But defining the objective(s) still isn’t enough. You must also be clear how segmentation will help and what criteria it would need to meet to be helpful. For example, we might say that our objectives are to:

1. Deliver a better experience to customers by tailoring it to meet the exact preferences of different segments

2. Communicate more effectively with customers through segment-specific messages.

As we identified last time, there are many ways of dividing customers into groups but most of them will not help us to make customers more satisfied. Since the definition of a great customer experience is one that meets our customers’ needs perfectly, a segmentation exercise would fall at the first hurdle if it didn’t improve our understanding of customers’ needs and preferences. A really deep dive into customers’ preferences and the way they make choices will almost always demonstrate that your customers are not all the same and will provide a basis for dividing them into groups that would enable us to develop segment-specific experiences that would improve customer satisfaction. 

Many segmentation exercises pass the “understand” test by doing lots of research, gathering loads of data and using it to divide customers into groups labelled with catchy names based on characteristics the data say they share. This will often enable the organisation to design several experiences or levels of service calculated to appeal to different segments. But that’s of little business value if you can’t identify which segments your real customers fall into. You therefore need to ensure that any deep dives into understanding customers’ needs and preferences also gathers detailed profiling information that will enable you to identify which segments your real customers belong to.

Sometimes this will be easy. A tour operator, for example, might profile its customers according to family life cycle with such categories as young singles, young childless couples, young families, families with older children, younger empty nesters, older singles, older couples.

The final usability test for a segmentation exercise is “reach”. If you have divided your customers into identifiable groups and you understand their differing needs and preferences you will be able to design segment specific offerings that should improve their satisfaction – but only if customers know about the different product or service offerings and have opted for the most suitable one. To make this happen you need to be able to communicate the right offerings to the right customers. And since customers' satisfaction is often based on perception as much as reality you must continue to tailor ongoing communications by segment.