Why isn’t your segmentation working?

Frances Hendry | 8th June 2016

When conducting a poll of Client Needs in 2014, Domus (marketing agency) found 22% of business respondents lacked a ‘useful and actionable audience segmentation’ - an ‘unmet’ need that crippled the ability of internal staff and agencies to effectively market products to target customers.

Fast forward two years, and our experience in pharma continues to show that there is still an unmet need in terms of how audience segmentation is created and used by agencies and internal marketing teams alike. Part of the problem is the (un)usability of the segmentations created.

Senior Associate Consultant Frances Hendry and Senior Customer Experience Consultant Peter Timmer take a closer look at what the unmet need actually is, and how you can make your segmentation actionable – so that it can deliver real commercial value.

 

What does a useful segmentation look like?

Segmentation should be a tailored tool; it needs to be created with a particular end-user in mind, and ideally, a specific problem to which it can be applied and actually solve. So frequently we see a segmentation research project being briefed to a market research agency, but with no clear view of who the eventual user of the segmentation will be, or how they will use it.

These are large projects. Healthcare professional (HCP) samples of 500 to 1000 customers are not unusual. Frequently, qualitative face-to-face interviews complement the quantitative survey that captures the number of data points required to drive the maths behind segmentation. The end-product of such a survey will be quantitative insight; the arising segments. In our experience, customer groups are divided into anywhere between 4-10 segments.

If we think about what a ‘useful’ segmentation actually is, it should deliver commercial value. If finding a useful segmentation is an unmet need, we have a commercial problem of missed opportunity. Going back to one of our previous points, segmentation needs a problem to solve. The act of using it means it must support ‘action’ by its user.

How do you create an ‘actionable’ segmentation?

To be actionable, it needs to be clear what actions the segmentation will support. Whether or not the user picks it up for action is probably down to answering ‘yes’ to three questions:

  1. Does the user believe in the segmentation? – Is it coherent and can they see their customers in the segments.
  2.  If the user believes in the segmentation, is it clear what actions it can support?
  3.  Finally, after the user has started to act with the segments, does it deliver commercial value and lead to the performance of better work than if the segmentation didn’t exist?

 

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