How Slicing & Dicing Customers Led to 20% Growth (No Actual Customers Were Harmed!)

In today’s competitive market, focus will always win. In a tough climate, while your competitors are running around with a scattergun, taking the road less travelled and executing a plan against sniper rifle like focus, will ensure you are maximising your business resources against the areas that will have the most impact!

One of the most effective ways to create laser focus is through customer and category segmentation. By breaking down your broader market into focused, prioritised groups, companies can tailor their strategies to better meet customer needs…delivering a sell story that is more compelling & relevant.

A segmentation strategy will also help you better leverage your companies signature strengths, optimise marketing efforts & communications, and ultimately increase revenue & market share. In fact, we’ve seen businesses that have implemented segmentation effectively, reporting up to 20% growth in sales, by focusing efforts in the areas that they are best placed to win. And in turn, taking focus deprioritising others.

Slice & Dice: What is Customer Segmentation?

Customer segmentation is the practice of dividing customers into distinct groups based on shared characteristics based on past performance, future growth opportunity & defining customer needs & roles.

But a customer, is a customer, right? Surely, every customer is valuable? Yes, but what most businesses don’t appreciate, is that a one-size-fits-all approach dilutes the ability to be focussed on the specific customers, where you are most likely to win, most aligned to your strategy & therefore most likely to drive growth.

A segmentation strategy enables businesses to:

1. Identify high-value customers – Focus resources on the most profitable & growing customer segments. Both now and into the future.
2. Tailor the sell story – Deliver targeted messaging, compelling narratives, products and promotions that resonate with specific groups.
3. Improve customer retention – Enhance customer experience by meeting their specific needs more effectively. You’ll show them you understand their business better & are the partner than gets their segment.
4. Optimize product offerings – Tailor products or services to align with the needs of different customer groups & focus your innovation efforts.

Real-World Impact - Case Study: A 20% Growth Success Story

Strategic Specialists helped a leading consumer & commercial goods company define its customer & product segmentation strategy, shifting from a broad sell approach (one size fits all) to a segment-based sell strategy.

This approach helped the business:

1. Segment their customers into value-based groups: high revenue, growth or gross margin & define the role they play in our growth agenda.
2. Refine product categories to align our products best to the needs of that specific group.
3. Tailor marketing strategies to ensure our pitch is compelling and that we support the customers with the tools to help them get more customers.

By identifying key segments for growth & the key customers within it, we could tailor the solutions better to their needs. Equally the company proactively deprioritised customers and segments that weren’t aligned to their growth ambition & felt had less potential. At the end of the day, they say the only thing more important than deciding what you will do, is deciding what not to do!

This bold approach helped the company deliver +46% / +$3.4M growth in priority customer segments to a total of, while managing to hold non-priority customer segments & managing these to only modest decline (-19% / -$1.1M decline), over the same period (despite not even calling on the customers at all). This has lead to the total business delivering $2.3M upside (+16%) YTD, in a market that has experienced decline due to cost-of-living pressures.

Through partnering key customers, in priority segments the company was able to exploit a relevant and compelling solution; while the competitors that remained scattergun brought less insight & a less compelling offer to the table.

Category Segmentation: Maximising Product Potential

Category segmentation focuses on dividing products into meaningful groups based on factors such as customer demand, price sensitivity, or usage occasions. This approach helps businesses:

• Align sales efforts with demand – Prioritize best-selling categories while nurturing emerging ones.
• Enhance cross-selling and upselling – Recommend complementary products to increase transaction value & maximise incremental gains.
• Develop more effective pricing strategies – Adjust pricing based on category performance and customer willingness to pay.

The Takeaway

Customer and category segmentation is like a delicious tart, slice it up & start with the most delicious bits! Many businesses only look at the overall revenue and profit number, but if you peel back the layers and truly understand where & what is driving your performance, you have a greater understanding of where you can create the most impact! By slicing and dicing customers and products strategically, businesses can enhance focus, better deliver on customer needs, and drive sustainable revenue growth.

If done right, the rewards of slicing & discing are significant—without any actual harm to customers, just better-targeted offerings that keep them coming back for more!