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Segmentation

We develop highly actionable segmentation solutions that drive sales growth, increase profitability and improve NPS and employee satisfaction.

A Fundamental Pillar of Data-driven Business

We help our clients to understand the complexities from what is segmentation in business and how do they use it, to how can we effectively implement our segmentation strategies?

 

The process of segmentation forms small, easily identifiable and actionable sub-categories of data, from large groups of raw uncharacterised data.  These subsets are shaped by a breadth of criteria, including similarities in demographics or transactional (typically purchasing) habits. 

 

Recognising customers is no longer enough.  We must understand their individual needs, behaviours, and the drivers for why they choose a particular product or service, to ensure we can deliver unique and appropriate offerings across the entire experience.  

 

From presenting the right product range in-store to delivering tailored experiences and marketing strategies to grow their value, the evolution of big data has increased the need for data science and analytics and segmentation solutions, which are invaluable for data-driven businesses.

What is Segmentation in Business? 

The core to understanding ‘what is market segmentation in business?’ is identifying what good looks like.  The key to our effective segmentation solutions are the five following principles.

When a segmentation strategy achieves these five principles it can be applied across the business to develop efficiencies, aid decision making and develop uniform strategies to be utilised by various business functions and industry/sectors.

1

IDENTIFIABLE

All customers/stakeholders can be identified and allocated into particular segments using the available data.

2

SUBSTANTIAL

Segments are large enough in size or value to warrant individual attention and generate profitable return.  This value-focus ensures differentiated strategies and investments can be implemented for each segment.

3

DISTINCTIVE

There are characteristics that make the segment stand out from the others. Customers or stakeholders move segments when their behaviour changes.  When new data becomes available these segments evolve and refine.

4

UNDERSTOOD

The segments are easily understood by the whole business and become part of the common language.  It should become the way marketing is reported to the business.

5

ACTIONABLE

Effective and manageable programs can be developed for the purpose of attracting, servicing, targeting and reaching the segments.  The performance of the segments can be tracked and measured. 

Characterising Market Segmentations

Depending on the businesses’ objectives, challenges and desired outputs, a variety of segmentations can be implemented. 

  • Behavioural segments: based on behavioural characteristics including relationship, product/channel usage and profitability.

  • Needs based/benefit segments: based on perceived product benefits, assuming customers purchase solutions to a problem/to satisfy a need (rather than product features/mechanics).

  • Attitudinal/psychographic/lifestyle segments: based on activities, interests, preferences and opinions.

  • Geographic segments: based on geographies and location based boundaries.

  • Demographic/socio-economic segments: based on age, income, gender, and other  measurable/identifiable characteristics​.

Depending on the data sources available to the business we can mix a combination of these segmentation groups, to identify and create the following profiles:

 

  • Lifestyle segmentations capture customers’ behaviour outside your stores. They require 3rd party data sources, but are valuable to data-driven businesses looking to develop their current segmentations. 

  • Attitudinal segmentations help understand survey data, by grouping customers into meaningful segments according to their responses/attitudes/needs.

  • ‘You are what you buy’ segmentations are instrumental to refine targeted marketing as they enable businesses to achieve tailored communications to match customers’ product preferences.

  • Engagement segmentations such as Recency-Frequency-Value, help identify and retain the most loyal customers and increase business efficiencies.

Our Segmentation Approach

Our ‘data-first’ approach to developing segments ensures our solutions are highly actionable across traditional and digital channels and can adjust dynamically to changing patterns of behaviour, optimising the omni-channel experience.

Our expert team works closely with our clients and to deliver meaningful profiles, highly actionable predictive values and predict future behaviours to enable integrated and coordinated omni-channel business activities across marketing, operations and commercial. 

 

Following a multi-segmentation approach, we define and build a suite of strategically focused segments, which inform the breadth of key decision areas for the business and across the different business units. 

 

Successful implementation will lead to a common language and measurement framework across the business that will describe the customer base and be integrated in strategic plans and key initiatives.

1. Strategic Segmentations

Top-level, descriptive segments that are enduring in quality and have fixed, stable membership, covering a broad range of the key business processes e.g. lifestyle, life-stage, loyalty and life-time value segmentations. This is the overarching segmentation process that enables the business to plan and organise in the medium to long term. 

 

Following this we build a range of lower level process and tactical activity-based segments that are used to drive specific processes or activities.

2. Process Segmentations

Used to address specific business processes, such as pricing. They are narrower in their business use and require more frequent recalibration. E.g. price sensitivity/promotional responsiveness.

3. Activity Segmentations

Throw away’ segmentations built for a specific purpose that may be discarded or redefined based on tactical considerations and short-term business needs, including a specific marketing campaign programme.  E.g. targeting segmentations for marketing activity and promotional offers.

All segmentation solutions can be applied across business functions or industries to uncover insights about your customers, stores and employees and develop engaging strategies.

Customer Segmentation

We help clients to target their customer experience and proposition based on their customers’ preferences/behaviours. 

 

By implementing customer segmentation models, businesses can tailor their marketing communications and develop their product range to meet the distinct, individual needs of their customer. 

 

In financial services markets, customer segmentation analysis is helping businesses to identify fraud by developing a greater understanding of their customers.

Branch/Store Segmentation

Location-based segmentations are a simple yet essential way to influence how businesses shape their strategies. 

Store or brand segmentations enable businesses to optimise their branch estate operations around the needs of their customers, maximising the return on investment.

Employee Segmentation

Business employees are a key, sometimes forgotten, stakeholder of any business. 

Employee segmentations can be used by all businesses to look after the needs of the employee based on their preferences or behaviours.  

 

Employee segmentation analysis can also be used by retail sales teams to shape their teams and drive efficiencies based on individual performance and the skillsets across the team.