Ingredients for a Successful Consumer Segmentation

Actionable insights from relevant samples are crucial to making decisions within a business. As insight experts everywhere can attest, the path to gaining those actionable insights and relevant samples comes with a myriad of personal challenges associated with identifying the relevant sample and engaging them in the research thereafter.

Consumer or market segmentation is the first step to understanding exactly who populates a brand’s customer base — which is crucial information that goes onto provide context for the insights generated from this research sample, as well as a lot of key decisions across the business. At it’s most basic level, consumer segmentation is the process of dividing a customer base based on common factors to better understand said customer base.

But how do businesses make sure they’re conducting effective consumer segmentation? What ingredients do insight teams need to make sure that their segmentation strategies are as impactful as possible?

Segment for Research and Strategy Success

Engineering the customer journey and mapping business strategies to steer the organisation into the future is an organisation-wide responsibility, but with each team contributing in different ways, they’ll need different insights from the same research sample. Consumer segmentation will help easily identify exactly who should be in the research sample for each project, and even help the insight team create staple research experiences such as a dedicated online customer research community for continual insights.

While there are some staples of consumer segmentation that can be applied to many if not all research projects and anywhere else segmentation is needed (such as demographic data like geography — one of the most traditional methods of segmenting consumers), each individual business and research project is unique and so should the segmentation criteria be for each instance.

The more accurate the data and consumer segmentation, the more relevant and impactful the decisions based on this data will be.

The more unique criteria such as behavioural and psychographic segmentation, will help bring that uniqueness to research experiences, segmenting the customer base in terms of customer opinions, experiences and actions instead of the typical location, age and gender. These segmentations will help businesses find out a lot more about their customers before the main research event starts, and these segmentation insights will only inform the resulting insights and help them to go further inside the stakeholder organisation.

Understanding why segmentation is important for businesses is one thing, but segmentation is actually important as it impacts the consumers being segmented too. Consumers benefit from greater experiences and communications from the brand, as it helps insight expert zero in on pain points and eradicate any friction from the customer journey, creating more valuable exchanges each time as a result.

While segmentation is used to understand the consumer base more thoroughly, or gain a baseline understanding to use and build on with future insights, it does require stakeholders or insight teams to have some communication with their consumer base or target audience already in order to recruit them into the research in the first place, or an idea of who their consumer base is so that they can find other ways to recruit them. Either way, there is a segmentation method ready to implement for each: ‘priori’ or ‘post-hoc’, which helps in either case.

To engineer customer journeys and business strategies well, brands need to embrace consumer segmentation.

The more accurate the data is that a business has on their customer-base, the more effectively they will be able to segment and understand the different personas present in their target audience. Then, any research that is conducted there after will only bolster these personas, building the fullest picture possible for stakeholders to use when designing the future of their business.

This article and infographic were originally published on the FlexMR Insight Blog, and can be accessed here.

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