Segment to Keep Customers Loyal

Reduce churn by managing your segments.

In order to reduce churn (customers leaving your product behind for a new supplier), marketers should create sales strategies that segment potential customers into groups with similar behavior, demographics or preferences.

According to DMNews, a “well-defined segment is one that a segment manager can understand.”  A manager should be able to observe what a segment is doing and come up with strategies to get them to buy more products.

One important caution for customer segmentation is to steer clear of the urge to use status levels as a  segment.  Platinum, gold and silver levels are based on spending.  However, a customer segment is an entirely different animal.  Segments should be grouped into categories like affluent seniors, families with children, avid pay-per-view sports fans, home office customers, etc..  Segmenting by spending level would lead to selling issues. Everyone would want to be the platinum segment manager!

To define and manage customer segments, your organization should:

• Use your database to do analytics.
  Create customer profiles.
• Brainstorm to identify segments that work and figure out how to modify their behavior.
• Assign segment managers.
• Set up a reporting system based on these segments.
• Give segment managers budgets to experiment with promotions and rewards to their segment members.
• Define reasonable goals for each segment.
• Set up a compensation scheme for success.

One you learn to manage customers in segments, you will see a significant increase in customer retention and far less churn.