Relational Segmentation: An overview for revision
This is my revision.
What is segmentation?
- identify your most and least profitable customers
- focus your marketing on the customers most likely to buy your products or services
- avoid unprofitable markets
- build loyal relationships with customers by developing and offering them the products and services they want
- improve customer service
- get ahead of the competition in specific parts of the market
- use your resources wisely
- identify new products
- improve products to meet customer needs
- increase profit potential by keeping costs down, and in some areas enabling you to charge a higher price for your products and services
- group your customers by factors such as geographical location, size and type of organisation, type and lifestyle of consumers, attitudes and behaviour
Relational and loyalty based segmentation segments based upon the level of loyalty and type of connection to the brand.
The diagram below uses a gym example and exhibits relational segmentation based upon attitude, purchase/usage frequency and demographics (age). This is a simple mechanism for segmenting consumers into ‘typical personas’ but may not be strong enough to understand that relationship.
The diagram below further delves into relational segments and proposes the following grid, based upon functional connection and personal connection.
To help segment customers, the following criteria should be used:
Multidimensional & Diverse Relationships (Hess & Story, 2005)
Testimonials – What will the customer say about your service
Willingness to expend additional effort – Will they travel further for you
Advocacy - Will they try to sell your service to others?
Willingness to forgive failure – Showing commitment and expecting it not to happen again
Price Insensitivity – How much more are they willing to pay and why?
Each of these criteria can be graded and segments generated. For customers who fit the ‘committed’ segment, it is further worthwhile understanding exactly what they expect in return.
So what do customers with a committed relationship expect in return?
Relational benefits expected from services (Gwinner et al. 1998)
Confidence - Not to be let down
Social - Friendly communication, good relationships
Special Treatment - Going the extra mile for a special customer
This concludes the post, I hope it was useful! Please leave your feedback below.