The Type Is Right:
Maximizing The Impact Of Segmentation Typing Tools
by Elizabeth Horn, Ph.D.

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  During the course of most segmentation engagements, a typing tool is developed. This tool classifies future respondents into a segment using fewer questions than used in the original segmentation analysis.

  Literally, the tool “types” future research participants. The algorithm behind the tool usually is based on a model — a form of advanced regression or a machine learning method. Because it does not contain all of the questions used in the original segmentation analysis, the tool’s classification accuracy is less than 100%. Depending upon a variety of factors, classification accuracy can range widely, 40% to 90%. Still, these tools are valuable in framing future research insights.
   

Typing tools are often delivered as Excel workbooks containing formulas and/or macros to power the classification. They are developed to be intuitive and easy to use. The most prevalent use case for the typing tool is for online, quantitative market research studies. An organization provides their typing tool to research agencies when a project involves one or more of the segments. The results can then be understood in light of the segments.

Similarly, for qualitative research, the typing tool is used when recruiting potential participants. Sometimes, the tools used in qualitative research are reduced in scope to include even fewer questions to facilitate recruiting over the phone.

Implementing the typing tool in quantitative and qualitative research projects is a straightforward way to activate a company’s segmentation. Yet, these tools can do so much more to help organizations take full advantage of their segmentation investment. Here are some lesser known, yet highly impactful ways organizations can leverage typing tools.

Know all customers. Industries that have multiple customer tiers manage multiple segmentation schemes. Examples of these industries include healthcare (health care practitioners, payors, and patients) and insurance (policy holders, agencies who sell policies, and employers who subsidize policies for their employees). The end-users usually can be typed into segments using online surveys. Nothing new there. But for the business audiences, such as insurance agencies and physicians, the typing tool can be used during in-person visits to facilitate relationship building. The tool can be installed on a laptop or programmed as a survey that a salesperson uses to record the responses. It serves dual purposes — a marketing tool and a research tool.

Facilitate customer onboarding. Through use of appealing graphics and question types, a “research-y” typing tool can transform into a cool, engaging experience that obtains information from first-time purchasers. Companies that sell curated subscription boxes use typing (and other) models to understand which products to include. The typing tool also can be used further up the conversion funnel by helping to qualify sales leads. Potential customers can explore a product/service’s website and register for additional information by answering the typing questions, for example.

Classify customer/prospect databases. Many brands maintain loyalty programs. Customers agree to provide information about themselves and their purchases in exchange for discounts and free products. Companies can send a short survey to program members to type them into the segments. However, not all program members will respond, which results in missing segment identifiers. As an interim solution, companies can implement a close relative of the typing tool, called the bridging model, which uses database variables to link to the survey-based segments. In the future, if the customer completes the typing questions, the segment generated by the bridging model can be replaced with the more accurate typing-tool-produced segment.

Understand purchasing over time. Brands that are fortunate to be sold in channels in which scanner data is compiled by third-party companies can have their segments typed in those companies’ household panels. This enables brand managers to track segment-level purchases, purchase cycles, and price elasticity longitudinally. As a bonus, tracking segment sizes over time allows brands to gauge when it might be appropriate to refresh a segmentation.

Segmentations are powerfully positive drivers of marketing and innovation. Vigorous application of the typing tool is necessary to achieve activation. The more companies integrate the typing tool into discovery and sales processes, the more likely they are to realize the full potential of their segmentation investment.

About the Author

Elizabeth Horn, Ph.D. (ehorn@decisionanalyst.com) is Senior Vice President, Advanced Analytics at Decision Analyst. She may be reached at 1-800-262-5974 or 1-817-640-6166.

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