We develop a framework to reduce the number of customer segments to the smallest quantity without losing essential information of the underlying population in the electronic marketplace.
We evaluate our approach in a case study using more than 21 million online flight bookings of a major airline company resulting in a 57.5% decrease from 1194 to 507 segments.
Findings have implications for organizations desiring to employ segmentation and/or personas for enhanced customer understanding.
Jansen, B. J., Jung, S.G., Ramirez Robillos, D., and Salminen, J. (2021) Too Few, Too Many, Just Right: Creating the Necessary Number of Segments for Large Online Customer Populations. Electronic Commerce Research and Applications, 49, Article 101083.