line with market change. Segmentation bases have to evolve, particularly where key attitudinal and response bases change.

 

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Tuesday, 19 November 2019
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