Customer Segmentation Methodology

A reader of the previous post asked "What is the best ways to define your customer segments?"

In order to implement a Customer Segmentation Methodology managers are required to:

• Divide the market into meaningful and measurable segments according to customers’ needs, their past behaviors or their demographic profiles
  
• Determine the profit potential of each segment by analyzing the revenue and cost impacts of serving each segment
  
• Target segments according to their profit potential and the company’s ability to serve them in a proprietary way
  
• Invest resources to tailor product, service, marketing and distribution programs to match the needs of each target segment
  
• Measure performance of each segment and adjust the segmentation approach over time as market conditions change decision making throughout the organization

This is an effort that takes time and resources but it reaps cuts marketing costs for Product Development, Marketing, and Service while improving revenue results for sales and marketing.