Companies have been using market segmentation for decades to divide and conquer their customers.
The idea: divide customers into subsets with common traits, interests and priorities so that businesses can offer specific, differentiated products to each segment. Traditional segmentation criteria include: demographics (geography, age, education, income level, etc.), psychographics (interests, opinions, lifestyle, etc.) and behavioral which is more advanced (how segments respond to offers based on situations such as time and place).
However, the problem with these traditional approaches is that they are historically based. That is, they don’t take into account rapidly evolving subsets, or project how the individual markets and sub-markets may behave in the future.
To go a step beyond into the future leveraging predictive segmentation can take your organization to the next level. Rather than segmenting based on current status, companies should be segmenting based on revenue and profit potential.
Predictive segmentation leverages observed historical preferences while also incorporating trends and external data such as macro-economic data and social data to forecast how segments or individual customers will evolve as circumstances change. The resulting segments are easy to identify and are discrete, doing a much better job of reflecting real-world variables and offering solutions for the real marketplace.
Customers are not static; they are continually evolving. Using predictive segmentation, businesses can stay ahead of rapidly changing customer trends – and ahead of the competition.