Segmentation and Customer Loyalty
Using Segmentation to Strengthen Customer Loyalty
May 2009

Segmentation and Customer Loyalty
Using Segmentation to Strengthen Customer Loyalty
By Mike Mancini, Vice President of Data Product Management Nielsen Claritas
Executive Summary Loyal customers are important to businesses because they offer a steady revenue stream, higher profit margins and enthusiastic referrals. But in a down economy, price sensitivity can trump loyalty. To strengthen the bonds with these high-profit potential customers, innovative companies are deploying enterprise-wide strategies built on consumer segmentation. These strategies go beyond the classic marketing applications of segmentation to drive customer-facing aspects of a business. Among the strategies: • Real estate departments select sites based on surrounding population profiles • Stores are remodeled to meet the needs of specific target groups • Customer service departments differentiate their response scripts according to how long a caller has been a patron • Merchandise is fine-tuned to meet the lifestyle preferences of the most loyal customers and those with highest profit potential At Nielsen, analysts have developed a framework for achieving customer loyalty: • Identify the best consumer segments • Create the top target groups and develop detailed lifestyle and behavior profiles • Deploy enterprise-wide strategies that take into account these profiles • Measure effectiveness and adjust strategy to maximize ROI Because this framework crosses functional boundaries, managers may face resistance to their deployment. But a well-executed enterprise-wide segmentation effort can
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strengthen customer loyalty and position a company for even better performance when a healthier economy returns. Introduction Customer loyalty comes in many forms: consumers who wouldn’t think of buying a car from another dealer, shoppers who are on a first-name basis with a boutique store clerk, coffee