Pros and Cons of Segmentation

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for other models are less subject to change, so they should be reviewed no more than once a year.


In most cases, segmentation brings advantages:

understanding strategically attractive market segments

understanding the overall health of the base and business: for example, determining the percentage of customer churn

identifying the reasons for the decline in key indicators - for example, a reduction in turnove vice president software email list due to a decrease in the frequency of purchases or the average bill

the ability to focus efforts on profitable segments

the ability to save on discounts for customers who are active and ready to make purchases without additional motivation

allows you to differentiate strategies for positioning, promotion, assortment management and pricing

more accurately predict sales volumes

Disadvantages include the potential for loss of reach due to an excessive desire for personalization and the possibility of missing out on new promising segments if you focus your efforts on previously identified ones.



Segmentation errors
When accessing customer data, analysts and marketers are overly enthusiastic about the patterns they see. In this case, the temptation is great to identify too many segments that will be impossible to manage. The same mistake occurs when there are no clear goals at the start. When identifying segments, it is important to remember what questions the business wants to answer or what actions to take on them.

It is worth paying attention to clustering: the selected segments may either be too similar to each other and have minor differences, or one of them will “fly in” clients who would logically be allocated to another group.

Another mistake is focusing on averages rather than medians. This can also affect the number of segments or clusters.