Getting granular with customer segmentation.

Our research on revenue growth at large companies suggests that executives should

“de-average” their view of markets and develop a granular perspective on trends, future

growth rates, and market structures. Insights into subindustries, segments, categories,

micromarkets, and even pockets of growth within existing large accounts are the building

blocks of portfolio choice and a critical factor in making sound decisions about where to

compete. In the past few years, the use of advanced analytics to track behavior and

preferences has made it possible to segment markets down to the level of individual

customers. By pursuing mass personalization at scale, companies can lift revenues 5 to 15

percent while also improving the efficiency of their marketing spend and reducing acquisition costs.

One car-rental company used advanced data-mining techniques to analyze its database of driver profiles and trips. Having identified ten distinct customer archetypes, it pulled in data from external sources to build a scoring model that it used to identify drivers in a given city or neighborhood who fit one of these archetypes. By tailoring offers and communications

to individual archetypes, it managed to grow its customer base by more than 10 percent in a year, increasing revenues by almost 20 percent.

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