It’s time for a fresh cut, writes Giles Lury
The best segmentations are a tool for business planning. They are applied and used; they are inspirational. They drive the bottom line. When they do this, segmentations are a valuable investment for growth: but having seen many over the years I’ve spent in business, far too few fit this description. Too many fail on at least one dimension. They end up as a waste of what can be a substantial budget. It is past time for change.
Segmentations were originally developed for classic fast-moving consumer goods (FMCG) brands, and were designed to link to old media planning tools like TGI. What worries me is that many segmentations are still primarily modelled from demographic data. But aren’t your customers more than their ages and postcodes? And if you’re using data that isn’t proprietary, won’t all your competitors have it too?
An alternative problem exists with those segmentations built entirely on attitudinal analysis. They can be interesting and inspiring, yes; but without a rigorous link to behaviour, they often don’t get buy-in from everyone in the business. For some teams, like customer relationship management (CRM) or retail, they’re just not practical or useful.
Frankly, it’s time to move on. The world has changed and there is a whole new brandscape out there. Customers are smarter than ever, and their beliefs, attitudes and behaviours have altered. Many aspects of brand research have changed too, so why is the industry still peddling a model built for the old world when FMCG was king and there were only a handful of TV channels?
Segmentations need to work for today’s brands, whether they are in tech, content, travel, leisure or finance. Fortunately, that shouldn’t be a problem, because one thing that unites this new generation of brands is that they are rich in up-to-date and even real-time customer data. Big data is an incredibly valuable asset. A company’s analysis of its customer data can identify genuinely meaningful differences between groups of customers. From there, a total market view can be built, with linkages to the behavioural dimensions that distinguish different groups of customers.
The quality of that data is, of course, pivotal: it’s still important to bear in mind one of the fundamental truths of marketing, that you can’t believe everything your customers tell you. Customers’ claimed behaviour can and does mislead: people over-claim, under-claim, forget, tell you what they think you want to hear, refuse to tell you what you want to know, or simply lie. Actions always speak louder than words, which is why good behavioural data needs to be included, though such data is not enough by itself. New segmentations need to include motivations and attitudes too, overlaid on the groups identified in your behavioural datasets.
This will make segmentations truly useful, providing the power of a targeting tool imbued with the richness of motivations, enabling you to know both who to target and how to talk to them.
One last consideration. As any marketer knows, while features are important, benefits are better. The same is true of any segmentation; the true value is realized in its application. That means building new segmentations with the end in mind, to help make sure that the segmentation is embedded within the business and integrated with relevant processes.
I’ve seen too much money wasted on segmentations in the past, but I’m optimistic that marketers today can develop more segmentations that are inspirational, that are used right across the business, and are relevant for today’s brands and their challenges. It’s time to give segmentations a fresh cut.