Jan Davis, Partner and Board Member, Market Vue Partners

So why DO we put time and energy into segmenting our customers? I can think of three great reasons:

1. We want to identify customers with the highest propensity and potential to buy more of all the goods and services we offer. By looking at past behavior with us, we can divide our customers into groups who have historically shopped with us more or less often and spent more or less. Using behavior and demographic data from outside sources, we can determine their capacity to buy more.

2. We want to make different offers to different groups of customers. Here we are looking for differences in interests. Do some of our customers primarily buy shoes while others buy accessories?

3. We want to identify the characteristics of best customers so we can go find more like them. Here the data requirements are different. It’s wonderful to know your best customer shops with you four times a year, spends $150 per transaction and has been your customer for four years. But how do you find more like her?