5 Must-Dos to Get the Most Out of Customer Segmentation Research

Customer segmentation studies are popular among the research community, but often times, organizations struggle to implement them effectively. Attitudinal or needs-based segmentation studies are by nature rich in detailed information about each individual segment of the market. Researchers usually communicate the information in a voluminous report due to the sheer amount of information these studies provide. This makes it tough for marketing and product development teams to understand and use the information.

To cite a real world horror story, we were once approached by the research executives from a cable television network about a segmentation study that had failed to provide useful information to management. The clients were literally worried about their jobs because they had spent six figures on a study that was a data dump with no useful management information. The good news was that the survey had asked the right questions and the data was fundamentally sound. The saga had a happy ending because we were able to reanalyze the results and provide a compelling narrative that drove the strategic decisions management had expected when they authorized the budget. Aside from using better methods to analyze the results, one of the secrets to this turnaround was in how we told the story, bringing to life real world viewers and educating stakeholders on who to approach and how.

Given that these failures are all too common, how can researchers help internal clients gain a more intimate understanding of the different segments of their market and quickly put this information to work for them? The following are five “must-dos” that Rockbridge follows when conducting a segmentation study to avoid failure in providing actionable information to management.

customer segmentation #1: Make the information digestible. A comprehensive PowerPoint deck is valuable for getting to know the segments in depth and answering specific questions about a target group, but it is not usually the best way to introduce a strategic profile of your customers to internal stakeholders. We have found that a concise executive briefing deck, which includes an overview of the segments followed by two or three slides that include key motivations, needs, and characteristics of each segment, is useful for introducing the segments at a high-level before individual teams begin implementation plans. We also include an infographic that our clients use to pique interest, socialize the segmentation results within the organization, and serve as a quick reference guide to the segmentation.

#2: Prioritize segments. One of the purposes of customer segmentation research is to identify the most valuable segments to target. To help our clients focus resources, we create a Segment Prioritization Index that calculates the market potential of each segment based on key characteristics of the segment, such as spending, size, future purchase intent, and other category-specific key characteristics. The index has helped our clients focus and move forward more quickly.

#3: Enable targeting. One of the deliverables of a segmentation study should be an algorithm based on a short list of variables you have available in your database to classify your current customers into appropriate segments. By scoring your database, the marketing team can send targeted marketing communications to individual segments, and customer service call center reps and relationship managers can tailor their approach by segment.

In a similar vein, segmentation studies should also include an algorithm to score prospect lists based on variables available. These might include variables in consumer direct marketing lists or the Dun & Bradstreet database of businesses. This allows marketers, the sales team, and the call center sales team to tailor their messaging to prospects and achieve higher acquisition rates.

#4: Classify website visitors. A segmentation study should also produce a short list of questions that can be asked to classify individuals in future studies or elsewhere in the organization. Marketers can ask the short list of questions in the online sales process to classify site visitors in real-time and serve appropriate content, from marketing communications to specific product and service offerings. Classifying website visitors provides a powerful way to personalize a prospect’s experience on your website and has the potential to drive sales.

#5: Develop personas to represent typical customers in each segment. Personas go beyond statistics and provide internal teams a mental image of a “typical” buyer, often in the form of a story or a profile. This method of presenting information guides the development of products and services, and drives goal-based design decisions. Often times, internal teams develop personas without much direction, so the segmentation solution adds a quantitative basis for the personas.

It is gratifying when a segmentation study makes a huge impact in an organization because it will guide major investments while providing an intimate understanding of the best customers and prospects. I recall one client recently, a global consumer technology company, using a study we conducted to champion its first true initiative to define their space in terms of needs and lifestyles instead of traditional product lines. Our client was anxious about satisfying demanding executives at the overseas headquarters, but in the end, by following the must-dos described here, the study drove high level strategic priorities while arming sales management and marketing teams with personas and infographics to win shelf space in big box retailers and appeal to the needs and desires of their target market.

Customer segmentation studies provide a great deal of strategic value to organizations, realizing that value requires researchers to go beyond standard reports and use creative approaches to make segmentations more actionable and accessible to their clients.


Written by: Gina Woodall, President