When assigning shortcuts to the contact categories, you may find the hotkeys do not work. If that is the case, please follow the steps below:
Step 1: Right-click the account folder in the folder tree;
Step 2: Choose "Data Folder Properties";
Step 3: Click "Upgrade to Color Categories";
Step 4: Click "Yes" in the pop up window;
Step 5: Click "OK" to close the "Outlook Today" window in step 3;
Step 6: Exit Outlook and re-open it, the hotkeys should now work.