Why Higher Segment Conversion Can Still Destroy ROI
The hosts challenge the assumption that finer customer segmentation is always economically attractive. A narrower segment may convert better, but the systems, teams, and operating costs required to serve it can outweigh that gain unless each conversion becomes dramatically more valuable.
- Segmentation commonly increases conversion rate.
- New segments can require separate teams, systems, and expenses.
- Evaluate net economic impact rather than conversion lift alone.
- The value of each conversion may need to increase substantially to justify the complexity.
“you almost always get an increas in conversion rate but you will then have to create systems new teams add additional expense”
“the value of the conversion has to increase tenfold”