Segmentation Strategy: When and How to Tackle a Refresh
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Segmentation Strategy: When and How to Tackle a Refresh

December 2, 2019

Chelsea Schafer

Does your segmentation framework feel out of step with the current landscape? It might be time for a refresh. Here's what you need to know.

A great customer segmentation framework is an engine that drives strategy across your organization — everything from marketing campaigns and media planning to innovation and new product development. However, like an actual engine, it won’t run smoothly forever. Given category shifts, evolving consumer needs, and changing customer expectations, the shelf life for a segmentation is typically three to five years. 

If company stakeholders are encountering larger obstacles — for example, not knowing which segment to target due to the lack of a good fit — then there might be active problems with your existing segmentation. In such cases, a simple refresh might not be enough to make it effective. On the other hand, if your segmentation framework is just feeling a little out of step with the current landscape, a refresh could be exactly what your brand needs. In this post, we’ll cover the key drivers and barriers of a successful segmentation refresh, what you need to do to prepare, and how you can execute.

Reasons to refresh your customer segmentation framework 

Not sure if your brand would benefit from a refresh? Here are some major reasons to consider updating your segmentation strategy:

  • Information gaps: You’re missing key information that you need to activate your segments.
  • Outdated/undifferentiated segments: You’re dealing with segments that behave too similarly to one another, or segments defined by tensions that are no longer relevant to your category or business. 
  • Ineffective typing tool: Your typing tool isn’t effectively identifying your target audience. 

Of course, there are a few barriers that could make the process a rough one if you don’t plan ahead. The key is to not let potential speed bumps like these stand in the way if the time is right for a refresh: 

  • Entrenched socialization: Your target audience has been well-socialized across the organization, and teams are used to thinking about a particular segment when making a business decision.
  • Entrenched segmentation dimensions: Similarly, teams might be used to thinking about consumers in relation to whatever underlying dimension supports your existing segmentation (e.g., high vs. low service expectations). In this case, a new dimension could confuse things. 
  • Current projects: Is there a major research study underway that’s using the current segmentations? Would an update impact the timeline or usability of the final results? 

Luckily, the sections below will help you make sure obstacles like these don’t impede your progress.

How to prepare for your segmentation refresh

Once you’ve made the decision to move forward with a segmentation refresh, there are a few important things you should do to prepare:

  • Be precise about your goals: Is it important that you be able to tag your database with refreshed segments? Or would you rather be able to layer in rich attitudinal metrics? Does the new segmentation need to identify key jobs to be done that your offering could be a match for? Or is it more useful for your marketing team to understand the demographic and psychographic profile of target consumers? Knowing your key needs upfront will help your team ensure that the refresh is set up for success from the very beginning. 
  • Earn stakeholder buy-in: Often, the biggest hurdles in the segmentation refresh process come after the work is done. Teams across your organization will understandably feel tied to your earlier segmentation, no matter how clearly it needed to be updated. After all, it’s what they’ve known for a long time — they’re used to it. Successful change management requires that you sit down with key stakeholders before you get underway on a major segmentation refresh. Use the time to identify what is and isn’t working for them, get their buy-in on a refresh, and hear directly from them what has been helpful so you can carry that through to the next generation of the segmentation. 

Strategies to execute on a new segmentation strategy

Once you and your team have properly prepared, it’s time to move forward with your segmentation refresh. Here’s how:

  1. Start smart 

This might sound obvious, but it’s crucial to front-load your strategic thinking. The more focused your efforts are at the beginning of the project, the more useful your end product will be. Key ways to start smart include:

  • Stakeholder interviews: Conduct stakeholder interviews to make sure segmentation end-users have a voice in the process. What do they want the refreshed segment to be able to do? What was/wasn’t working in the earlier iteration? 
  • Upfront qualitative research: Online SmartCommunities, focus groups, and ethnographic interviews can help you uncover the key tensions and emotional nuances that differentiate consumers. 
  • Deep hypothesizing: Segmentations are only as good as the inputs that create them — and for strong inputs, you need a robust questionnaire that effectively captures relevant attitudes and behaviors. To ensure analysis is as targeted as possible, hold a collaborative hypothesis-generation session. Get all the ideas about what segments you might find out on the table. 
  1. Amplify impact with multiple data streams

Now that we have access to behavioral data that records actual consumer actions, it’s never been easier to tie the “what” and the “why” together. Leveraging third-party data can help identify which segments should be your priority, plus make your segments more targetable. 

  1. Think beyond the analysis

The work isn’t done when you’ve identified and profiled key segments — or at least it shouldn’t be. By building downstream activation into your project scope, you can help keep the momentum moving and make sure teams know how and when to activate against your new target segments. Downstream activation can include things like: 

  • Communication plan development: Identify historically successful employee communications to map out a message hierarchy, determine specific tools for each audience, and create a launch calendar
  • Cultural Segment TrendScan: Future-proof your segments by identifying macrotrends and cultural shifts impacting your target segments. 

A new start: Refreshing your segmentation strategy in 2020

All of this might sound daunting, but the new year presents a great opportunity to make sure your current segmentation framework is truly serving your business — and we’d love to help. If you want to learn more about how to tackle a segmentation refresh, let us know

Chelsea Schafer

Senior Director, Insights & Strategy

As Senior Director, Insights & Strategy, Chelsea has a passion for using data to tell stories about how people make decisions, and to understand what drives persuasion in information-rich...

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