In process improvement, the focus is always on the client. the organization lives for and through its clients. Each organization must therefore ask itself about the added value it delivers and make a point of getting to know them and their expectations. I’d like to share some thoughts on knowing your customer base and how you organize it into categories.
If you are dealing with ten or so clients, it is quite easy to know the needs of each and every one of them, so you don’t need to keep reading. However, when you offer products to hundreds, thousands or even millions of clients, knowing them all is simply impossible.
How can I satisfy all my customers if I can’t know them all?
Our mind has created categories, boxes in which you can slide each client. This is a necessary simplification, because we are not able to process large amounts of information. The division of our environment into categories applies to everything we do. It is from these categories that value analyses, strategic choices and business targets should be established. This is the famous segmentation, the basis of all marketing activities.
However, you must keep in mind that segmentation destroys 99% of the information on your clients: no matter how good your segmentation is, it will not be able to adequately cover each individuality. Here are some examples of categories:
- Age (or any other socio-demographic characteristic)
- Level of profitability
- Years of loyalty
It is rare that all my 30 and 40 year old clients have been loyal for 7 to 10 years. So if I categorize by age or loyalty, I would have different results. It is possible to combine several categories, but no one combination will adequately cover all clients. The segmentation must reflect the value I bring to my clients.
Example of segmentation for a Champagne vineyard
The vineyard’s clients are scattered all over the world. The company does not know them directly, as it sells its bottles to wholesalers. Wholesalers sell them to retailers. They are the ones who resell them to the vineyard’s final customers. Traditionally, the winery could categorize each client by region and seek the best development strategies for each region. In fact, this is what is usually done. It could also have a different approach and question the value it brings to each person… In this case, it could to give itself the vision to participate in the success of the festive events. It would then put its clients in categories related to the type of event: evening with colleagues, couple’s outing to the restaurant, life event, corporate … and review its strategy according to its result in the different categories thus created.
Example of segmentation for a financial institution
Beyond the strategies and business targets, the entire work organization should reflect the chosen segmentation. This is what I discovered during my visit to the Caisse Desjardins de Lévis. It is a financial cooperative with 52,000 members.
The Caisse has chosen to create categories by life stage profile: student, employed, retired, self-employed. The offices have been organized to receive each type of customer in spaces that correspond to them. Thus, retired people are welcomed on the first floor. There are rooms with children’s games for members in employment… Teams are trained by customer segment, not by skill set. This way, each team offers all the financial products and services relevant to its target.
We need to find the categories that reflect the value provided. Then you will transform the organization around these categories: strategies, business development, work teams, products and services…