we get into the details of that role we must establish some background information about segmentation itself. Segmentation is a complex, confusing discipline. Practiced by marketers, data miners, and most businesses, it is a greatly maligned discipline. The objective for this chapter is to define some of the basic concepts that underlie the segmentation discipline and to review the more popular types of segmentation in use in telecommunications today. llence in Telecommunications The Telco Churn Handbook SEGMENTATION OVERVIEW The term segmentation is used much in the churn, customer relation management (CRM) and marketing areas; however, few really understand what it is. In its simplest and most basic terms, segmentation from a CRM/marketing perspective is the process used to divide a very large group of customers and prospects into logical, easy-to-manage, smaller groups. The example in Figure 11- 1 illustrates how a population of customers can arbitrarily be divided into two groups, thus creating segmentation. Segment 1 Segment 2 Figure 11-1: Any Division of Customers into Groups is a Form of Segmentation Reasons for Doing Segmentation Of course, random organization of customers into groups does not accomplish anything by itself. The customers should be grouped in such a way that we can better understand and provide their needs. The One-to-One Marketing Misunderstanding Modern marketing theory has created a number of new, interesting, and sometimes useful concepts. It has also created many confusing, counter-productive, and misleading terms. One of the most misused terms in marketing today is "one-to-one marketing." The term claims as its basic premise that the world of Chapter 11 marketing is shifting from a mass marketing model (one company marketing one product offering to a very large group) to a one-to-one model that basically sees the firm creating individualized offerings for each customer. While this concept of one-to-one marketing is very interesting and has applicability in some industries, far too ma