June 24, 2020
Navigating the yellow brick road
Creating a commercially successful segmentation
Ultimately, it’s a process of art and science, but to be truly successful it has to go on to live in your organisation...
“We need to become more customer driven, we need to be closer to our consumers and our prospects. We need to know what makes them tick. We need a new segmentation.”
You probably recognise this conversation, a frantic call to arms to ‘better understand customers, know how to appeal to those who don’t yet buy from your business and/ or enable an effective cross-sales strategy’.
If you haven’t had it yet, you’ll likely be there soon…not just because of the current transition to a ‘new normal’, but because it’s a repeating corporate dialogue – and should be – because as social and market context, people’s preferences and what’s available to ‘chose’ is constantly changing.
Whether in your organisation the segmentation in question is a new birth or a phoenix from the flames that comes out to the tune of the Stone Roses’ ‘I am the resurrection’, it’s likely to be accompanied by a sense that it should be the oracle, a saviour, a business’ very own yellow brick road…the pathway to a wonderful new world of success.
Don’t be fooled – there are many issues along the path. That yellow brick road has a fair few potholes in it, a couple of rivers to cross with broken bridges and to top it off, a few bear-traps and landmines guarding the holy grail at the end of it.
But if you pack the right tools, prepare and plan well and, critically, work together to build those bridges and navigate the right route, you’ll arrive at your desired destination. In this case, that’s achieving meaningful commercial success – however you’d define that.
But ‘purpose’ is key. Everything about successful segmentation is about starting at the end.
- Why am I doing it?
- What do I need to really understand?
- What are the actions I’m planning to take if my hunches are right?
- What are the value drivers in my organisation that it needs to connect to in order to really show its commercial worth?
Once you have answered these questions, you have to decide whether you want to start segmenting by needs and attitudes, demographics or firmographics for businesses or behaviours, whether stated or real through operational customer data.
For example, it’s common strategies such as developing a forward approach to growing market share, developing your customer value proposition and understanding the best fit target audience for your product or service line, where attitudinal, needs-based approaches are often used.
In order to make sure you maximise your chances of making it all the way down the yellow brick road, here are some things to think about…
Define a clear and singular core purpose: fix the key anchor and then ancillary requirements e.g. developing sales + acquisition strategy/ inform proposition design, communication and/ or behaviour change
Complete a data audit: working with your internal analytics team to understand your data, what you’ll need to use for linkage, but also what you can use to profile the segments or even build the segmentation with your internal data baked in from the outset
Ensure a robust design approach: a core design which has stability baked in to unlock the overall value and utility of the segmentation solution developed
Ultimately, it’s a process of art and science, but to be truly successful it has to go on to live in your organisation, to be translated into the language and data views of your finance team, to demonstrate how it can be genuinely linked to commercial value, whether its growth, expansion, cost efficiencies or revenue protection. It’s certainly not just about marketing or colourful personas on the wall.
We’ve created some practical guidance for anyone looking to gain an understanding of the key characteristics of meaningful segmentations and how to apply them to your business. Just take a look at the video below.
At Savanta we have a team of analysts with a wide variety of backgrounds, including data processing, statistics, management consulting and scripting. Our bespoke reporting offers a fully customisable design to ensure your insights are valuable to you, your internal stakeholders, and clients.
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