LRW Perspectives

Back to Perspectives
Market Segmentation

How to Run a Stellar Market Segmentation Process

LRW
Posted On  September 17, 2019
Share

The Power of Segmentation Analysis

When your organization commits to a new market segmentation, you’re creating an exciting opportunity to lead your organization into the future. That’s because market segmentation sets the stage for developing strategies to drive product development, communications strategies, and experience design.

Along the way, there are lots of logistics and variables to address. Some of the big ones include engaging and managing stakeholders, using art and science to craft the segmentation itself, collaborating effectively with your research partner, and perhaps most importantly, effectively embedding the segments into your organizational culture and activating them in your marketing.

Given that we’ve literally conducted thousands of market segmentations, we’ve coached hundreds of clients on how to run a stellar segmentation process that delivers big impact.

Building a Market Segmentation Strategy 

Crafting Your Segmentation RFP 

  • Explain your business goals. Of course this sounds obvious, but RFPs often have fuzzy objectives. Did the CEO call for a focus on innovation? Are you looking to create a global positioning? To maximize your chances of success, begin with the end in mind.
  • Provide insight about your stakeholders. Who are they? What are their goals? Who will use the segmentation output to act in a different manner? Is it your CX team, your product team, your marketing group, the C-suite?
  • Think about activation at this (early) stage. Consider how you’ll activate your segments both internally and in the market, remembering that it’s nearly impossible to activate externally until your internal teams are on-board. Be specific if you can be. For instance, will you want to score your database? Do you need the ability to target your segments digitally? Answers to these questions could drive key elements of your research design.
  • Include details about your budget. It’s tempting to hold this close to the vest, but you will get better research designs and save time if you can let potential research partners know your limits. Imagine going house hunting with a realtor who doesn’t know your needs and budget.

Kicking Off Your Segmentation Study 

  • Define success and anticipate roadblocks. As you kick off your segmentation study, define what success looks like and layout how to best collaborate with you and your team to solve problems. For instance, if you anticipate a challenging stakeholder within your organization, consider how to most effectively engage them in the process.
  • Communicate evolving needs and objectives. Make sure you integrate what you’ve learned throughout the RFP process and evaluation into the project. Once you select a partner, commit to keeping them abreast of any changes in your strategy, business conditions, or category.

Evaluating Target Segments 

Getting Immersed in Research and Data 

  • Get your partners up to speed – quickly! A single- or multi-day “immersion” session offers a great opportunity to share other relevant research, internal documentation – anything and everything to make sure your partner becomes as smart about your business as you are.
  • Engage your stakeholders and get alignment. Align with them on the type of segmentation approach you plan to take. In the case of a segmentation refresh, your stakeholders may already have a good idea about their anticipated segments. If they don’t, it’s worth taking the time to workshop them at this stage.

Developing Your Segmentation Questionnaire 

  • Consider an up-front qualitative component to your program. A segmentation’s success hinges on the quality of the questionnaire. The better you know your customers, the better you understand the questions that belong on it. If you don’t have a recent segmentation, consider an up-front qualitative component, like Online Anthropology, to spark key insights that will guide questionnaire development and other aspects of your study.
  • Save time by getting key stakeholders in one questionnaire workshop. Questionnaire development can be time-consuming, and you can save time by getting all your stakeholders together and hashing out questions in one session.
  • Don’t make the segmentation survey be the only source of information for the study. Longer surveys degrade data quality, and besides, you can append other data sets or launch additional brief surveys with the short-form tool to enrich your segment profiles.

Sharing Your Segment Profiles 

  • Before you commit to segments, make sure you can market to them. Segments aren’t found, they are crafted. Segmentation blends art and science, so there isn’t one single “right” approach. You and your stakeholders should be evaluating segmentation solution based on your knowledge of your category and business.

Marketing Segmentation Strategies for Activation 

Delivering Effective Market Segmentation Output 

  • Bring your segments to life in a way that resonates. Now that it’s time to bring your segments to life, make sure you inform your partner what type of graphical styles and formats you think will resonate with your organization. And remember that presenting the final report is actually just the beginning of your segmentation journey.
  • Hold an Actionability Workshop®. Now’s the time to plot out the specific steps you’ll take to engage your internal team – and eventually members of the segments themselves – in the market. Your activation workshop should be a collaborative session with creative catalysts designed to push the creative boundaries for how to activate your segments.
  • Activate your segments. Once your study is complete, make sure you create a short form survey, also known as a typing tool, so that you can apply your segmentation to future research projects. Use advanced techniques to target your segments across digital platforms. Score your database to more effectively communicate to existing customers.

Remember that a segmentation’s success is measured over time. If you check in six months after the Actionability Workshop, have your segments spread throughout the organization? Are your stakeholders referring to them on a first-name basis? If so, you know you’ve run a successful segmentation study – one that will drive your business strategy – and growth – for years to come.

Written by LRW
For 40 years, LRW has been asking so what?® to help our clients use market research to have significant business impact. Learn more about us at LRWonline.com.

Comments

Your email address will not be published. Required fields are marked *

Subscribe to Our Perspectives