Segmentation – the good, the bad and the ugly.

Nov 30, 2020 |5 min read
segmentation papers

Segmentation is having a bit of a moment in the limelight right now, and quite rightly so. When done well, segmentations can be one of the most powerful foundations for any business to understand their audience, target them more effectively with the right products, services, and messages to drive much-needed growth. With businesses and consumers, the world over, adapting to recent changes, things are different now and segmentations can help you understand how, where, and why. But most importantly, they can help to pinpoint how businesses can respond and thrive in this 'new normal'.

segmentation oranges

For the past few months, our global inboxes have been flooded, client calls dominated, and team video calls focussed on, you guessed it…segmentation. Segmentations are the 'marmite' of the analytics toolkit - they can be incredibly insightful, strategic pieces with a long shelf life, but they've also been known to bring even the best of us, out in a cold sweat. We've developed hundreds of segmentations in the past 30 years from exploring the software needs of small businesses across the globe, to mapping the global haircare customer and everything in between. We've worked with client's existing segmentations in our ad hoc projects and helped to enrich segment understanding through our creative delivery offer. We've seen it all, the good, the bad and the ugly. Drawing on our collective wisdom (or the 2CV hivemind as we like to call it), here are our top 10 do's and don'ts to help you get the most out of your next segmentation.


Review the research and knowledge you already have internally about your customers, potential customers and market - you'll have more hidden gems, key insights and interesting hypotheses to explore across your business than you at first might expect. One of our biggest tips is to make sure you go into the quantitative phase as informed about your audience as you can be. It's often useful to kick start your segmentation research with some solid exploratory work upfront to provide a sound understanding and grounding. Making sure you have a thorough grasp of similarities and differences across your audience negates the likelihood that segment groups might be engineered based on misconceptions and allows for genuinely new, fresh insights to be uncovered. 


They can undoubtedly do a great deal and are an incredibly useful tool for insight and marketing teams alike, but they are not the silver bullet for all your future business challenges. When planning your segmentation, be clear and realistic about what it can and should achieve. Segmentations will give you a solid foundation to build from, deep audience understanding and mechanisms to prioritise and focus your business moving forward. But it won't be the holy grail to answer every question the business will have over the next couple of years. Be clear on what the core aim of the segmentation is and stay focused on that to give it the best chance of success.


For a segmentation to land effectively in an organisation, stakeholders need to buy into it - many a good segmentation has failed to have an impact and reach it's full potential because it's just not been sold into the wider business. It's important to give the key people in the business a voice and input into the segmentation. This not only helps to get internal alignment but reveals the business needs and expectations for the segmentation we need to consider and deliver on. This also informs the embedding process, knowing how best to bring the segmentation to life across the business. Do not overlook this part of the journey, make sure you give stakeholders multiple touchpoints within the segmentation process to make sure the key people are aligned and involved before you move forwards at each stage. It might make the process slightly longer timewise, especially if you have busy, time-poor senior stakeholders, but the end payoff is definitely worth it.


This might sound counterintuitive, but when it comes to segmentation it's just as much an art as science. The data process must be robust and therefore scientific, but the analysis and insight needed to understand the sometimes vast and complex data truly is an art form. Before you start segmenting, there's a lot of work to do to explore the data and get it in the best place to create the best segmentation. Sometimes what you think is two dynamics in a market turns out to be two ways of expressing the same thing, other times the irrationality of the human mind can present challenges in the data. Whether you deal with this through data manipulation, interpretation, or analysis, it is important to look deeper and use every data stream available to draw together segmentation insights.


For the segmentation to succeed, a collaborative process works best, with the client and agency working closely throughout. This can be uncomfortable at times, sharing early-stage thinking and outputs which are not fully formed. But you'll need to lean into this, work together to push the segmentation forward, tailor it to make it fit for purpose for the business. We always recommend an early review of the different segmentation solutions, ensuring the client sees all the potential options available. This gives you the opportunity to stress test and understand which solution will bring the most value to the business and not close down any potential options before they've been fully explored.


If the segmentation seems so complex that the end-users don't intuitively understand who each segment is or find themselves within a segment - Houston, we have a problem! This can be for a multitude of reasons, for example, if there are too many segments, or if there is too much detail provided on each segment, it's hard to conceptualise each one in a simple way. Segment names themselves have a powerful role to play here - they can be left to the end of the process, but they are so key to get right, as they need to convey the essence of the segment simply in just a couple of words. A good way to tackle this is by creating 'working names' early on and then finessing these with the client - at the end of the day, they know what will work within the organisation.


On the flip side, there is also the danger that segments can be too obvious or generic, and not shed any new light on the issue or challenge they were created to address. To avoid this, we recommend really doing the ground-work before you even think about a quantitative segmentation, in this case, if you fail to prepare, you can almost certainly prepare to ultimately fail (defer to tip number 1 above for more detail). Your goal here is to make your segments engaging and intuitive for everyone to understand. You know a segmentation is right when you can say - I am segment A, my colleague John is Segment B and my dad is segment C, it's that great 'aha moment' when we know we've all cracked it.


Where budget allows, we recommend qual once the quant segmentation is created. Yes, it's an added investment that might not always seem worth it on face value, but if you've worked hard to create a new segmentation that can change the game for your business, it would be a shame to not put it into action and make it work just as hard for you. This stage need not cost the earth, you can pick your key target segments and work strategically to bring them to life one by one, over time to the business. This can have the effect of super-charging the quant findings - we've run many debriefs where qual case studies have really helped to bring segments to life, making them more recognisable and believable, encouraging stakeholders to buy into them. Putting a real human face to your segments can really help cement them in your stakeholder's memories.


Thinking about one of the final segmentation outputs, the golden questions algorithm, make sure these really are 'golden' questions. They should be a short number of questions which can be used to identify segments in other research or data sources. If they are a large set of questions and statements, they will eat up precious time in surveys and risk not being used at all. Work collaboratively with your agency and their data specialists to get this element right and work for your future needs.


The best way to embed and socialise a segmentation will differ for every organisation and needs to be tailored according to client needs and constraints. For some businesses using physical outputs - posters, banners, wall stickers and booklets, strategically placed around your office can work wonders to make your stakeholders truly customer-centric in their day to day roles. For other businesses, a more visually engaging and immersive experience might be better suited - think about using segment champion films, videos, documentaries or podcasts to share with stakeholders or even creating segment shrines and immersive room experiences to put your stakeholders into the world of each segment.


With so many elements to consider and pitfalls to avoid, it's easy to see how a segmentation can sometimes miss the mark and not deliver. Miss one key ingredient in this recipe, over or undercook others and you risk a segmentation which doesn't fulfil its full potential. But done well, with the right balance of ingredients and considerations, a segmentation can be a hugely valuable tool to unlock growth for your organisation. Covid-19 has changed consumer behaviours and habits and sparked a re-evaluation of what's important to them, so it's not surprising that segmentations are the flavour of the month right now. For many businesses, it's the time they are re-evaluating their existing knowledge of their audience and market to make sure their current segmentation still works and is what the business needs. For others, it's the first time they are thinking about putting a new segmentation in place as a foundation to drive into the future. Whatever your experience with segmentation in the past, whether it's been a successful tool or not for your business, if you've not already considered it as a tool to move you forward, now just might be the right time. It's a big undertaking and as we've highlighted above, it can be a scary process, with multiple pitfalls to navigate. But, with the right inputs, collaboration and hard work from both client and agency, it might just be the thing you need right now to take your business forward, recover and get back to growth.