Mutually Exclusive Collectively Exhaustive: Creating Customer Segments That Yield Results

#CommunityGifts by Chirag Parmar | Growth & Strategy Lead, WebEngage

OOCS was designed so brands could chase their north-star metrics without any spillage or spam.

Welcome to another blog at Retention DNA! 💯

This week we’re taking a look at Objective Oriented Customer Segmentation (OOCS), an all-new way of segmenting your users to ensure a highly personalized and effective approach to engagement.

Customer segmentation is a pivotal strategy for organizations to effectively target and engage their audience. Traditional demographic, geographic, and behavioral segmentation strategies, however, have started to show their limitations, leading to a need for a more dynamic and impactful approach. 

As you can tell from the above Venn diagram, the overlapping areas of objectives A, B, and C consist of customers that are usually the ones deluged with messages meant for other specific groups.

On the other end of the spectrum, there are customers outside the Venn Diagram who are being neglected and receive no messages whatsoever.

The process of maintaining traditional segments is often a resource-intensive endeavor. They require constant updates and adjustments, leading to a drain on valuable time and resources. The complexity of managing multiple segments also contributes to the challenge. With each new segment added, the intricacy of the system grows, which, if not managed well, can hinder scalability. The more complex the segmentation strategy becomes, the harder it is to streamline operations. 

Enter the concept of Objective Oriented Customer Segmentation (OOCS) - a method that seeks to address the challenges faced by modern businesses in reaching the right customers with the right messages.

The Limitations of Traditional Segmentation

Customers are often grouped based on factors such as age, income, and geography, ignoring the complexity of their behavior and decision-making processes. This one-size-fits-all approach results in a subset of customers being bombarded with numerous messages while others are left untouched, leading to missed opportunities and potential revenue loss.

Additionally, the segmentation strategies that were formulated decades ago fail to align with today's rapidly changing customer behaviors, buying patterns, and market dynamics. 

Introducing Objective-Oriented Customer Segmentation (OOCS)

At the core of OOCS is the principle of Mutually Exclusive and Collectively Exhaustive (MECE) segmentation. This means that each customer falls into only one segment, ensuring clarity and preventing overlap while collectively encompassing the entire customer base. 

OOCS takes into account the customer lifecycle stages, behaviors, and engagement patterns, ensuring a highly personalized and effective approach to engagement.

Let’s have a look at these:

• Customer Lifecycle Stages: OOCS acknowledges that customers go through various stages in their journey, from being unknown users to loyalists, and need messaging and engagement tailored to where the customer stands in their journey.

• Behavioral Segmentation: Customers who perform primary, secondary, and tertiary actions are grouped accordingly, enabling targeted and personalized interventions.

• Objective-Aligned Segments: Each segment under OOCS is associated with specific objectives. For instance, converting unknown users to active users, turning active users into repeat transactors, and nurturing loyalists are some of the objectives that these segments might pursue.

• Measurable Impact: OOCS ensures that each segment's objectives are measurable and yield quantifiable results. This approach enables businesses to track progress, identify bottlenecks, and optimize their engagement strategies effectively.

Benefits and Implementation

The OOCS framework empowers businesses to transition from a one-size-fits-all approach to personalized, data-driven engagement strategies. By aligning each segment with specific objectives, challenges, and solutions, companies can streamline their efforts and ensure that the right customers receive the right messages at the right time.

Bringing OOCS to life needs understanding how your customers behave and creating paths that seamlessly guide them between segments. This system's flexibility guarantees that as customers change, so can our strategies.

Moreover, these segments can be dynamically formed based on user behavior on the WebEngage dashboard. The initial logic is pre-set, driving automatic migration between segments. 

Effort is only required during initial setup, after which the system operates autonomously throughout the year. Customers consistently migrate through these segments as they engage with the platform, facilitated by real-time data updates within the WebEngage dashboard. 

Conclusion

As the business landscape continues to evolve, customer segmentation strategies must adapt to meet the demands of a digital-first world. Objective Oriented Customer Segmentation (OOCS) offers a groundbreaking approach that addresses the limitations of traditional strategies. 

By leveraging MECE principles and a dynamic, real-time methodology, OOCS empowers businesses to create customer segments that yield results, foster engagement, and drive revenue growth. 

That’s it folks! Unleash the power of engagement and embark on the evolution at Retention DNA 🚀