A segmentation is arguably the most powerful and useful insight technique. It is also one of the hardest to do well. An effective segmentation is an investment well spent, it can shape strategy across CX transformation, product and service development and communication for five or more years.

Segmentations often fall-down in two areas:

• Effectively putting people into meaningful and discrete groups.

• Being easily able to apply the segmentation to customers quickly in real-life.

Given the importance of a segmentation we are sharing our view on best practice guidelines to keep in mind.  

What is a segmentation?

Segmentation is a family of techniques which divide a group of people into discrete groups. By doing this you can then speak to them, approach them and design products and services for them in a way that best delivers on who they are and what they want. For example:

• You might look at customers by their spend – high medium or low.

• It could be useful to look at prospects by how they choose what to buy – price-sensitive, quality-driven or convenience focused etc.

The three things you need to get right in the design stage

• The segments need to be meaningful. The differences between segments have to be ones that result in different business approaches.

• A segmentation needs to drive effective results. Each segment has to be large enough (either by volume or value) to be worth addressing.

• It needs to easy to find the segments. We need an easy way to identify and target members of each segment, without having to repeat the full set of segmentation questions.

Our top tips for a powerful segmentation

• Aim for at least three and no more than ten segments, ideally four to six. Each segment should be no smaller than 5% of the population by volume and 10% by value.

• One of the key reasons a segmentation might fail is not putting in the upfront planning and advanced thinking. You need to have a hypothesis about the dimensions that might form the segmentation, an understanding of the overall target audience and what business plans the segmentation will shape.

• There is always a temptation to throw everything into a segmentation, but keep it focused and to a minimum. This is key in terms of digesting the insight and assigning people outside of the study to a segment using golden questions.

• If it is difficult to know the dimensions to include then do some upfront qualitative work, use A.I. and/ or run a workshop with the key stakeholders.

• Bi-polar questions that put people on a spectrum of answers are the best type of question to use to pull people apart and avoid a segment of those who always fall on neutral ground.

• Make sure you have time to review multiple iterations of the solution, it takes time to do this well and time to reflect. It is often a blend of science and art to get to the right solution.

• Think about how to share the segmentations, what channel, what messages.