Ten things that will make your segmentation successful in driving business decisions

Ten things that will make your segmentation successful in driving business decisions

Do you regularly commission or develop audience segmentations? If the answer is “yes”, then you will know that most segmentations fail before they manage to inform any decisions. That was certainly our experience in the years before we launched AKAS. Having said that, we did witness some segmentations survive and pass the test of ‘decision-making applicability’. So, what makes segmentations succeed? We think there are ten key criteria:

1. Ensuring that business needs come first and segmentation follows, not the other way round. Only develop a segmentation if there is a clear business rationale for it and it fills a knowledge gap. Legitimate business needs include:
- Growing a supporter/customer base in terms of value and volume
- Informing strategy, finance and planning by helping to set realistic targets, forecast growth or allocate marketing spend
- Designing targeted marketing and communications approaches, campaigns and messages

2. Making sure that the segmentation has Senior Leadership buy-in. Senior buy-in is critical for any segmentation’s long-term success. If the segmentation is driven by the in-house Research/Insights/Data Analytics teams, they need to find a senior leader to champion the project. Be patient: this may take some time.

3. Developing a proper “business case” which future-proofs your segmentation. Before launching the project, build a business case for the level of incremental growth the segmentation is likely to deliver to the organisation. Gather case studies demonstrating success from the sector and other sectors. Allocate the right resources to embed it internally. Embedding the segmentation will be an ongoing task: at least one member of the Consumer Insight team should be responsible for continually gathering and communicating back to the business case studies which demonstrate how the segmentation helped solve various business objectives.

4. Treating the segmentation like an internal marketing project with a communications plan. Ensure that you plan upfront how to roll out the segmentation when commencing the project. Work with the internal communications team to do so and be as creative as possible. Ensure that you communicate the thinking behind the segmentation widely within the organisation at each stage of the project. Don’t wait until you have all the outputs in place before sharing the segmentation as it will be too late by that point!

5. Incorporating multiple perspectives into your segmentation to make it strong. Once you have established the business needs that the segmentation would help to address, form a multi-perspective segmentation working group which will drive the thinking behind the segmentation design. It could include representatives from the Research/Insight/ Data Analytics teams as well as practitioners whose teams will use the segmentation outputs: strategists, marketers or even a member of the finance team. Convince each member of the working group that they are the champions of the segmentation.

6. Designing a hybrid segmentation. Business-applicable segmentations are those which uncover underlying audience values and/or needs, and translate them into attitudes and motivations, which in turn influence behaviours. Therefore, the segmentations most likely to succeed are those which are a hybrid between values, needs, attitudes and behaviour. The most powerful segmentations merge actual behavioural data (from databases) with quantitatively derived information about values, needs and attitudes.

7. Making sure that your segmentation fulfils what it sets out to do. This point might seem obvious, but it is important to ensure that your segmentation is quantitatively robust and delivers against its main ‘raison d’etre’: to maximise differences and minimise similarities between different segments. If your segments do not demonstrate sufficient differentiation, review your design and start again.

8. Building a bridge between organisational databases and the new segmentation. Ensure that during the design phase of the project you have thought through how you will impose the segmentation onto your databases retrospectively as well as going forward. This is frequently one of the key challenges that organisations face and a key determinant of the success of segmentations.

9. Limiting the segmentation to no more than 6 segments. Any more than 6 segments become unmanageable for the human prefrontal cortex to process.
“Our short-term memory capacity is surprisingly limited. Typically, we can retain half a dozen or so items in the forefront of our conscious mind at a time. If you overwhelm the brain with too much information or too many tasks, the prefrontal cortex will kick in and select which to keep and which to ignore.” A.K. Pradeep, CEO, Neurofocus, Research Magazine, February 2012

10. Including a small number of truly complementary golden questions to increase the likelihood of the segmentation’s survival. It is best to aim for no more than 6-7 short golden questions that identify each segment. These must take no longer than 2-3 minutes to ask when interacting with members of the public face to face, on the phone or online. Remember though, segmentation is only a lens! Segmentations cannot be a substitute for other powerful ways of understanding audiences such as socio-demographic profiling. They should therefore complement what is already known by delving deeper into needs, values, motivations and attitudes which can then be calibrated against actual behaviour.

If you would like to follow up on the topics discussed in this article, please contact Luba Kassova or Richard Addy on contact@akas.london

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