Strategic segmentation: getting the most of customers

Having met several chief executives individuals during the last five days in South Africa, I got insightful feedback on one of our core business lines in most of the current engagements in mobile operators across Europe and Africa: Strategic Segmentation.

While these managers told me that they were always jumping on the bandwagon to try the latest and greatest management tools, they never leveraged on what I think is one of the most powerful strategy development tools:  customer segmentation. Please find next some real examples of strategic segmentation projects:

Customer segmentation has been around forever, and many companies have used it as a marketing tool.  But in our experience, few get the bottom-line results that they should.  And since most agree that all elements of a good strategy—from product design to pricing to distribution to competitive positioning—should in some way derive from the goal of meeting the key requirements of target customers, customer segmentation itself is a critical tool for strategy development.  Why, then, do many companies not see bottom-line results?

Most often it is because the output ends up being interesting but not actionable, or the results are used only for limited marketing purposes, not as a strategy tool to guide the entire organization. Segmentation divides customers into groups based on the underlying needs or characteristics driving their purchase decisions.  Truly distinct customer segments respond to different value propositions and require different strategic approaches. When properly used, segmentation helps to allocate resources throughout all levels of the operator to create value propositions that uniquely serves the target client’s clusters.

Customer segmentation is at its most powerful when used as a fundamental part of the strategic process, instead of just as a marketing tool. A sound segmentation allows operators to choose from the vast spectrum of potential clients and focus on the distinct clusters that the operator is best suited to serve. After aligning the organization to serve these clusters, the marketing departments will be able to define a differentiated and defensible value proposition which its competitors will have difficult emulating.

Nice reading
Best, CVA. Flying from London to Madrid