Avoiding Data Free Segments

The most common mistake made by many distributors in implementing a segmentation strategy is relying on data-free segments. It may seem obvious to segment customers based on company size, industry codes or geographies but in fact, these types of segments are often too broad to be useful. Worse, these kinds of segments are not based on the data that resides deep in your sales history.

Segments should be based not on broad theoretically-logical categories but on realistic categories that take into account how the customer companies interact with you, with their industry, with their competitors and with yours. Something as simple as a difference in the number of different products a customer orders from you can greatly impact your profitability and pricing decisions, even when compared to companies with otherwise identical total volume, region, industry, or other simple demographic trends. A granular approach will almost always generate more useful data and result in fewer customers that fall through the cracks.

Photo credit: Cristina Costa