Customer segmentation in the telecommunications industry

Abstract

This article is based on experience and recent research in the Telecommunications sector. It looks at the ways in which segmentation has now become generally accepted within the industry- and thus how the central question has moved on from whether segmentation should be done at all, to what is the right sort of segmentation for a particular business, business issue and target audience. Four segmentation schemes are considered: Customer Value Segmentation, Customer Behaviour Segmentation, Customer Life cycle Segmentation and Customer Migration Segmentation. Looking at examples of how each of the above tends to be used, the article concludes that advanced use of segmentation allows each customer to be part of a micro-segment, which allows for precise targeting, with knowledge of what the retention and value drivers are for each customer. The end result is higher retention and growth, with the parallel benefit of enhanced business planning, where specific growth and retention targets may be assigned to each segment. © 2010 Macmillan Publishers Ltd.