The needs are discovered and verified through primary market research, and segments are demarcated based on those different needs rather than characteristics such as industry or company size. Segmentation delivers that insight by subdividing a customer portfolio into multiple categories, based on such attributes as behaviors, value, and needs.
In such cases, it is merely a convenient organization of the market that has no strategic or operational value.
The indicators are dependent variables that are used to define or measure the latent classes in an LC cluster model. Another complication is that it is almost impossible to precisely identify all of the non-negligible costs associated with a customer over its lifetime, especially for software as a service SaaS companies whose service costs stem from a blend of hosting, bandwidth, customer support, and account management costs.
What does their spending score look like and how does it compare though? For example, as noted above, we are not sure how long a current account will stay a customer or at what rate it will renew. Segmentation is a continuous process that should be repeated periodically, allowing companies to keep track of segment trends and changes, identify which segments are likely to grow, and treat different segments differently based on their needs at a given time.
There are others as well, such as discriminant analysis, principal components analysis, and so forth.