General Merchandise/HBC

Why Convenience Stores Need Customer Segmentation

Richard Poye, former RaceTrac, MAPCO, Circle K retailer, shares tips at Convenience Retailing University on where to start
Richard Poye at Convenience Retailing University
Photograph by W. Scott Mitchell

Customer segmentation allows convenience-store retailers to better understand customers’ preferences and buying patterns, and tailor efforts to add value to customers’ experiences. Richard Poye—head of development at Food Trends Think Tank who previously worked with c-store chains like RaceTrac, MAPCO and Circle K—shared the importance of customer segmentation at CSP’sConvenience Retailing University conference in Nashville.

“If you don’t walk into every meeting… thinking about your guest first, and what’s the most important thing that you need to get that guest, you’re going to get lost,” Poye said.

Customer segmentation provides the lens to define high-value target customers, guides category and marketing execution, curates product offers, highlights important customer preferences, focuses loyalty programs, strengthens supplier relations and drives impactful innovation, Poye said.

Richard Poye

Retailers with no customer segmentation try to please everybody, he said. Instead, group existing and potential customers based on shared characteristics like demographic, geographic, behavioral, needs-based, technographic and more, Poye said.

Poye listed five steps of the customer segmentation process:

  • Research: Gather and analyze data and understand customer preferences and needs.
  • Cluster: Group important customers by need groups.
  • Define: Identify patterns, preferences and the most attractive segments.
  • Approach: Develop value proposition.
  • Activate: Develop go-to-market strategies.

A category manager might be really focusing in on the customers who have high current and potential value, Poye said, but by doing guest segmentation, category managers can find potential value that they don’t know exists yet.

Along with the four “Ps” of marketing, category managers can focus on the four “Cs” of customer perspective (in bold): Product (consumer wants and needs), Price (cost to satisfy), Place (convenience, ease to buy) and Promotion (conversation, communication approach).

“Ultimately, when I look at guest segmentation, this is where I think there are elements of impact. You can grow your business. You grow sales. You basically can convert guests that you weren’t really focusing in on,” Poye said. “These are areas in which you can impact your business that are powerful. I’ve seen it happen.”

One example Poye gave was with innovation.

“If you’re starting your innovation and you’re not thinking about your target guest first, you could be making some fantastic products, but you’re going to make it for the wrong person,” he said.

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