Customer Segmentation

Customer Segmentation ModelA solid customer segmentation is one of the cornerstones of virtually all sales force optimization processes.

In a nutshell, not all customers have the same sales potential, so you can significantly improve the sales productivity of your sales force by having them focus more of their efforts on higher potential and more responsive customers.

We recommend that our clients employ a Visible Proxies to Sales Potential™ approach to customer segmentation.  In its simplest form this approach finds a link between visible customer attributes (e.g. number of doctors in the practice) and sales potential.  The exact steps and the modeling techniques used to achieve this will vary depending upon the following:

  • Availability of Sales Data
  • Level of Sales Data (e.g. customer, account, brick, other aggregation)
  • Availability of Visible Customer Attributes
  • Availability and level of market data

In some cases simple regression models are ideal while in others more sophisticated count model or non-linear modeling techniques give better results.

UK Customer SegmentationCase Study – European Vision Care:

A European Vision Care company had been segmenting their customers based on their own sales.  As a result they had hit a plateau and found it difficult to grow in line with expectations.  The management identified their approach to customer segmentation as one of the key weaknesses of the business.

Cozmix carried out a full customer segmentation re-design.  The client commissioned a survey of their customers to assess the market potential (not carried out by Cozmix).  This was a subset of all of their customers.  In addition, the sales force collected visible attribute data for *all* of their accounts.  Cozmix then created a predictive model which linked the visible attributes to the market potential.  This model was used to predict the  potential for all of the accounts.  The segmentation scheme which was used was a 3×3 grid. Each segment has a letter (A, B and C) to indicate the potential and a number (1, 2 and 3) to indicate penetration or share of the company.  The cell A1 has high potential and high share, while C3 is low potential and low share.

Cozmix then used CallMix to define the desired call frequencies for each segment and then defined the segments in such a way as to balance the planned calls with the call capacity of the sales force.  This was an iterative process facilitated by Cozmix.

The final deliverable had three components:

  • Precise definition for each segment
  • Recommended coverage and call frequency for each segment
  • List of accounts in each segment

In this particular case there was a follow-up sales territory design project, which is often necessary after a change to the customer segmentation.

This methodology has been successfully applied in the US, Europe and Australasia.

Call us today (+1-(321)-251-1300) for a no-obligation discussion about better ways to segment your customers.

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