Customer Data Segmentation: Keys to Growing the Top & Bottom Lines Harry Klein Customer Engagement Strategies, Inc.

“Vision without action is a day dream. Action without vision is a nightmare.” -- Japanese Proverb

“Never mistake activity for achievement.” -- John Wooden, retired Head Coach and Ten-Time National Champion, UCLA Men’s Basketball

Customer Segmentation What is it? –Logical, tactical, and/or strategic grouping of customers based on specific characteristics Some Benefits –Improved communications with and about customers –More effective marketing and sales –Improved revenue and earnings performance –Precisely targeted differentiated offerings

Age of the Customer Loyalty is fleeting Customer support is required 24/7/365 Customers want multiple communications channels for interacting with companies Customers want instant responses and satisfaction Differentiation is critical Avoiding commoditization is an ongoing battle for many businesses

Management Response to Age of Customer Become more customer centric: –CRM –CEM (Customer Experience Management) –Calls Centers –Customer Self-Service –Segmentation –Single view of the customer

Problems in the Age of the Customer Confusion due to various customer touch points have different tools for different purposes without consistent look and feel and data Lack of a unified customer view and communication Customer-facing processes and solutions (CFPSs) being deployed without a strategy that encompasses entire customer life cycle Don’t know what do to with data from all the CFPSs Expected CFPS ROI is not achieved

Brand Promises Customers Experiences Business Processes Solution = Customer Engagement Customer “Hot Spots” are where Processes create a disconnect between Promises and Experiences Customer Engagement: The Intersection of Promises, Processes and Experiences

The Four Stages of Customer Interaction Initiation – on boarding new customers Integration – achieving operational excellence Intelligence – new knowledge creation Value Creation – develop new, mutually beneficial opportunities In each stage: Define intellectual, emotional and behavioral goals and a desired end state

Businesses enjoy: –More revenue –Greater customer life- time value –More customer referrals –Customer loyalty –More targeted spends on customer facing processes and programs –More value for their investment Customers enjoy: –Success –Experiences that live up to or exceed expectations –More easily realized benefits –Relationship clarity –Greater confidence in their decisions –Trust in vendor –More value for their investment

Customer Segmentation Strategy #1 Segment customers based on their experience within the Four Stages –Measure customer satisfaction –Measure trouble tickets, support calls, self-service –Identify gaps in customer information

Customer Segmentation Strategy #2 Segment customers based on behavior within the Four Stages –Identify behavior profile of most valuable customers –Identify other customers who are behaving like profitable customers –Identify customers who use/don’t use customer support –Compare satisfaction data with behavior Satisfaction data may not reveal truth in all instances –Customer is “satisfied” but not behaving similarly to other satisfied customers

Customer Segmentation Strategy #3 Segment based on value to your company –80% of company revenue is coming from 20% of customers –Individual customer profitability –Value creation beyond standard offering –Actively refer prospects

Recommendations 1.There are multiple ways to segment customer data – this is not one-size fits all 2.Determine what makes your situation unique 3.Develop the right customer interaction strategy based on intellectual, emotional and behavioral goals for each step of customer life cycle 4.Prepare for segmentation with data collection and careful analysis 5.Segment based on experience, behavior and value 6.Focus the right activities on the right customers at the right time – focus on customer life cycle

Recommendations 7.Track life-time value of customers 8.Look for actions and offers that will improve customer experiences and/or alleviate the negative experiences 9.Ask customers what ONE thing they would change about being your customer 10.Measure – or at least estimate – cost to maintain customers and identify those that cost more than their revenue flow 11.Live the Golden Rule 12.Be proactive

Thank you! Harry Klein W: