By: Fred Milman (email@example.com)
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Using Modern Strategic Segmentation for Customer Centric Direct Mail Marketing
In a competitive marketplace companies are vying to stand out and entice customers into using their goods and services. In the past product centric strategies were used and they revolved around features and capabilities of the item being sold. Products that did more were always in a better position to make the sale. The paradigm for direct mail marketing has now shifted to a more customer-centric strategy where the seller must now know exactly why the customer is more likely to buy the good or service before they win the sale. The product or solution must solve a problem the purchaser is likely to have right now. Simply using personalization in marketing communications or some of the digital techniques such as retargeting and onboarding will not work. It means gaining an understanding of the real needs, wants and desires of your customers as it relates to the products and services you offer.
Strategic segmentation is required to meet the customer centric paradigm, using behavioral data on customers for example, like purchases, length of time on the file, number of different product categories bought, returns, etc. with demographic and lifestyle data (both self-reported data the company has captured as well as appended data).
You must create manageable and meaningful number of customer segments that are similar to each other and dissimilar to other customers. A typical segmentation scheme usually has between 4-8 segments. Not only does each segment need to different from the other segments. They will fit a profile that the marketers recognize as having the same needs, wants and desires allowing them to craft communications that will resonate with the recipient’s needs.
The construction of the segments is part science and part art form. The statisticians and marketers collaborate to arrive at a cohesive solution. Different customers will have varying perceptions of your product value relative to your competitors, based on discretionary income. Our strategic segmentation is for a financial services company that sells various forms of life insurance, credit cards, investment products and loans to a base of about 3 million customers. We created a 6 segment scheme that consisted of clusters that were fairly evenly distributed. The segments were homogenous but different from the others.
- Dual Income – 14%
- Empty Nester – 16%
- Upscale Homeowners – 16%
- Average Joes – 15%
- Up and Coming – 18%
- Starting Out – 21%
Each of these segments received different offers, creative and messaging customized to suite their specific needs providing a truly customer centric approach. We built these segments using research from focus groups and quantitative research. It provided us with an understanding of the attitudes each group had toward the company and the products/services it offered. These insights were used to help with positioning and for new product development to help satisfy the needs of each segment.
If you are interested in exploring a strategic segmentation solution for a customer centric marketing strategy, contact us.