8 key characteristics of meaningful and successful segmentation

It’s essential to look at attitudes and values now – not just behaviours of the past.

Truly understanding consumers in a landscape of constant change isn’t easy. Especially as customer behaviour has changed massively over the last couple of years. The growth of online and omnichannel paths to purchase across all customer types demonstrated it’s increasingly important to understand how the different customer journeys are experienced by different segments.

Of course, the cost-of-living crisis is impacting consumers everywhere too, which in turn impacts organisations across all kinds of industries – from automotive and charities to retail and travel. And on a global level, the implications of the climate crisis are increasingly front of mind for consumers and businesses alike – impacting both purchasing choices and the way we operate our organisations.

Considering these massive market shifts, do you really still know who your customers are and how they engage with your category and brand?

Do you know how their needs differed, and which ones present the best commercial potential?

Possibly not!

If you can’t easily answer those questions, it’s worth considering a segmentation health check to refresh your understanding and see what’s changed.

Super segmentation

At its core, segmentation is about gaining a deeper understanding of your customer and category groups and creating different segments within those groups.

To become more customer-driven and respond to changing expectations and preferences, there’s a clear need, in many cases, to refresh the understanding of segments to ensure we connect with consumers effectively. Done right, it can have a big impact on your business.

What’s the most important factor in determining the success of segmentation?

Put simply: Actionability and effective embedding of the segments.

When you’re embarking on a segmentation health check, you must start at the end and think about what you need to understand. You can segment by needs, attitudes, demographics, or behaviours (stated or real) through operational customer data. It’s essential to look at attitudes and values now – not just behaviours of the past – across current and prospective customers. Then it’s time to take the next steps and test those insights within those segments.

Segmentation will help you discover these key insights:

• Who your different customers are in terms of behaviours, motivations, attitudes, and needs?
• Which ones should you target?
• What is the size of the opportunity?
• Which behaviours make them unique opportunities – or not?
• What challenges and frustrations do they encounter?
• Why are customers behaving that way?
• Does white space exist?

In other words… marketing gold dust.

The eight key characteristics of meaningful segmentations

So how do you do this successfully?

1. 1. Real: grouped on dimensions that influence how you’ll approach them, distinct from one another and sizeable (large enough to justify its existence).
   2. Stable: segments found should be defined by the core of what makes people “who they are” and therefore should stand the test of time.
   3. Art: get under the skin of the market through qualitative research; ensure the final segmentation model can be brought to life with real-world examples.
   4. Science: use hard data to give a definitive view; marry primary gathered survey data on behaviours, needs and attitudes with internal data; spot patterns using sophisticated statistical tools (where appropriate).
   5. Prioritise: link segments to commercial potential and value drivers in your organisation.
   6. Actionable: bring segments to life through profiles that make them understood, recognisable, and useable across the business.
   7. Findable: profile using characteristics that allow you to identify segments in real-life (e.g., geographical location, age, gender, social and economic geography) or linked to your database.
   8. Embedded: Real-time mapping or enrichment of segments to ensure continued relevance (e.g., through TGI, Axiom, Experian and other third-party data sources.

If you’d like further information on refreshing your segmentations, our article – Navigating the Yellow Brick Road – will help. If you’d like to find out more about our approach to segmentation or talk to us about conducting a segmentation health check, please get in touch.