Nov
29
2012

Is there a fundamental issue with market segmentations?

Make sure your segmentation is actionable.

Having worked in the customer insight world for much longer than I care to remember I am still amazed by a recurring and underlying issue when it comes to planning market segmentation projects.

My first encounter was 15 years ago when I inherited a historical segmentation project as I started as Customer Insight Manger for a leading building society. I entered just as the organisation was ripping up and starting again – the main reason was despite all the research there was no way to understand which customers fitted into which segment so the insight remained just that – a bit of research.  We chose instead to adopt a simple geo-demographic framework on which to understand prospects and customers. The revised approach was embedded into marketing strategy planning and targeting and things started to move forward.  At the time I’d assumed this was an isolated incident.

Fast forward to the present day, in my current role as a marketing consultant I am acutely aware that far from being a one off, it’s a frequent occurrence.   I’d also argue that given the new world of customer engagement across multiple channels that this segment anonymity is more of an issue now than a decade ago.   Customers expect relevance leading organisations to become more data dependent – the ability to consistently plan and track shifts based on segmentation is only possible when you can successfully classify customers and prospects.

So if you’re just about to embark on a segmentation project then save yourself some pain by upfront planning to establish what you need the outputs to influence – it’s probably a long list so prioritise and recognise that no one segmentation will be perfect for each scenario!  Finally consider trading some up front discrimination for a segmentation that’s actionable – there are ways to develop bespoke segmentations which allow you to allocate back segments to individuals on and offline.  At least this way you will have an answer when someone in your organisation asks you how to target your ‘New Wave Adopters’ group with the latest product launch.

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