Why Customer Segmentation Analysis is Essential

Customer segmentation analysis is essential. No company has just one type of customer. Customer segmentation analysis allows you and your data to capture this reality. Capturing reality is a pre-requisite to using data to make decisions. Each customer segment needs to be understood, marketed to, and tracked.  Download our case study. 
It is time to stop thinking about your “customer” and start thinking about your “customers”. Don’t let your marketing and customer metrics, hide valuable facts and insight in aggregated data and averages. The next level of marketing analytics is to calculate and track metrics for each customer segment. Customer segmentation provides you a window through which to understand why people do what they do. This gives you enormous power when trying to improve customer lifetime value, increase customer loyalty, reduce the cost of customer acquisition.


Customers have different reasons for purchasing, different habits as customers, different values, and different reasons why they are loyal. These differences go beyond customer demographics. You have to get to what truly separates your customers. Otherwise you are going to waste money and time, creating targeted marketing campaigns. However, when done properly customer segmentation analysis can provide tremendous return relative to a one-size-fits-all approach.
Most marketers arbitrarily group customers. This is not customer segmentation analysis. True mathematical driven customer segmentation is very complicated. Customer segmentation is not just about creating arbitrary customer groups. It is about finding the statistically significant reasons, the true reasons, why your customers behave differently. Until now, only the most sophisticated companies could afford to segment their customers.
Using predictive analytics and data science,  CAN is able to help you segment your customers by what truly makes them different, not just what you think makes them different. All we need from you is your accounting and customer data. Learn how we keep your data safe. We can typically produce results within 30 days, and have our results implemented within 60 days.
The results of customer segmentation can be counter-intuitive. This is because results of customer segmentation are based on data and math, not culture biases or your biases. We recently did a customer segmentation study for a health insurance company and found some interesting results.

  • When men are the primary healthcare provider in the family, a family uses more preventative healthcare, and has less emergency healthcare expenditure. When women are the primary healthcare provider in the family, they use less preventative healthcare and more emergency services.
  • There is statistically no difference in loyalty, profitability and healthcare usage patterns between men and women once their kids grow up and leave their house. This helped our client save money. They no longer needed to create two unique marketing campaigns. One was enough.
  • Young bachelors are more loyal to their healthcare provider, than young bachelorettes. Who would have thought that a 22 year-old man is more loyal than a 22 year-old girl.

Customer segmentation provides you insight into the unique stories of your customers. It allows you to create marketing campaigns that intersect customers at the right point in their story. If done properly, you will target each segment based on their customer story. What channels will you use to reach them? What should you offer them? How should you sell them on your brand? What discounts, coupons and incentives will you provide them?
Be Brave! Go beyond one-size-fits-all marketing and customer metrics. If you are going to make data-driven marketing decisions, you need data that reflects reality.
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