“Segmentation Studies Never Pay Off”
Overcoming The Myth
by Felicia Rogers
In the business world, we’ve probably all heard it said in one form or another:
- “We did a segmentation, and no one bought into the results.”
- “We spent a huge amount of money on this consumer segmentation project, but it just sits on the shelf.”
- “The ROI on our last segmentation was awful. We could never seem to get any traction.”
Unfortunately, these are fairly common experiences in organizations of all types and sizes. And it doesn’t matter if the segmentation is focused on people, behavior, need states, or anything else. Just doing the segmentation analysis and writing a report will often fall short of everyone’s expectations. It’s not until the team works together to truly understand the segments and what they represent for the organization, that everyone will grasp the most important piece of the puzzle. We have to understand “what’s next;” what comes after the segmentation analysis is done and documented.
It’s really all about the “so what?” and the “now what?”
Now that we’ve identified the segments:
- Which ones are most important to our business?
- Are any of them low-hanging fruit?
- Which ones will require more focused effort to leverage? Will that be worthwhile?
- How do we reach them?
- What do we say to them? Show them?
- What products or services will resonate most strongly with them?
It’s important to remember that the research and report are really just the beginning of the journey. In working with our clients, we have found that it’s often vitally important to flank a segmentation initiative with in-person work sessions involving key members of the client organization’s team.
In the pre-session, a cross-functional team from the client organization comes together with the research partner team to review what they already know, what they hope to learn, and what they need to accomplish, as well as to establish success criteria. In other words, what are the goals of this segmentation work? Why are we embarking on this journey? We find that teams have often never sat together to have these discussions. This type of alignment helps set the stage for a productive project with a successful outcome. It helps establish widespread buy-in from the very beginning, and a “we’re all in this together” type of camaraderie.
In the post-session, all of the same team members gather once again, often for one or two full days. This is actually one of the most critical stages of the project. The results are in. We have identified 5, 6, 7, or even 10 consumer segments. We know who they are demographically, psychographically, and behaviorally. We know where pockets of them can be targeted geographically. We understand a lot about what makes them tick. This is where the real fun begins. As a group, everyone receives and begins to absorb the report. There are charts, graphs, quotes, photos, videos—everything needed to understand each segment and bring it to life. Then, the rest of the time is spent workshop style. There are typically both large-group and small-group discussions and exercises. The goal is to leave this workshop with move-ahead plans. We want to:
- Prioritize the segments to decide which ones the team will pursue.
- Align on product or service offers for each segment of interest.
- Identify potential communication strategies for further development and testing against the segments.
- Assign specific next steps to each team member in order to keep the momentum going.
With a process like this in place, there’s no reason for a segmentation report to be received and filed away in frustration. Everyone is invested in the process. Everyone understands why it was done and how the organization plans to use it. And most importantly, everyone knows their individual role in making the segmentation a success.
About the Author
Felicia Rogers (firstname.lastname@example.org) is an Executive Vice President at Decision Analyst. She may be reached at 1-800-262-5974 or 1-817-640-6166.
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