We often talk about the importance of aligning your brand/ message/ offering with the needs and expectations of your customers. But that raises an interesting question, do the needs of your current customers reflect the wider world?

It’s an often-stated fact that customer acquisition is significantly more expensive than retention. Your current customers should be your first port of call when conducting research and understanding where you can improve.

“It’s important to incorporate feedback mechanisms throughout your customer journey. This can be a simple review after a transaction etc. If you set the expectation that you want to encourage feedback and will ask questions early on, it becomes easier to expand on this later.”

Dr. Leigh Morris, Strategy Director, Bonamy Finch

We can largely categorise your relationship with customers into three groups:

ADVOCATES – Every brand is looking to move beyond a transactional relationship with their customers and towards ‘fans’ who actively support and share their offering. While converting customers into advocates will obviously improve the lifetime value of those customers and lower your future marketing cost. The ‘problem’ with this group of customers is that they are typically viewing your brand through rose-tinted glasses. This might mean that they skew data if you were to conduct a customer-wide survey.

LAPSED – On the opposite side of the spectrum, lapsed customers may skew your data to the negative. Typically, brands lose customers not through one bad experience (although obviously this happens) but through a series of smaller and often not-connected issues. Once a customer has lapsed it’s incredibly difficult to get them back and even engaging in the most basic of surveys may cause further annoyance.

APATHY – As much as we might all hate to admit it, the bulk of our customers may fall into this more casual group. They neither actively love nor loathe you.  In many ways this is the core audience that you are looking to influence and convert to advocates, but their lack of interest makes it more difficult to reach out without incentives.

All three of these groups have one crucial thing in common – they represent the past, the present, but not necessarily the future. While there can be a lot of useful information and hidden value, when it comes to strategic decisions they shouldn’t be the only people you ask because;

• You only understand these customers in relation to your own brand.
• You don’t know if their behaviour with you is typical of their behaviour within the category or with competitors.
• You may not have the qualitative information needed for you to refine your product/ service or personalise the offer.

But this leaves brands in a bit of a catch 22 situation…

They can go out to their database, but the answers may not reflect the wider world. However, if they go out to the wider market looking for broader answers, then this often can’t be tagged back to that database where it would be the most useful.

The good news is, there’s a way to get the best out of both worlds…

Hybrid segmentation is a new approach that fuses market and CRM data to deliver a rich, single view of your customers. It’s powered by algorithms which means it can incorporate all of the relevant factors from both sets of data.

It starts with an understanding of your business problem and what can influence that. Too often segmentation projects are started with fuzzy ambitions around ‘getting closer to customers’ and many businesses are guilty of going out and stockpiling information to the point where they can’t see the wood for the trees. We start any segmentation programme by looking at your challenges to see how we can affect that, and then working backwards from there.

We conduct a thorough review and analysis of the available databases and variables. This is often a substantial piece of work in and of itself. It can highlight data which is going to waste, insights which may be drawing the wrong actions or gaps in your current knowledge.

We take your current understanding of customers and put this alongside a psychographic understanding of the whole market through fresh primary research. This enables you to add the dimension of needs and motivations onto your database, combine it with that transactional data of what your customers have been doing and enhance your ‘get, grow, keep’ strategy. It helps you understand your customers and the wider world. By comparing the two, you can often find new areas for product growth or white space to move into.

This is only a very broad overview on what hybrid segmentation is and how it can help flesh out your current strategy. It also gives you an indication of wider market trends which will effect your decision making in the future.

Get in touch with our team if you’d like to find out more.