The Importance of Client Segmentation
Segmentation is about classifying clients according to a precise list of objective criteria. Marketing segmentation helps you to allocate clients in different boxes instead of just one. To each of these segments, the marketer links particular features in order to better understand the different type of customers, this way adjusting its offers and messages. But no one can be summarized by only a box, so the aim of segmentation is to reduce failure as much as possible. And especially to benefit from the efforts being made for its creation and use.
By dividing the client base in many subgroups, you will get slightly closer to the desires of your clients. This leads to 2 advantages, only if you limit yourself to exploiting the segmentation operationally:
- Leverage extra value from the client base through a better communications customization.
- Recruit more clients by making the offer of the company available into different ones, each better suitable to a client profile (would you buy unique size pants?)
Here are some of the criteria that could convince you to start your marketing segmentation:
- When the disparity within your clients is getting more and more obvious during each campaign.
- When you spend twice more time working on your client base.
- When your loyalty campaigns generate at least one hundred thousand dollars per year.
- When your catalog is so much heterogenous that it is obvious that your clients cannot be interested in all your products.
How are Segmentation and CRM Related?
Link your CRM to a detailed and well-designed sales strategy and you will be able to develop, search and award your best clients.
Organizing your clients according to where they are in the sales process will optimize your sales cycle. Companies that succeed understand how important it is to step to the right timing during the decision-making process of the buyer, and to make it as easy as possible for the client.
Here is an example of the way your customers could be categorized by using the typical selling process:
- A lead: it’s a client whom you haven’t talked to yet, but that could be a potential buyer.
- A prospect: it’s someone interested in your product. You’ve already been in touch once.
- A guaranteed prospect: not yet a client, but you are sure that he’s about to buy your product. You simply need to finalize the sale. Segregating the guaranteed prospect of prospect that hasn’t yet received your offer will help you save a lot of time.
- A client: all the people that have already bought your product.
It is as well true that with technology you can compile all sorts of data about your clients. But collecting relevant information requires thought and careful preparation.
The first step through identifying your most profitable client is to know why they buy your product and services. CRM records having account management functionalities that can include a personalized model with which a sales representative can classify by category if the purchase was based on a special offer, a visit, or geographical proximity.
Your CRM system also has to provide for detail describing if the purchase requires or not a follow-up (training or maintenance work, for example), if a minimum contact with the client is necessary, or if there is a risk that the buying will not happen again for a long period of time. This information is crucial because it helps to assess the profitability of the clients through a better control of the acquisition and maintenance costs.
CRM tools are helping you to follow up your key customers in order for them to be automatically lead towards a special page with relevant offers when they visit your website. At the call center, you can even routes your best clients through your customer service or first choice offer in order to provide the best possible service. The same care can be provided to clients that fit within the type of profile that you have targeted even if they don’t represent a significant turnover.
The CRM software can also assess if clients answer better to visits, web offers, online presentations, emailing campaign or other approaching methods. A good start to reduce sales costs.
CRM tools that are adopted by a company is depending on a lot to its size, to the complexity of its IT system, and to the volume of its client base, big enough, or not, to be followed up by a sale and basic turnover report. However, any company that takes the initiative to implement better strategies to benefit even more of its clients will gain something. These strategies are also profitable for clients. They show how the company is worried about them and the way to serve them.
CRM and Scoring
Scoring techniques help you to eliminate customers that are not profitable, this in order to nurture the best ones, assigning a score to each client (like a grade, or a letter—A, B, C, etc.). They complement traditional segmentation techniques.
Scoring helps to reinforce the collaboration between marketing and sales teams. Common definition of scoring criteria is helping to implement common goals.
It has to include both explicit and implicit criteria, as much as compartmental ones that are crucial to identify what motivates the purchase of the leads, like, for example:
- The function or the role of the contact
- The size of the company
- The capital of the company
- The industry of the company
- The type of expected product or service
- The budget allocated to the project
- The expected delivery date
You also have to plan activity or behavioral criteria, like, for example:
- The number of filled in form
- The number of downloaded content
- The number of read e-mails and links being clicked
- The time since the last contact
- The origin of the lead (internet, fair, recommendation, etc.)
- The channel used for the first inbound contact (phone, website form, online ads, etc.).
- Has a specific request been done?
- Has a specific field or type of form been filled in?
Each criteria will be given a number of points out of 100. For example, if you target in priority companies from the agro-food industry with 50 employees, you can assign 10 points to a company with more than 50 employees, as well as 10 points to a company from the targeted sector.
Otherwise, you can assign negative points—for example to a company below 5 employees if this kind of company is not the one you target.
The criteria and points definition step requires collaboration between the sales and marketing teams. The weighting of the different qualification criteria of a purchase probability will have to be reconsidered regularly, in particular after a first experimentation and according to the progress of the market, of your products…
Furthermore, this scoring system can be used for your prospects and clients. It allows you to prioritize leads and clients follow-ups for secondary purchases. For the clients having criteria such as the date of the last purchase, then the time since the last purchase or the average shopping cart is often used.
But the quality of a scoring depends on the chosen model and the relevancy of the criteria that are being used, but also especially on the available customers’ data of your CRM. And the more you feed your CRM with data, the higher the chance for your scoring to reflect the real and updated “value” of your clients.
Also saying, the scoring of a client evolves over time. It is at least as interesting to know the scoring of a client presently than the evolution of the score over time.
Therefore it is important to feed your CRM with recent customers’ data. In particular by using clients’ form, which allow today, thanks to the technology, to get qualified and precise data about your clients:
- Center of interest
- Favorite product categories
- Consuming habits: buying frequency, average shopping cart, etc.
- Behavior among your marketing solicitation (do your clients appreciate receiving offers? Do they think that your solicit them too much? Etc.)
- Immediate and future needs
- Expectation toward your offer
But be careful not to over-solicit your clients, who can easily get bored. Learning on knowing your clients also means to know where to position yourself and be balanced, this in order to not ending up invading them too much, which can sometimes scare people. You would then obtain the opposite effect and risk to lose the ones that trust you.