Introduction to Customer Profiling (aka Segmentation)

 

 

There are typically two approaches to customer segmentation (or profiling). These are Demographic Segmentation and Behavioural Segmentation.

Demographics and characteristics

These are characteristics such as marital status, gender, age, or even information about whether the person reads an Economist magazine.

This type of characteristics might be important for someone selling advertising, or even deciding on content of a website. Demographics are important typically in the first stages of an online project.

 

Behavioural segmentation

Behavioural Segmentation of about user actions, behaviour. It seeks to find answers to questions such as:

– will customer visit again

– will customer buy again

– will customer respond to a given marketing campaign

– is the customer likely to renew or cancel subscription

– is the customer satisfied with your service, and so on

 

Which one to choose?

Behavioural data is usually a much better predictor of your future relationship with a customer than demographic data will ever be. Understanding customer behaviour is crucial for  example in a situation where you are interested in making your customers to buy more, or when you want to avoid customer churn.

The best, and most actionable insight you will achieve if you combine demographics and behavioural data.

 

 

Introduction to Customer Profiling (aka Segmentation)

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