Before you commission a segmentation, ask whether you actually need one.

Segmentation can be one of the most powerful tools in the insight toolkit. Done well, it can give a business a clearer view of its market, reveal where the strongest opportunities sit and create a shared framework for making better decisions. But that doesn’t mean segmentation should always be the starting point.

“We need a segmentation” is a brief we hear reasonably often. Sometimes it is exactly the right answer, but even then we think it is worth spending time understanding what sits behind the request before getting anywhere near methodology.

Segmentation is a research approach, not a business objective. If the approach is fixed too early, there is a risk of investing significant time, money and organisational energy in answering a question that hasn’t quite been defined yet.

The more useful place to start is with the business challenge: what are we actually trying to understand, and what decisions will that understanding need to support?

Once that is clear, we can work out whether segmentation is the best way to get there.

What is the segmentation there to help you do?

At its best, segmentation helps make a complicated market easier to navigate. It identifies meaningful differences between people and gives the business a clearer way of understanding which of those differences matter commercially.

That might mean helping a team understand where the strongest growth opportunities sit, which audiences warrant greater focus, whether different groups need different propositions or experiences, or where investment is likely to have the greatest impact.

We’ve seen segmentation used to make exactly these sorts of choices. In some cases, it has helped distinguish between established audiences a business needs to keep winning, and groups where there is greater headroom for growth. In others, it has brought much-needed clarity to differences in needs, behaviours and value, helping teams decide where to focus rather than trying to pursue every opportunity at once.

That is where the real value lies. A segmentation is not valuable simply because it produces a set of clearly defined groups. It is valuable because those groups help the organisation see something differently and make better choices as a result.

How do you know if segmentation is the right approach?

One of the first things we want to understand on any segmentation brief is why the conversation is happening now.

Perhaps growth has slowed and the business needs a better view of where future opportunity lies. Perhaps the market has changed and the current picture of customers no longer feels sufficient. Sometimes different teams are working with quite different definitions of the audience. In other cases, there may be major decisions coming up around innovation, portfolio, proposition, customer experience or communications, and the business needs a stronger understanding of people before making them.

All of these can be good reasons to consider segmentation. But none of them automatically mean that a new segmentation is required.

That is why the upfront conversation matters. We want to understand how the work would actually be used, who needs to use it and what success would look like. Our approach to segmentation puts a lot of emphasis on stakeholder engagement for exactly this reason: understanding how the segmentation will be used and what success looks like needs to happen before the model is built, not after it.

Spending time on those questions can save time later, because it gives the research a clearer purpose and helps avoid unnecessary complexity further down the line.

Sometimes, you need something else

There are plenty of situations where the underlying need is for better market or audience understanding, but a full segmentation is more than is necessary.

A business might need to explore an emerging audience, understand how a category is changing, identify unmet needs, map an opportunity space or size a particular growth opportunity. Depending on the challenge, audience exploration, qualitative research, market mapping or opportunity sizing may provide a clearer and more direct answer.

The point is not to talk clients out of segmentation. It is to make sure the research fits the decision rather than trying to fit the decision into a predetermined research approach.

The same is true when a business already has a segmentation. The fact that it is several years old, or that teams are no longer using it consistently, does not necessarily mean the organisation needs to start again. The more useful question is what has actually stopped working. Has the market changed? Is there important new information that the existing framework does not capture? Or is the issue simply that people have lost sight of how the segmentation should be used?

Those are very different problems, and they are unlikely to have the same answer.

Sometimes the right recommendation is a new segmentation. Sometimes it is to refresh or extend what already exists. And occasionally the right answer is that a segmentation is not what the business needs at all.

A good research partner should be comfortable saying so.

Be clear about the job you want it to do

Another common challenge is the segmentation that gradually becomes responsible for solving every unanswered question in the organisation.

Because segmentation is a significant investment, it is understandable that different teams want it to work hard. Before long, it can be expected to identify the most valuable customers, explain brand

choice, guide innovation, shape the portfolio, optimise communications, support targeting and predict future behaviour.

A strong segmentation can support a wide range of decisions, but trying to make one model answer everything can weaken the clarity that makes it useful in the first place.

Being disciplined about its role at the beginning helps. Which decisions really matter? What needs to become clearer once the segmentation exists? Where do we expect people in the organisation to behave differently as a result?

Those questions also help distinguish a segmentation that is merely interesting from one that has real commercial value.

In our work, we look for solutions that are commercially attractive, targetable, stable, genuinely differentiated and intuitive enough to make sense to the people who will use them. Being clear about those criteria upfront helps keep the segmentation focused on what will genuinely add value, rather than trying to satisfy every possible need across the business. It can also help avoid unnecessary complexity, making the work easier to use and more efficient to deliver.

Think about what happens next

One useful way to pressure-test the brief is to imagine that the research has already been completed. The analysis is robust, the segments are clearly differentiated, and the final presentation has gone well.

What happens next?

Perhaps the marketing team can see much more clearly which audiences warrant greater investment. An innovation team may spot an opportunity it had not recognised before. A brand team could have a stronger view of who a proposition is really for, while senior teams may become more confident about where to focus and, just as importantly, where not to.

If you can describe those kinds of decisions reasonably clearly, there is probably a strong role for the segmentation.

If it is difficult to say what anyone would actually do differently once the segments exist, it may be worth spending more time defining the challenge before commissioning the work.

That does not mean knowing the answers before the research starts. Good segmentation should uncover things you did not expect. But there should be a clear connection between the understanding you are trying to create and the choices the organisation needs to make.

So when do you actually need a segmentation?

For us, segmentation becomes particularly valuable when there are meaningful differences within a market that should lead to meaningfully different decisions.

If the business is ultimately going to treat everyone in much the same way, a complex segmentation can end up adding more complexity than clarity. But if understanding different people could genuinely influence who you prioritise, where you invest, what you offer or how you go to market, segmentation can be hugely powerful.

Most organisations are not short of possible opportunities. The harder challenge is knowing which ones deserve focus. A strong segmentation can bring structure to that choice and create a shared understanding that gives people across the organisation more confidence in the decisions they make.

So, when we hear “we need a segmentation”, our first instinct is not to start discussing how to build one. It is to understand what the business is trying to decide.

If segmentation is the right answer to that question, then the next challenge is making sure we understand people in the right way. Knowing what customers do can tell us a great deal, but it does not always explain why they do it. That distinction can make all the difference to the opportunities a segmentation is able to reveal.

Next article in this series “You know what your customers do but do you you know why“.