Anthony Tjan’s Harvard Business Review blog post, Approximately Correct Is Better than Precisely Incorrect, perfectly illustrates the value of customer segmentation. Your customers are different, and treating them all as if they were the same results in poorly targeted offers, lower sales, and dissatisfied customers.
The trick is that customer segmentation is hard. Otherwise, everyone would be doing it well! The ideal segments are cohesive (everyone in a segment has similar behavior and preferences) and actionable (you can identify which segment a customer is in and respond appropriately). There are more or less three generic flavors of customer segmentation, and all of them have drawbacks. Continue reading The Hard Road to Good Customer Segmentation