Our Guide to

Customer

Segmentation

Our Guides

Our guides are here to help you understand a topic or to provide support for a particular task you might already be working on. Inside you’ll find lots of information to help you plan and make better

decisions. We’re not saying we have all the answers but we believe the stuff inside this guide will help get you started. If you think we’ve missed anything, or you want to join in the debate then please get in touch.

Inside you’ll find

• What is segmentation?• Types of segmentation• Creating your own segmentation• Some important things to consider• How we can help

What is segmentation?In a nutshell

Segmentation is the act of researching and then grouping audiences or customers into clusters that have commonalities and similarities. Each of the ‘segments’ is distinguishable from each other either by demographics, social economics, attitudes, behaviours, motivations or other additional factors.

It’s about

• Researching customer behaviour, attitudes and profiles to understand characteristics, identify

commonalities and differences

• Creating clusters of customers who share common factors, whether it’s demographics or simple

idiosyncrasies

• Identifying the business objectives and requirements for using segmentation i.e. proposition

development or marketing

• Identifying customer needs and requirements

• Helping the business to prioritise activities to meet customer demand

• Identifying new revenue and marketing opportunities

• Identifying new ways of reaching and engaging with customers

Types of segmentation Various methods of segmentation

Demographic Socio-

economic

Size Attitudes Behaviours EngagementValue

Age, gender,

nationality, beliefs, location

Social status, salary, assets

Company size Fears, worries,

concerns, personality, characteristics

Habits,

routines, rituals, way of life

Spending

power, buying patterns

Relationships,

interactions

Before you undertake any segmentation work it’s best to understand what your objectives are, as this will guide the

method you choose. Remember you can segment in so many different ways. You could use some of the options

below, a mix or take an altogether different approach. You might mix your segmentation up to include existing

and potential customers.

Creating your own segmentation

Step 1: Assess what data and insight you already have

Before you undertake any

segmentation work have a look at

what insight, research and data you

have already. There’ll be plenty of past

and existing projects that will have

collected some information that might

be able to help you. You might even

find some segmentation that has

already been done.

When looking through this mass of

information and insight assess whether

there are any conclusions you can

draw from the work. Are you able to

group customers into segments based

on information already to hand?

Use this research phase to really dig

out some great work that might be

hidden.

Finding those hidden nuggets of information

Step 2: Get some customers in a room and have a conversation

Invite a specially selected mix of your

customers in for a coffee and a chat. Be

prepared to ask them a little bit about

themselves.

Tell them what you’re trying to achieve by

doing some segmentation. Talk to them

about improving products or services and

give them all the information they need to

feel comfortable talking to you about their

personal lives and how they might interact

with you.

Show them some of the segmentation ideas

you might already have. Ask what they think.

Ask them what you might have missed or left

out. Get them to describe the type of

customer they are.

Use this session as a primer. It’s about

assessing any assumptions or early

hypotheses you might want to test.

Speak to your customers, learn more about them

Step 3: Conduct some customer research

By now you’ll have a good idea of the

information and insight you already have.

You’ll now need to set some time aside to do

some customer research.

Write a good research brief and be clear on

the objectives and desired outcomes you

want to achieve. You need to decide which

method of research would suit this exercise

best. You might design a survey with

questions that will help provide output that

can be used to segment your customers.

Be sure to write a screener so that you’re

speaking to the right people and to ensure

you have a robust sample and true

representation of your customer base

involved. If you’re going to conduct some

focus groups then design a discussion guide

to help you facilitate the session and get the

real insights you need.

Create a survey, host a focus group, analyse

Step 4: analyse your research output and define your segments

Take your research results and define your

segments. Give each segment a name that

sums up the overall insight you’ve generated

about them. It’s going to stick in people’s

minds, so make sure it’s right.

Bring your segments to life by creating

personas. Consider bringing the segments to

life by using real customer profiles and stories.

Define your segments, give them names

Some important things to consider

Keep your segments to a manageable numberToo many and their usefulness will suffer

Make sure you don’t go overboard with the number of segments you have. It’s easy to split hairs and think you need to separate as many customers as possible. Remember that segmentation is as much about finding commonalities as it is about

differences.

Everyone is individual and segmentation is based on generalisations. It’s only the important differences between the segments that you need to focus on.

Give them sensible namesMake sure the name acts as a segment summary

Make sure you don’t get too carried away when it comes to giving your segments a name. Remember they need to be easy to understand by everyone.

Eventually you’ll want employees across your business to be able to describe and conjure up the customer in their imagination without having to return to reading the segmentation you’ve developed. A product manager or

campaign executive will need to be able to plan their activities against segments they remember and can easily act on.

Make sure people are using your segmentation Encourage adoption and ensure it has a role in business decision making

Make sure your hard work is being used.

Showcase your work to the rest of the business.

Senior leaders should already have articulated

the purpose of your work and how it will guide

everything in the business from product

development to pricing decisions and

targeted marketing.

Define how you want the segments to be used

and adhered to. You might decide that only 3

of the 8 or so segments you have found will be

focused on. Write a future world where they

are used across the business and are

considered in every major business decision.

Write a plan for how you intend to get your

segments used in the way you’ve defined.

Watch your work take off and change the

business for the better

How we can helpYou’re not alone

1Segmentation projects

If you’re looking for us to

lead a segmentation

project we have all the

necessary skills to help

you start and complete

a project that will deliver

tangible results

2Survey Design

You may want us to

design a survey that will

help segment your

customer base. We have

research skills to ensure

you’re asking the right

questions, at the right

time, in the right way

and to the right people

3Strategy

You might want some

advice on how to get

the most out of your

existing segmentation

work. Whether it’s

product development or

pricing we’ll get you

thinking