Having worked on over 1500 studies, STRAT7 Bonamy Finch thought we'd discuss the key principles to what makes an effective segmentation...

Measurable & Applicable

One the most basic requirements from segmentation is that it should be quantifiable and reliable. While data will always change, without even basic measurement and tracking in place it will be near impossible to understand growth and ascertain as to whether your chosen segment and proposition are truly valuable.

Not only does your segmentation need to be measurable, but it should also be something which can be applied in other areas, such as other areas of research and within your CRM. With rules-based algorithms and automation it is now much easier to reintegrate segments into all areas of your business.

Accessible & Responsive

Organisations often start segmenting in order to find white space, but while identifying unserved customers is one thing, you also must ensure that they will be responsive to your offering. Target segments need to be responsive to marketing activity or there needs to be evidence that they will show interest in new products and services. It is also critical that they can be served at all. Organisations often fall into the pitfall of chasing after ‘desirable customers’ that are out of reach. This could geographically, physically, psychologically or otherwise. If you cannot ultimately serve that customer then developing an acquisition strategy will be completely wasted. As a general rule of thumb “better” customers tend to take longer to find and convert and therefore have a higher associated cost, if there is not sufficient budget/ people resources allocated to this, then why chase them at all?

Substantial

There has been a clear trend in the last decade towards serving niche markets in order to tighten focus and activity. While segmentation is all about grouping consumers, a segment needs to be large enough to warrant separate business action. Segmentation is about focusing attention, but it is not about excluding others from using your product or service. Standing for something doesn’t mean narrowing your appeal, and targeting a segment should lead to a refined message with the same underlying values.

Actionable

Last but in no way least, segmentation needs to have a practical value beyond blue-sky planning. Segmentation is about much more than list-making, it is about providing actionable insight that can drive activity more likely to reach, win and retain new customers. This insight needs to be utilised in a practical manner or it will quickly become abandoned. As such segments need to tie into existing systems, workflows and processes.

STRAT7 Bonamy Finch are the experts on segmentation. With over 1500 successful projects we combine insight from multiple sources and techniques. Multi-national organisations turn to us for their challenging segmentations, to find out why you should too: sign up for our next event or get in touch.


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