Creating the Segments

Once you have captured the customer transaction data, you need to divide your customers into some sort of usable segments so that you can create a marketing program for each. How do you set up the segments? This is a problem that separates the good marketers from the indifferent ones. There are dozens of ways to do this. For example:

• Senior citizens, college students, families with children, empty nesters

• High spenders, occasional shoppers, lapsed customers

• Profitability segments

• RFM (recency, frequency, monetary analysis) segments

• SIC groups (for business-to-business marketing)