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How to segment customers into ‘1% clubs’ to boost satisfactionCustomer segmentation is nothing new. Marketers have been doing it for years. But nowadays there is so much more data being captured, and making sense of it is the key to optimising performance. 

You can’t please all of the people all of the time, but you can delight a good proportion of them. You just need to find out what makes them tick. 

To do this you can create a bunch of ‘1% clubs’. Slice off the top one percent of customers in any given area (e.g. by value, or by engagement). Monitor these groups, treat them differently, experiment, and learn from them.

Here are seven ideas to help you get started...

The 1% most engaged

The more engaged a customer is, the more likely they are to buy, share, recommend and remain loyal. As such it is worth knowing who they are. They probably care about your brand more than most, and as such they’re not going to be shy about telling you what they think. They can be very useful for product development, crowdsourcing and cheerleading.

The 1% most responsive

You could file this under ‘engagement’, along with dozens of other things, but it’s worth looking at in isolation. Try to identify why people respond to your campaigns. Email open rates might be largely dependent on delivery times, or subject lines, but are other factors at play? 

The 1% most valuable

It goes without saying that these folks should receive special attention. You probably know who a lot of them are already, and you should be trying your hardest to keep them happy. What makes these people tick? What are the common characteristics of your most valuable customers? How did you acquire them? What do they need to stick around? How can you find more customers like them?

The 1% most price insensitive

Not necessarily the most valuable, or the most frequent buyers, but those customers who think nothing of splashing out on the best products. Segment these customers. Create dedicated marketing campaigns for them. Try to figure out how to make them purchase more often.

The 1% most influential

Who are the real power users among your customers? Apple can count many influential people among its customer base. When influencers like Stephen Fry passionately describe products like the iPad as “soul-scorchingly beautiful”, people like me sit up and take notice. Wrap up your influencers in cotton wool and make them feel special.

The 1% most mouthy

It’s a good idea to try to identify those customers who make the most noise (which comes in two flavours: good and bad). These people can help or hurt brands, depending on the decibel level, the frequency of shouting, their connectedness / network, and how borderline crazy they are. 

The 1% most unprofitable

Now this one is slightly controversial but I do not believe in ‘customer service neutrality’. Surely the best paying, most profitable, least bothersome customers should attract a higher level of customer service? I’ve heard of firms that actually reduce customer service levels for unprofitable customers, and I think it makes plenty of sense to push these people in the direction of your competitors (how you go about that is your own business). 

Creating niche groups can help you understand how to influence wider customer behaviour. Remember to start by benchmarking the absolutes (numbers of customers in any given 1% club, average customer value, satisfaction levels, etc) and define some targets / goals.

I’m sure there are plenty of other ideas along these lines – please leave your own suggestions below.

[Image by Beta-J via Flickr, various rights reserved]

Chris Lake

Published 22 October, 2010 by Chris Lake

Chris Lake is CEO at EmpiricalProof, and former Director of Content at Econsultancy. Follow him on Twitter, Google+ or connect via Linkedin.

582 more posts from this author

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John Courtney

John Courtney, CEO and Executive Chairman at Pay on Results SEO, Content Marketing, Social Media, Digital PR, PPC & CRO from Strategy Digital

A good extension of the old 80/20 rule, worth working hard on to develop a profitable business.

almost 6 years ago

Ian Barnes

Ian Barnes, Director at Praeparo Ltd

I don't think your last point is controversial it is all too easy to loose track over time of where the money comes from. We went through a similar exercise a few months back as we believed our least profitable/high maintenance customers were burning too much time that would be better used on getting new customers and upselling/servicing existing.

almost 6 years ago

Rob Mclaughlin

Rob Mclaughlin, VP, Digital Analytics at Barclays

Excellent post Chris - I like your approach to the benefits of customer segmentation...based around understanding the specific behaviour and experimenting to find the best way to communicate with them.

Also, you show a great maturity in your understanding of segmentation - for segments to represent powerful vains of customer behaviour they need to be focussed ie. if it represent more than circa 1% of your audience then it is liekly too broad

almost 6 years ago

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Steve Mills - Marketing Consultant

Great site, really informative articles. Steve Mills Marketing Consultant

almost 6 years ago

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Depesh

Good article Chris - we all need to start somewhere when thinking about Segmentation - you'll not always get it right first time so failing fast and small with a 1% segment will have less impact on your business and if it takes off, grow it and expand...

almost 6 years ago

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Robert Piller

Great article.  We are taught about the 80/20 Rule-- but I like your 1% Rule as the next step in identifying the right customers.

almost 6 years ago

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Jen Del Carlo

I like the idea of the 1% approach - generates focus and likely some enthusiasm too.  However, did want to point out that this approach is more of a marketing strategy rather than segmentation, as it leaves 99% in the one other segment!  What may be helpful here is to apply this approach within an existing segmentation - take your priority segments and do a deep dive on each of them.  Find out which 1% idea works best for each and use that to create some buzz in the market, better relationships with key groups, and hopefully direct impact on business results.

almost 6 years ago

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Charlotte

Just trying to do this with my Twitter account using a tool I just discovered through the Kissmetrics blog called Formulist.

over 5 years ago

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Andrew Ludlam - Marketing Consultant

Great article, and one that dispells a few myths. Focus on the few and not the many. Whilst we're all aware of the 80/20 rule, in reality it's much closer to 99/1 - especially in today's ever crowded market place.

almost 5 years ago

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