Braintrust Query: Why Does So Much Customer Segmentation Analysis Lead to So Few Results?
Through a special arrangement, presented here for discussion is a summary of a current article from Cultivating Your Customers, the M Squared Group blog.
As I recently thought about customer segmentation analyses I have worked on over the past 10 years, I realized that the actual segmentation initiative has succeeded in fewer than 50 percent of those companies.
While many analyses were deemed successful by identifying clear and distinct segments, truly successful initiatives are characterized by specific actions that will add value — clear, identifiable customer value.
There is a wide range of reasons why organizations are resistant to implementing customer segmentation initiatives. These three reasons represent some of the greatest barriers to driving customer and company value out of customer segmentation:
- Mismatch Between Metrics and Desired Behaviors: If company metrics are quarterly-based or, even worse, monthly-based, employees will be unlikely to focus on initiatives that can yield higher returns in the long term. Since segmentation increases marketing costs (creating different offers, creative, etc. for each segment), and the returns may not come for several months down the road, you see the problem.
- Conflicting Priorities: A segmentation initiative may be the top priority at the outset, but over time other projects appear more important. Enough short-term projects falling one right after another may cause segmentation to fall off the list entirely. Since segmentation at the beginning is an unknown, and workloads are already high, the project is often delayed in order to "make the numbers, now."
- No Repeatable Process: If no process exists for evaluating marketing programs on a regular basis and the segmented effort is also not measured, then the effort as a whole is doomed to fail. If you do not determine that segmentation is successful as a strategy, why should you repeat it?
In addition, segmented marketing programs are more work the first time around. The only way they get easier is if you plan for multiple versions and then put the work into its time slot. When a marketing department is either overwhelmed or just basically reactionary, any approach but the simplest goes by the wayside in the name of expediency.
And there goes segmentation…down the drain.
So if you are starting a customer segmentation initiative, or find yourself in the midst of one right now, you should take a few minutes and examine these three factors to see if they apply in your organization. More often than not, they will.
What are the reasons organizations are resistant to implementing customer segmentation initiatives? What’s the best way to overcome such hurdles?