Sep 18, 2015


Each of us is a special, unique snowflake. One of a kind. Singular, distinctive, outstanding, remarkable. Beautiful, even. There is no one in the whole wide world quite like you.

Well, at least that’s what our mothers told us. And in her eyes, it’s undoubtedly 100% true. But you know, in some ways, and it may pain us to admit it, we’re kind of like other people too.

The reality of it is that we mere humans can’t wrap our brains around 320 million unique descriptions for every individual in the country. It’s hard enough for our poor brains to remember the names of people we see every day! So to make this mentally manageable, we may place people into certain categories, based on characteristics in which they are similar.

The idea is to come up with the “right” groupings, which depends on our purpose – what we want to use the groups for. [1]I know it’s not related to categorizing people, but apparently, the Sami languages in northern Scandinavia have somewhere between 180 – 300 unique words for snow. So that’s a lot of groupings. And that can be both an art and a science.

In business, this is what we call “customer segmentation.” Segmentation, by definition, simply refers to slicing and dicing a customer file based on one or more characteristics, in order to discover customers that are “like” each other in some interesting way. However, it’s critical to pick the right type of customer segments.

For example, I happen to fall into the category of “people who like Chuck T’s (the original canvas version), the Atlanta Braves, and kung pao chicken, extra spicy.” I also fall into the category of “people with brown eyes who haven’t visited South Dakota.” [2]Someone told me it can be nice there in the summer. You might observe that these are probably not the most useful ways of grouping the typical American consumer. Perhaps if you are contemplating opening a Szechuan sports bar in Sioux Falls, it could make sense for you. [3]If you are, please add me to your mailing list.

So how do businesses typically think about customer segments? Many times, these words are used in the context of list selection for direct marketing. We create segments by dividing the customer base into “people I am going to send this campaign to” and “people that I am not going to send this campaign to.”

This type of grouping can be useful for a one-time tactical purpose, but it is far too granular when it comes to designing a high-level organizational vision that drives your marketing, product, and customer experience strategies. You need a whole different type of customer segmentation scheme when it comes to strategic decision making.

You need to identify whom your best customer segments are so that you can develop strategies to retain them. You need to identify customer segments that are only partially engaged with your brand so that you can create strategies to develop them further. And you need to identify your least engaged customer segments so that you can continue to support them while monitoring, if not minimizing, your investment in them over the long term. Every person in your customer file is in one of these strategic customer segments – and you just need to discover which one they belong to.

Well, with one exception. You, of course, are still a unique and special snowflake. [4]See, Mom was right! But everyone else is in a segment.

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