Benefits of Customer Segmentation Part 2: Business Goals & Segmentation

Mar 7, 2018 | General

Benefits of Customer Segmentation Part 2: Business Goals & Segmentation

In Part I we talked about the need of segmentation for any organization in the business-to- business market. We also took a deep look at the basic definition of customer segmentation and considered some questions your organization needs to consider to start putting your customers into different segmentation “buckets” within your CRM. In Part 2 we’ll discuss the importance of setting business goals for your segmentation. In our third and final part of this series, we’ll get deeper into the benefits of segmentation, explore specific examples of segmentation and discuss how to use your CRM system to get there.

Role of Goals & Setting Segmentation Strategy

Effective customer segmentation is critical for companies to achieve a number of goals such as:

  • Improve customer acquisition strategies

  • Strengthen customer relationships

  • Increase customer retention

  • Improve the customer experience

  • Drive revenue expansion by Identifying and maximize cross-sell and up-sell opportunities

  • Improve products and services to enhance differentiation from competitors

Businesses know setting goals is necessary, but actually going about it can be difficult. When you add that these goals need to be revisited periodically to ensure they are still on target you have an added level of complexity. It’s all too easy to make the mistake of creating a segmentation strategy before setting the goals. In that case you run the risk of either taking your business in the wrong direction or not having the data you need to make accurate business decisions. Goals will give you the direction to stay on target and provide the means for achieving your business ends.

How to Set Your Goals

Effective customer segmentation begins with well-defined goals that establish criteria for success. One example of this is the SMART framework. Under the SMART model a good goal must be:

  • Specific: Great goals are well-defined, unambiguous, focused and clear to everyone.
  • Measureable: Define specific metrics that you will use to measure success.
  • Achievable: The goal should be within reach.
  • Realistic: The goal must focus on something directly aligned with the broader business goals.
  • Time-bound: Without a time frame tied to the, business goals don’t get done.

When there is a need for more detailed market segmentation a technique called MIDAS can be used. MIDAS stands for Measureable, Identifiable, Definable, Actionable and Substantial. The criteria you create with MIDAS and the resulting CRM data you capture will provide a deeper insight on accomplishing your goals.

After Goals What’s Next?

One of the ongoing concerns with CRM systems being able to collect and segment such large volumes of data is what to do with it. The goals that you set above will be the foundation to put place a CRM segmentation strategy. When you identify a major goal like increasing sales in a specific demographic by 15%, then identifying the relevant data to the goal becomes a manageable task. Other non-relevant data can be ignored.

Your specific goals will allow you to be clear about what information you need to collect in your CRM. Take each goal and break it down by the types of segmentation (demographic, product/service benefits, behavioral and psychographic) and identify the segments and values you need to have in your CRM.

Setting business goals and segmentation strategy is not a one-and-done event. As your organization grows and as markets shift your goals should evolve. When your goals change, your segmentation model also needs to change and that will impact what data you collect and how you use your CRM.

CRM technology should also drive change. Your CRM is evolving significantly behind the scenes. Many CRM improvements today are not visible to the end user. CRM systems are increasingly capable of talking with other data systems automatically. Smart logic (artificial intelligence) is being incorporated into CRM systems faster than we thought possible, even just a year ago. Periodic reviews of your CRM’s capabilities in relation to your goals and segmentation strategy will ensure that you maximize the ROI from your CRM.

AspenTech CRM has decades of experience working with its customers to take their business goals and implement an effective customer segmentation strategy within their CRM. If you want to maximize your business success by leveraging your CRM contact us today at (866) 880-4228.

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Related Articles:Benefits of Customer Segmentation Part 1 – Segmentation DefinedCRM Insights Part 4: Artificial IntelligenceBenefits of Customer Segmentation Part 3 – Segmentation Examples & Your CRM