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Segmentation, segmentation, segmentation

This post - Segmenting Customer Support Services Yields Higher Financial Returns, Says ServiceXRG - caught my eye over on the Tekrati weblog.

"Customer service programs and practices based on customer segmentation yield higher support contract value and performance"

This is not just true of customer support but of any interaction with a customer that might yield profit - check out a previous post on this topic. Any time you can use the data you have about customers, or third party data you can integrate, or predictions about their likely behavior in the future, to segment them you are likely to make better decisions about how to treat them and thus make more profit.

"less than one-third have formal strategies in place to segment customers based on service needs"

Terrifying. What are the rest doing - guessing? I suspect that, in most companies,  some aspects of how customers are treated are segmented but that many are not. Even if they are doing segmentation, I wonder if they are applying it every time their interact with a customer - even if that interaction comes on the website, by email, in the monthly billing cycle or on the phone? I suspect not.

A decision-centric, or EDM, approach would make it clear where you should embed segmentation rules and would encourage the use of analytics to develop those segmentation rules. This is not rocket-science, indeed it is perhaps the ideal starting point for EDM - identify a customer interaction where you have multiple options and build a decision engine for that interaction, driven by rules and analytics (especially around segmentation).

Tom Sweeny, a Principal at ServiceXRG, gets the last word:

"Getting to know who your customers are and what they need and expect from you is the critical first step in developing a long-term profitable relationship"

And improving the precision of your interactions by embedding this knowledge into a decision engine could well be the second.

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