Computerworld - The more you know about a customer - age, gender, what he owns, what he spends and what his preferences are - the more likely it is that you can create and pitch a product or service that will hit a bull's-eye. Identifying and interacting with your customers in ever-smaller groups is a tantalizing prospect - and now easier and more cost effective than ever, thanks to the Web and other technological advances that gather, store and sort customer data.
"In the earlier days of market segmentation, some sociodemographic information was known, but it wasn't actionable. Now, it's radically refined into thousands of segments, and it tells you things about class culture, how they behave with their wallets and how to reach them," says Mike Riley, a vice president at Mercer Management Consulting Inc. in New York.
For example, among credit card issuers, Capital One Financial Corp. is a leader in applying information-based marketing that is based on hundreds of variables to identify thousands of customer segments and devise offers tailored to these segments in terms of interest rates, credit limits and interest-free periods, says Riley.
The Falls Church, Va.-based company then tests and evaluates the results, a strategy that has paid off in helping Capital One grab market share from bigger credit card issuers, says Mercer Vice President Nick Winter. While many firms gather data, most don't take time to study the results in detail and make cross-comparisons, he says.
By contrast, Citibank in New York uses traditional "push" segmentation (separating customers by demographic criteria, such as high income), while MBNA Corp. in Wilmington, Del., uses affinity segmentation (segmenting by common interest groups like professional associations and sports teams), a Mercer case study notes. NextCard Inc. in San Francisco uses self-segmentation, allowing customers to configure their own credit cards' terms.
One of the challenges organizations face in fine-tuning marketing campaigns is that the relationship between a company's IT staffers, who mine the raw data, and the marketing folks, who need it to make informed decisions, is often contentious, experts say.
In some instances where there's a particularly deep rift between these two groups, IT staffers are even regarded by their business counterparts as "data Nazis," says Riley.
"Business unit [staffers] say IT tries to control the process in a way that is unproductive," says Riley. "Instead of 'thou shalt do,' business units want IT to provide a set of standards and analytic tools as a foundation to rely on."
Tom Connellan, a partner at Performance Research Associates Inc., an Orlando-based marketing consultant and co-author of e-Service: 24 Ways to Keep Your Customers When the Competition Is a Click Away (Amacom Books, 2001), says, "The key role for IT staff is looking all the way down the value stream to see who the end customer is out there and how can I work with my internal partners to create value for that customer at the end of the value stream? For some, this is a real mind-shift, because IT is technology-centric, not customer-centric."
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Future Focus: What's Coming in Enterprise Mobility Management (EMM) Find out why Enterprise Mobility Management (EMM) solutions that are truly future-ready must be designed to enable Machine-to-Machine (M2M) capabilities and much more.
- The CIO's Guide to Enterprise Mobility Management (EMM) This guide will help those making an EMM platform decision make the best choice for their organization.
- Yankee Group: BlackBerry Results Refute Rumors of its Demise Yankee Group: BlackBerry® is stronger than the press makes it out to be.
- Your New EMM Platform: How to Streamline the Migration Smartphone migration can be resource-intensive and challenging. Find out how outsourcing the process can save significant time and money.
- Live Webcast Increasing the Value of Your Reports and Dashboards Learn how incorporating other analytical capabilities such as predictive modeling and visualization can increase the value of your reports and dashboards by providing...
- Testimonial: Cystic Fibrosis Trust Peter Hawkins, the Head of IT for Cystic Fibrosis Trust, discusses the role CommVault's Simpana software platform plays in improving the company's information...
- Increasing the Value of Your Reports and Dashboards Learn how incorporating other analytical capabilities such as predictive modeling and visualization can increase the value of your reports and dashboards by providing... All Management White Papers | Webcasts