customer data segmentation: keys to growing the top & bottom lines harry klein customer...

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

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Customer Data Segmentation:

Keys to Growing the Top & Bottom Lines

Harry KleinCustomer Engagement Strategies, Inc.

www.customerengagement.com

“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 unique3. 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 customers8. Look for actions and offers that will improve customer

experiences and/or alleviate the negative experiences9. Ask customers what ONE thing they would change

about being your customer10. Measure – or at least estimate – cost to maintain

customers and identify those that cost more than their revenue flow

11. Live the Golden Rule12. Be proactive

Thank you!

Harry KleinW: 781-559-8202

hklein@customerengagement.comwww.customerengagement.com

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