In the past segmentation relied on attitudinal data captured through focus groups or interviews which are then fed into a quantitative survey. Statistical measures help us understand how the attitudes and demographics clump together in segments.
Today the proliferation of customer data means that we can build better segmentations because they’re based on data harvested from a range of sources. (e.g. social media, census, passive tracking of online behaviour) So we’re asking people fewer questions and using real behavioural or transactional data (e.g. purchase or loyalty data) which is more precise than relying on people’s memories or perceptions of what they do, which is notoriously inaccurate.
While segmentation is hardly a silver bullet to all your problems, all too often it is rolled out and forgotten about after a few months. In order to have a lasting business impact it is key that senior stakeholders are involved in the process and that a practical action plan is made with both short term and long-term strategy. Segmentation should create a common language for everyone to easily relate to customers, and segments need to tie into existing systems, workflows and processes.
Segmentation starts with defining customer groups and then should be applied to your ERP/CRM/Marketing systems. It is also important that segmentation is applied to your future market research. Insight Communities are a great way of taking different segments and doing extensive, long-term research. The key benefit being that as the context in which different segments interact with your brands changes and is influenced by outside factors, you can see the impact almost instantly.
