How to Design Your Next Segmentation
Any way you slice it, segmentation is a long-standing method of empowering organizational teams to understand customers more deeply and drive more focused and effective decision making. On the surface, the act of developing consumer segments appears to be straight forward. Yet, it can also be a source of confusion and disillusionment, with some teams embracing the value of the output, as others are left scratching their heads on how to implement.
While many factors can influence the effective adoption of a new segmentation, Gongos has found one critical step that differentiates those that are successful, versus those that collect dust—the team’s dedication to upfront planning and thoughtful consideration of back-end activation. It may seem too simple to be true, but having conducted segmentations across industries, organizations, and a variety of internal stakeholder uses, we’ve found that the right type of planning will garner commitment, alignment, and strategy-building that involves more than analytical rigor. It combines the art and science of selecting the right solution to serve the organization’s needs while building complementary socialization strategies to ensure its success.
Before you start your next segmentation project, set yourself up for success with these four planning considerations:
Before diving into the components for the segmentation itself, ensure there is a strong business use case and internal buy-in among impacted internal end-users (e.g. marketing, product development, innovation, strategy).
Core questions to consider:
- Why have you determined that you even need segmentation?
- What will creating segmentation enable for the business?
- Who within the organization has the potential to be impacted, and how can they be involved in the initiative?
- Once in place, how should internal stakeholders act differently?
- What can we learn from past similar initiatives?
Determine who you should be segmenting based on the business goals and use cases.
- To acquire new customers, include prospects.
- To size the market opportunity, ensure market representativeness.
- To drive engagement, loyalty, and penetration, focus on existing customers.
The inputs for segmentation can vary widely based on the use cases and available data sources. Spending focused time discussing hypotheses will help shape the types of inputs to use.
Segmentations may include one or more data sources, such as:
- Behavioral data – existing first-party data available in databases about your customers
Incorporate into your segmentation solution if you have a lot of existing first-party customer data that could serve as a strategy for activation on the segments, offering more personalized experiences.
- Purchasable data sets – second-party additional behavioral data sources (such as passive metering data) to third-party data sources (such as Axciom)
If there are common data sources the organization is using to make decisions or leveraging for media buys include these data sets in the analysis to improve the accuracy of these strategies.
- Survey data – exploring attitudes and needs
Especially valuable when the organization needs to truly understand who its customers are and what motivates them, incorporating survey data can be a key component to driving personal connections and empathy among internal stakeholders and customer segments.
For a segmentation to realize its full potential, a strong implementation plan needs to be built. However, waiting for the solution to be identified before building an implementation plan is risky, and can lead to poor adoption across the organization.
Spend focused time on the front end to begin to create a plan, taking into account:
- Who needs to act on the segmentation and what levers can they pull?
- How do you want individuals to feel when they learn about the segments?
- For each group identified, how can the segmentation impact their day-to-day decision making, and what tools and resources do they need to support this impact?
- What are potential barriers to success? Accelerators of success?
With these aspects of the segmentation explored, ensure the right internal team is involved and committed to the process, and that you have a solid plan for engagement and communication throughout the workstream to guide understanding and adoption throughout the process.