How are you segmenting?

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I once helped a company which made several different products and offered many different services build out a Voice of the Customer (VoC) program.  Here were two mistakes they were making:

Their first mistake was that they defined their Customers by their own products and services.  One of the important concepts in your VoC program is differentiation between your segments.  The different types of Customers you sell to have different needs, different experiences, and different attitudes about what constitutes good CX.  But how you differentiate matters.

This organization had distinct and broad categories of products and services, which, the bigger you get is inevitable.  You may have so many segments that it’s unreasonable to differentiate too much (or at least to categorize and lump together certain like segments).  But, it’s important to segment your Customers because one size truly doesn’t fit all.  And we’ll get to what to do with the segments in a minute.

Here’s the problem they had: 

They segmented their Customers not based on anything about the Customers, save for which product they bought.  Let’s say, for the sake of argument, they offered a number of different products.  These products could be categorized into three types of functional categories:  a couple products fold paper; a few cut paper; and a couple more are types of organizers.  All these fall into the overall category of “office supplies,” but they can be sub-divided this way.  (This is just an analogy for example.)  So what this organization had done is to segment their Customers based on whether they bough folding machines, cutting machines, or organizing machines.  This way of segmenting their market was wrong for a couple reasons:  First, it’s company-centric instead of Customer-centric.  Surely the feedback was taken seriously, but the spirit in which the feedback was solicited wasn’t grounded in wanting to know more about the Customers, but rather wanting to know more about themselves as a company and their products.  Secondly, what if a Customer purchased more than one product?  In an instance where someone bought a folding machine and a cutting machine, he’d receive two surveys.  Inefficient, and an annoyance to the Customer.

The better approach would be to segment the Customers based on attributes about them, rather than simply what they bought.  There are actually many choices here too:  the frequency with which a Customer buys; the issues the Customers are trying to solve (why they bought); who the Customer is (commercial or consumer, non-profit or for-profit, one-time or habitual, etc.); perhaps (if it’s pertinent) regions; or many other aspects of the Customer base that vary in ways other than simply how the company makes its own money.

The second major mistake they were making was that they didn’t even differentiate between the questions they asked between these (improper, company-centric) segments in the first place.  What made the nature of their lack of proper segmentation more vexing was that they weren’t even changing what they were asking of their Customers in their surveys between the segments they had developed.  The surveys were exactly the same no matter what the Customers’ interactions were with the company.  Some questions didn’t even make sense because they didn’t apply to all the products the company sold (i.e., “How’s it going with your folding?” might go out to a Customer who’d bought a cutting machine).  The result was something that was consistent, but not useful.  The desire for this consistency was at heart that the leadership of the organization wanted a standardized measure with which to compare the performance of each product division.  The irony here was that the bosses could compare the scores between the divisions, which was gratifying for them, but if any division wanted to actually improve the score (and compete against the others, by the way) they’d have less insight into how to do so because the VoC program wasn’t built around how they interact with their Customers.  Naturally this led to score-chasing rather than experience-improving.

The solution is to view things from the Customers’ perspective.  Even in the development of a VoC program itself, the questions we ask (and how we ask, and whom we ask, and how frequently we ask, etc.) should be driven by what’s important to the Customer in the first place.  It’s kind of meta, if you consider it:  We’re asking the Customer how we can improve.  But before we can ask how to improve, we have to know enough about our Customers to know what’s important to them in the first place. And that requires curiosity about and awareness of what types of Customers we have.

(Originally Published 20200715)

– LtCol Nicholas Zeisler, CCXP, LSSBB, CSM
– Principal, Zeisler Consulting

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