Today’s savvy, well-informed customers want to do business with companies that know them and their business needs intimately. With this knowledge, companies can create personalized experiences that meet customer needs. But this means companies must dig deeper to learn more about what individual customers want and value.
It was this intent that drove Ferguson to transform its relationship model to focus more deliberately on the needs and expectations of their customers. By thinking outside/in, Ferguson hoped to effectively align account team resources, improve customer experience and ultimately increase profitability and share of wallet.
Armed with a wealth of detail about customers, purchase behavior and customer perceptions, Ferguson partnered with Walker, who used cutting-edge analytic techniques to develop a customer needs-based segmentation model. This segmentation approach identifies the unique needs of groups of customers.
Business needs addressed with this segmentation include:
Several types of measures are recommended to create a successful segmentation. Walker used the following inputs to build Ferguson’s model:
Walker’s solution used cluster analysis, statistical profiling, and predictive analytics to create usable customer segments and an automated typing tool to drive customerfocused decisions and strategies. Data from a customer needs assessment was run through industry-standard clustering algorithms along with post-hoc profiling algorithms. These analyses yielded five customer needs-based profiles.
Using internal metrics, Walker then created a predictive scoring algorithm able to forecast segment membership for all customers.
The segmentation analysis that grouped customers based on their needs and expectations allowed Ferguson to take specific actions to improve customer experience.
Ferguson’s financial return on personalizing the customer experience based upon customer needs has been substantial. Test markets implementing the segmentation strategy have seen a significant increase in sales, combined with a lower cost to serve.