By Arthur HughesVice President, KnowledgeBase MarketingAuthor of Strategic Database Marketing, third edition (New York: McGraw Hill, 2006)
Customer segmentation is essential to successful direct marketing. Segments are groups of customers with similar interests in your products or services, which you have created based on their demographics and lifestyle. Your messages to customers in each segment should reflect these differing interests if you want to find a receptive audience. You would not send the same message to senior citizens that you would to college students. Empty nesters or families with young children will respond better if you target messages that are relevant to their needs, interests, and lifestyles.
An ideal segment is one which:
Has definable characteristics in terms of behavior and demographics. For example, retired couples, business travelers age 30 to 60, students, families, and number of employees. Business customers should be segmented by SIC code, annual sales, and number of employees.
Is large enough in terms of potential sales to justify a custom marketing strategy with appropriate rewards and budget.
Has members who can be motivated by cost-effective rewards to modify their behavior in ways that are profitable for your company.
Makes efficient use of available data to support segment definition and marketing efforts.
Can be measured in performance, with control groups.
Justifies an organization devoted to it. The managing organization ...