Note: this is the first post in a three-part blog series on business-to-consumer segmentation. In this post, we will address the five most common B2C segmentation strategies. Stay tuned in the coming weeks to learn more about the importance of setting goals for segmentation and resourcing against segment needs.
This fall, we introduced you to CCC’s latest research initiative on business-to-consumer (B2C) customer segmentation strategies. CCC members, the wait is over—we’re happy to announce the publication of this new research on our website.
Though segmentation has traditionally been a sales and marketing tactic, we find that many customer service organizations also started to segment customers to differentiate support offerings. B2B service organizations led the way, but B2C companies are not far behind.
To address complex customer needs and deliver personalized service in a scalable way, B2C companies often choose to implement service-specific segmentation schemes – or they find opportunities to differentiate service within the constraints of segmentation schemes predefined by sales or marketing teams.
Companies usually select a segmentation scheme that aligns with service-specific goals since schemes are not equally effective at attaining all goals. For example, a segmentation scheme that aligns high-level service with customers that provide the highest value to the company will be most effective at driving revenue goals by encouraging retention of high-value segments. The same scheme might not be equally effective at reducing costs, since high-touch service often requires training and/or hiring of dedicated staff.
We find that most B2C service organizations segment according to customer:
- Needs: This scheme categorizes customers according to similar needs, priorities, or desired outcomes for support interactions. This scheme is most effective against customer experience goals, such as reducing complaints or facilitating low-effort interactions, because it aligns service offerings with customers’ support needs, not just similarities in surface-level characteristics.
- Lifecycle with Company: Customers often require different service levels at different points in their lifecycles with a given company. For example, a new customer might require high-touch service during on-boarding to help ease his or her transition to the company.
- Life Stage: This scheme addresses common needs of customers in similar life stages or facing similar life events. For example, some companies offer high-touch service to youth customers to strengthen relationships with these groups and maximize their future value to the company.
- Value: This scheme groups customers based on their current value to the company. “Value,” in this case,” is defined by customer profitability, product holdings, or loyalty.
- Potential Value: This scheme is often paired with the value-based approach to tailor service to segments with high anticipated future value (defined by future potential profitability or loyalty to the company). The goal of this scheme is often to maximize the future value of these high-potential customer groups.