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December 4th, 2014

The Indispensability of Customer Segmentation

It’s not news to anyone in the marketing world that customers have more choices than ever before when it comes to ways to shop, retailers to purchase from, and brands from which to choose. With omnichannel blurring the lines between brick-and-mortar and online purchases and extensive global sourcing, creating a plethora of brands, the marketplace is, well, cluttered. Even more so, the data required to understand how your brand lives in the market is ever more vast and disparate.

If even thinking about how to optimize your place in the market fills you with anxiety, it’s time for an intervention. Specifically, you need to employ customer segmentation.

Why Segmentation Research?

All the syndicated data in the world won’t paint the clear picture you need to tackle the marketplace. An informed strategy demands applied segmentation research. Applied segmentation identifies with which consumers you have the right to win.

It identifies your target segment(s), their persona, and how your brand value proposition best aligns with their hierarchy of needs. It informs how to market to them based on quantifying their consumption of media and paths to purchase.

The Other Benefits of a Segmentation

Our recent post, “A Checklist for Winning the Product Line Review,” discussed customer segmentation as a critical element for winning shelf space.  Yes, segmentation data is essential for creating the sell-in story, but it’s most potent when entrenched in the whole of your product’s lifecycle: from product development to sell-through.

Segmentation gives you a typing tool—a customized algorithm that, through a formula of specific variable designators, allows you to “type” consumers into a segment. With minimal interface, typing tools can be applied to—and appended with—existing customer databases or incoming data captures to prioritize which consumers are worth investing in and what products to upsell or cross-sell.

The vital consumer insights and targeting that comes from thorough segmentation turns confusion into confidence. Exasperation becomes empowerment. Various data sources can have a uniting thread and become more powerful.

Brand positioning is the art of sacrifice. The same holds for creating a targeted marketing plan. If your brand’s decision on where to develop products and how to sell them isn’t informed by applied segmentation, you’re playing a dangerous guessing game. It’s time for your strategy to become appropriately informed through customer segmentation.