Segmentation – Eating the elephant in small bites
Market segmentation is not a new marketing practice and the benefits of segmentation are typically pretty obvious – you take a huge, mass audience, bucket it into smaller, more manageable groups according to commonalities, and then hone your marketing efforts to speak in a more meaningful, relevant way, customizing both message and channel. Check, check. Makes sense.
But what starts to become daunting is the move from theory to practice. The thought of actually doing the work to segment our own audience can become a little mind-blowing. The resources seem incredibly expensive – you’ve got to use one of those big research firms to dissect your customers and give you a segmentation analysis, right? Wrong.
Callahan recently tackled a segmentation assignment for one of our Fortune 500 clients. We developed custom segments to create propensity models, specifically tailored for the business area we support, which now provides opportunities for testing, prioritizing and personalizing.
Here’s how we ate the elephant one bite at a time.
Our challenge was unique in that we were looking at B2B customers versus a consumer audience. However, this is also what presented the pressing need to segment the space. Historically, the client only had consumer propensity models to use for targeting, so we developed a solution that would create custom segments in the B2B space, based on firmographics such as business diversity, time in business, business size and industry along with a variety of other characteristics unique to the B2B audience and decision making process.
We started by overlaying data from a variety of secondary resources including Hoovers, Economic Census, Urbanicity and others, with our existing customer data to build out rich customer profiles. Then we blended our industry knowledge and our client’s business objectives with the findings to begin defining segments. We took a sample set of 50,000 leads and honed in on six unique segments that incorporated 11 different factors and dimensions. From there, we were able to create unique personas that allowed our audience to come to life in new ways. The segmentation uncovered insights into decision making, business needs and overall business stability and vitality, informing how we could prioritize segments and align offers and solutions.
We then looked at what those personas looked like across the U.S. to allow our regional teams to build out localized plans that addressed how the personas are distributed.
Finally, we built clone models, or regression models, to help determine which characteristics are most predictive in identifying our best customers. This helps us develop acquisition efforts based on our success with existing customers.
Since we completed the segmentation analysis, we’ve been able to provide our models for better lead segmentation and better targeted marketing efforts.
This process has been informative in helping uncover any “tribal knowledge” about the customer base, so we can see which assumptions may be flawed and validate assumptions that are still relevant.
We have also been able to overlay CRM data that include customer value metrics and sales data to help inform a recommendation for prioritization, for both existing customers and prospective efforts. Finally, we worked with our client to understand the consumer decision journey to determine how findings from the segmentation can build differentiation and meaning as we create tactics that speak to our audience throughout the decision making process.
Our next step will be to look at results from testing to begin a loop of continuous improvement, to further refine and hone our message, channels and approach.
See? That elephant is suddenly much less intimidating.