Customer segmentation is a big issue as companies look deeper at their existing customer base, and as Graham points out, not only are companies needing to readjust their strategic initiatives and sometimes entire operational models, the data that they have in their database may not mean what it meant just a few months ago:
The recession has resulted in a number of companies having to change their ‘business operating models’ and to switch their emphasis. Sometimes this can have unintended consequences . For example, talking to one telecoms executive, his company’s emphasis has changed from acquiring new customers, to retaining the ones it already has. This is quite a change for the telecoms industry, more used to spending huge sums of money acquiring new customers to replace the ones that it lost the previous year, than to keeping existing customers. This change applies to many other industries too.
As the recession evolves into something more frightening, I am sure that there will be many more of these ‘phase changes’, as businesses switch from their current operating model to a different one.
The difficulty with changing the emphasis from customer acquisition to retention, is that it requires very different business capabilities. Acquisition is generally done through mass marketing campaigns to the market as a whole. What is generally on offer is a bundle of product, service, even experiential components, that are almost identical to what competitors are offering. The emphasis is on competitive intelligence and mass marketing capabilities. Retention on the other hand is mainly done with a combination of mass-customised follow-on offers to individual customers based upon their recent behaviour. The emphasis here is on customer analytics and mass-customised marketing capabilities. Making the switch can be very difficult, as although most companies already have these new capabilities, they are not always there in the right quantities to deliver against management’s change in emphasis