Common mistakes in customer segmentation

Customer segmentation is a problem that enterprises often face in service marketing. The service marketing strategy of a company cannot be separated from the support of customer segmentation. However, there are very few companies that are really effective. Chinese companies mainly have the following problems in customer segmentation.

Question 1: Subdivide only for segmentation

This situation is typical of the absence of goals. In the past, there were many such enterprises encountered in corporate consulting experience. Business managers often just realize that they need to do customer segmentation, but after doing the subdivision, they do not think clearly or even think about it. Just being aware of the need to subdivide, it began to divide customers, not to mention what system segmentation methods. Even the subdivided state is not used, nor is it updated. Separation from the goal is often not applied.

Question 2: Segment by product type purchased

This is a way that some companies often use in customer segmentation, and they are segmented according to the products that customers purchase. Such a subdivision method is to affix the customer to the product label and divide the customer through the products that the customer purchases and holds. In some industry sectors, such segmentation will have some significance, but in most cases, this segmented service is more significant than marketing. In other words, companies in this situation are not identifying customers, but identifying products. Such identification methods do not effectively support the customer's service marketing strategy. They are often used to guide internal employees how to operate. Many times The subdivisions inflicted harm on the customer's experience.

Question 3: Customer Segmentation by Asset

This is also a mistake often made in marketing. Businesses tend to think naively that customers with high assets will be more willing to buy products from companies. Some companies often use such methods to single out high-value customers, and then frequently recommend various new products to this group of customers, causing customers to be bothered and even negatively negative. Many companies are affected by financial companies and are also applying asset-based customer segmentation. The problem often found is that even if high-asset customers are found, the services and products of the enterprise cannot be improved.

Client assets have a certain degree of correlation with the ability to pay, but usually do not directly affect the customer's purchase motivation.

Question 4: Customer Segmentation by Natural Time

Some companies simply subdivide in the order in which they first come and go. Just as most wine producing regions will mark the vintage of each bottle of wine, the customers of these companies often appear with years.

Subdividing according to natural time is also considered as one of the common subdivision methods of an enterprise. It is generally applicable when an enterprise performs after-sales service, or estimates the product retention rate or product maintenance cost of an enterprise. Most of the time, it is only used in the verification process of product after-sales service. It is a defensive countermeasure for enterprises to protect their own interests.

Some companies use the natural time of product purchase to estimate the customer's product retention time and update time, which is a good application. But fundamentally speaking, this segmentation is still for the defensive segmentation of the enterprise itself.

Question 5: Segmentation without conducting a study of customer behavior

In the process of providing services and products, some companies have great dependence on customer behavior. However, enterprises do not understand the importance of customer behavior, nor do they know how to analyze, identify, and apply customer segmentation. We often use some simple indicators to replace customer behavior, and even cover up real customer behavior. For example, some investment-oriented institutions will propose indicators of customer risk appetite, but they cannot combine the internal and external factors of customer risk appetite, and find that customers' risk awareness is different under different circumstances.

Failure to effectively understand customer behavior can make companies feel confused when applying customer segmentation and taking countermeasures.

Question 6: Blind customer value segmentation

Customer value is different in different industries and enterprises. Enterprises often do not carefully interpret the meaning of customer value, and blindly subdivide customers in the name of customer value. The external indicators such as assets and high-value products are often used instead of the intrinsic value indicators of customers. There is no doubt that there are many problems with this method of customer value segmentation. More importantly, even if a certain identification problem is solved, it cannot support enterprises to implement targeted service marketing strategies.

The segmentation of customer value usually needs to be conducted in conjunction with actual data and customer behavior research. Enterprises often lack sufficient understanding here, and simply simply monetize their value.

Question 7: Invariable one-time breakdown

There are many ways for Chinese companies to use customer segmentation, but most of them are one-off. Customer segmentation is essentially a continuous process, and more companies are often overly concerned about the results of segmentation, hoping to get a simple and straightforward result through simple methods. This is a good expectation, but it is not practical. This is an important reason why enterprises are not well-informed in customer segmentation, and they are too radical for results.

Author: Shi Yanjun