Knowing your consumers and targeting them in the right way is high on the priority list of marketers in any business. But what’s the first step? Companies and brands undertake customer segmentation to divide their customer base into targetable subgroups that become the cornerstone of their growth strategies. Getting it right can mean boosted profitability and a competitive edge in the market.  

 

Paul Carney is the Managing Director of STRAT7 Bonamy Finch, a global marketing and customer analytics consultancy. He has 25 years of experience with segmenting audiences. In the last fifteen years at STRAT7 and Bonamy Finch, Paul has helped run 1,500 segments in different categories, multiple countries, and several markets. 

 

As a new year draws nearer, with markets fully reopening after an uncertain 18 months, more and more marketers are opting to conduct segmentation of their consumers.  

 

“People have started to understand that they can get ahead of the curve now by creating a segmentation to adapt to what the new normal might look like. We are seeing an appetite for segmentations higher than we’ve ever seen,” Paul said.   

 

Paul joined the What’s Possible Community sessions to outline ten tips for growth-minded marketers who want to create an impactful segmentation that sticks.

Before starting your segmentation, make it clear where the business is coming from, what the company culture is like, where the siloes are internally, and if any prior segmentations were done. Aptly communicate and operationalise the segment data for the end-user and ensure it’s straightforward and easy to use. 

 

“We really want to communicate that the segmentation is an ongoing journey. It’s a very dynamic programme of research,” Paul said.

Linking the segmentation to data assets is the next consideration. Paul and his team typically ask a business for a pre-existing customer database the segmentation can work from. An accessible database makes the data collection process simpler.

As the segmentation is growing legs, constant communication with internal stakeholders is essential. From a communications perspective, it’s better to tease and update people periodically to douse any pre-conceived ideas about the segmentation. Weekly and monthly newsletter updates help build demand in people’s minds and have everyone on the same page.

A lot of marketers struggle to define their desired targetable categories, says Paul. Finding out who is actually in the market is an important function of the segmentation.  

 

Paul also advises against defining categories too tightly and rigidly. Leaving space for different defined tiers in disruptive markets, where other consumers could be lurking, is prudent. 

 

Looking for consumers in untapped markets will ensure you talk to different types of people you might not have considered but who can still form part of your customer base.

Paul encourages marketers to try and assess their consumers at a deeper level. He says to avoid segmenting on consumer demographics and values, and instead focus on their needs and motivations.   

 

“It’s about finding that sweet spot between having an understanding of the category dynamics and what drives choice, but also having an understanding of why people do things,” he says.

In the segmentation process, capturing data properly will put you in good stead. For instance, having a good questionnaire can help keep data untainted. Doing it wrong could spell disaster; bad data against all types of research is the enemy of good segmentation.

Segmentation datasets are incredibly rich sources of information. However, in some cases, marketers only need to use 10-20% of survey data for the segmentation. Use residual data to create spin-off research projects that can help uncover even deeper insights into consumers.  

 

Paul says that promoting access to the data to the right people at the right level should also be considered. Having dashboards with segment information can be beneficial to everyone in the business.

Deploying the data is the next step. It’s crucial to know where to use the segment data, visualise the segments, make it easy for teams to use, and aptly name the segments.  

 

When communicating the segments to stakeholders in the business the more visually stimulating, the better.

Make the segmentation portable and injectable into other studies. Continuously improving the algorithms and figuring out how to replicate them in other robust cases is something STRAT7 and Bonamy Finch takes seriously.

Paul’s final tip is to stand for something and have a definite opinion on why the company is performing the segmentation. His view on customer segmentation is that the differentiation of consumers does not mean excluding others.  

 

Paul reminds brands that targeting segments is not your only source of volume; customers can come from other segments. Segmentation should not cut out certain consumers and prioritise others.  

 

“We feel standing for something; you have to do that in today’s market. Otherwise, you’re really just going to be in the middle of any map or any market,” Paul concluded.

All in all, Paul says a segmentation dataset is valuable on average between three and five years. He recommends refreshing segmentation data periodically and adding information to it. He says a really nice way to add segmentation understanding is to build communities and get unique customer perspectives.