The Marketing Book 5th Edition

Market segmentation 267

Although CRM involves more than a software
package, in practice, many organizations
either selling or buying CRM ‘solutions’ tend
not to venture much beyond the more narrow
IT approach. The chapters on relationship
marketing and CRM explore this issue further,
but for the sake of our segmentation illustra-
tion, the software deployed is described as a
CRM solution. As Figure 10.2 shows, the
software produces a Venn diagram showing
the number of customers who have purchased
Account Types A, B and C; 39 426 people have
account A only, and their names and addres-
ses are quickly displayed (these are obviously
‘scrambled’ for this exercise). This is a poten-
tial segment for a cross-selling campaign con-

cerning another of the company’s products,

say Account Type B.

The company could target these customers

immediately, with a promotional offer for

Account B. But this would undervalue customer

and transactional data as an asset. In addition,

the company would also want the highest return

on marketing investment. As we have already

mentioned, it is increasingly important to satisfy

that strategic criterion for segmentation which is

concerned with financial returns.

If the company mailed all 39 426 at, say, £1

per piece, the spend would be £39 426 uni-

formly across the target, missing the opportu-

nity to ‘gravitate’ spend towards more profit-

able groups. So, instead, the company could

Figure 10.2 Software for segmentation metrics