Typical Customers Don't Exist

At least not in the way you used to think about them.

For many companies that have lost touch with their customers or don't have penetration within the companies they do business with, that is a problem. In that case, access and attention can be expensive.

You know how that goes, you're looking to sell your stuff to people who meet certain criteria. You even have a persona created to represent your typical customers. Do a reality check on that.

Marketers have been using segmentation to target specific groups, and allocate marketing budgets to best results, for a few years now.

Many experts have articulated traditional segmentation as a method that focuses on identifying customer groups based on demographics and attributes - for example, attitude and psychological profiles.

There is however, a way to do segmentation that is value based. This looks at groups of customers in terms of the revenue they generate and the costs of establishing and maintaining relationships with them.

Customer value based segmentation activities include things like:

• deciding what data to collect and how you will gather it
• collecting and integrating data from many sources
• developing methods to analyze data
• establishing effective communication among marketing and customer service, for example
• implementing apps to deal with the data effectively and respond to the information it yields

With social media integrated in the listening and communication process, you might gain greater insights into what customers are thinking and doing. You may be able to integrate information that will:

• enable you to create or extend product/service offerings
• allow you to determine the profit potential of each segment based on and compared to your operational ability to deliver
• understand how to make better marketing and pricing decisions
• create scalable offerings/pricing based on segment needs

Because today customers will not go back to being anonymous masses you can market at, and because as a company you may not have the luxury of such a fat marketing budget any more, you need to invest in the right kind of tools that will put the information at your fingertips, when you need it.

This means that your IT group will need to learn to support new tools. The emphasis on customer intelligence is being felt at every level of the organization in many if not most businesses. Today, you can learn about your customers in real time.

Which is why LinkedIn is now offering a profile organizer that starts to make the tool look more like CRM and Salesforce.com is offering social integration with chatter (slated for 2010 roll out).

While typical customers don't exist anymore - we've all become individuals, especially thanks to online access - there are now more ways to learn about who your customers are and what they want and do. If you invest time and attention in capturing the data and doing something with it (the doing part is especially important).

Typical customers don't exist, but sure enough, companies are trying to push us back into those segments and categories. This is one of the reasons why businesses salivate over user adoption of mobile apps. Push people to a predetermined interface, and you can give them a menu where yours is one of the names on the list. There's a similar rationale with Facebook.

Social networks can reveal a whole lot about communication patterns while they gather other data. Apps can funnel in customers who would otherwise roam the vastness of Web URLs unchallenged - and unpredictably. The money is on the predictability. Attraction doesn't look so good on forecasts - and can be damn near fatal in some cases.

We're barely scratching the surface in the social CRM application, of course. And with the wealth of information collected, will come greater responsibility, in privacy protection, for example. For now, remember that, when in doubt, the term "relationship" can help here - just ask!

There is a wealth of useful information on CRM. And a community deeply engaged with the topic. My point is that typical customers don't exist anymore. There is a whole lot of data online, embedded in interactions. You now have the opportunity to dig deeper.

Today, you've got to approach customer intelligence - how shall I put it? - more intelligently. 

Case study on great use of CRM: see what this Indie band did with Salesforce.com.

© 2006-2009 Valeria Maltoni. All rights reserved.

Comments

[brindey weber]

Hi Valeria! Great post! I have a question about segmentation. Traditional segmentation was based upon, as you say, things like psychological profiles that told marketers what factors were important to clients when making a buying decision, yes? If you instead segment people into groups by value, it better allows you to target your efforts to where they are best received. (I spoke with Mike Volpe of Hubspot on this two weeks ago- he's brilliant.) However, here is my question: if we now took away our organization of people by how they make buying decisions, then we no longer can apply those principles for blanket marketing efforts on our segmented groups.....but now that I think about it, I do believe that is a good thing. Raising a glass to "customer relationships."

[Valeria Maltoni]

Bridney,

I like how you talked yourself into and out of the question within the same comment. Focusing too finely on what a "typical" customer will do will make you miss what the customers in front of you are actually doing.

[brindey]

Haha. Thanks, Valeria!

[patmcgraw]

Valeria,

Great post - I especially liked this statement:

"...invest time and attention in capturing the data and doing something with it (the doing part is especially important)."

Too many companies are capturing data without understanding why. Instead the go sifting through data in search of gold - and the end result is analysis paralysis. You have to define the rules of the game up front - what question do you want to answer? What information is needed to develop your answer? What sources are acceptable for gathering that information?

Without this upfront work, you lack focus and invite waste.

[Valeria Maltoni]

@brindey - thanks for stopping by.

@Pat - we have too much data and too little understanding of how to use it and validate if it's the right kind of data in the first place. I agree with making decisions early on. In a way, the ease with which we can collect data has made us lazy on planning.