Good Customer Segmentation Propels Quality Customer Service

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You have been labeled! You have been segmented!

Believe it or not, we are subject to segmentation on a regular basis. Honestly, I was a little disturbed when I realized that I have been placed in various segments by companies I do business with. Customer segmentation involves dividing the pool of customers into well-defined sections. Customer segments often have the same needs and wants. There are four broad bases of segmentation - demographic, geographic, psychographic, and behavioral.

Nielsen Claritas has developed the PRIZM clusters. PRIZM stands for Potential Rating Index by Zip Markets. There are multiple clusters and they include:

Young Digerati: Tech-savvy singles and couples living in cool Los Angeles neighborhoods like Venice and Silver Lake. They are rich, college grads who like to use gyms, shop at boutiques, and dine at casual restaurants. They also like coffee shops, juice bars, and regular bars.

The Cosmopolitans: Well-educated couples living in fast-growing cities such as Las Vegas and Miami. They are usually older home owners, empty nesters, and college graduates. They like the nightlife and leisurely activates that are around their neighborhoods.

Another common way that customers are segmented is using U.S. Generation cohorts. These cohorts are:

Birth RangeSize
Gen Z1995-201223 million
This generation is highly connected and is growing up in a very sophisticated computer and media environment.
Gen Y (Millennials)1979-199478 million
This generation sometimes is referred to as Echo Boomers because most are children of baby boomers. They hate hard sell and prefer online buzz for marketing in addition to cool events, computer games, videos, and unconventional sports.
Gen X1964-197850 million
The bridge between the tech-savvy Gen Y and baby boomers. They are more pragmatic and individualistic. They really appreciate value.
Baby Boomers1946-196476 million
This generation likes to stay young and uses technologies, services, and products that promise to turn back time.
Silent Generation1925-194542 million
Being active is very important to this generation and they consume products that help them achieve their goals.

The concept of segmentation is fascinating not only because it justifies stereotyping, but most importantly because it is absolutely necessary in order to have a successful marketing strategy. In healthcare, we often do not talk about segmentation because we like to serve everyone equally. In reality, the concept of specialization is very similar to segmentation. Pediatricians provide care for children and geriatricians provide care for elderly. The customer segment for a pediatrician includes people between the age of zero to 18. The customer segment for a geriatrician includes people over the age of 65.

Starbucks has a commuter segment and a captive consumer segment. I am in the Gen X segment in addition to being in the commuter segment. Despite being in a loyal segment, it is surprising that Starbucks can not figure out how to spell my name. Starbucks, I thought we had something special!

Once you start thinking about segmentation, it is very difficult to stop your mind from trying to identify what segments you belong to. In order to provide excellent customer service, I encourage you to identify the customer segments for your business. This is often the first step and it also applies to healthcare settings.

Meanwhile, have you figured out what segment you are falling under for this blog? IU grad student, IU undergrad, professor, headhunter looking to hire MD/MBAs ...

Read about my thoughts about MDs getting MBA here: A Physician MBA from Kelley: Perfect choice for my career

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