WELCOME TO OUR BLOG!

The posts here represent the opinions of CMB employees and guests—not necessarily the company as a whole. 

Subscribe to Email Updates

BROWSE BY TAG

see all

A User's Guide to the “Perfect” Segmentation

Posted by Jay Weiner, PhD

Mon, Jul 22, 2019

iStock-628987676 (1)

A really good segmentation benefits many users. The product development team needs to design products and services for key target segments. The marketing team needs to develop targeted communications. The data scientists need to score the database for targeting current customers. The salesforce needs to develop personalized pitches.  Last, but not least, the finance department uses segmentation to help allocate the resources of the firm. With so many interested parties, it’s easy to see why getting buy in up front is critical to the success of any segmentation.

A "perfect" segmentation solution would offer insights for each user to help them execute the strategic plan.  What does this mean from an analytical perspective?  It means we have differentiation on needs for the product development folks, attitudes for the marketing folks and a predictive scoring model for the internal database team.  That sounds easy enough, but in practice it is difficult.  Attitudes are not always predictive of behaviors.  For example, I’m concerned about the environment.  I have solar panels on my roof.  You’d think I would drive a zero emissions vehicle (ZEV) and yet I drive a 400HP V8 high octane burning gas powered car.  I don’t feel too bad about that since I don’t really drive much.  That said, my next car could be the Volkswagen I.D. Buzz, an all-electric nostalgic take on the original VW van, but I digress.

Segmentation is not a property of the market.  It is an activity.  It’s usually helpful to evaluate several potential segmentation schemes to see how well they deliver the key objectives.  We do this by prioritizing the objectives.  Getting nice differentiation on attitudes to help create more effective marketing campaigns might be more important than getting a high accuracy on scoring the database.

My colleague, Brant Cruz recently listed leveraging existing data sources as one of the keys to successful segmentation.  This is often one of the biggest challenges we face in segmentation.  How well can we classify the customer database?  What’s in the database?  Most often it’s behavioral data like month spend, products purchased, points redeemed.  These data are the most accurate representation of what happened and when it happened.  What they don’t help explain is why it happened and in some cases who did it.  For example, many families subscribe to streaming music and video services.  If you don’t remember to log in, then the behavior is correct for the family, but not necessarily attributable to a specific user.

Appending demographic and attitudinal data to the database can help provide the links.  When such data are available, we have to verify the source of those data.  Many companies offer the ability to populate demographic and potentially attitudinal data. If this is the source of the append, then is it an actual value for the specific customer or is it a proxy for that customer based on nearest neighbor values.  In either case, we would still need to determine the age of the appended data.  How often do these values get updated?  Are some values missing?  For example, if you have recently signed up for an account, then your 90-day behavioral data elements won’t get populated for some period of time.  This means that I would need to either remove these respondents from my file or build a unique model for new customers.  How well we can accurately predict the segments is contingent in part on how accurate our data are.

The most accurate solution would be to simple segment using only information in the database.  If our ultimate goal is to help the client with prospecting for new business, a segmentation of customers is not likely to be too helpful.  This means that I need to collect primary data and ask surrogates for the values in the database.  A concurrent sample of customers would help with any need calibrate the survey responses for over/under statement.

When we start to mix database values with primary survey data, we typically do two things.  First, we dilute the differences in attitudes and needs.  Second, we reduce the accuracy of scoring the database.  There are ways to improve the scoring accuracy.  We can provide a list of attributes that could be appended to the database to increase the correct classification.  Sometimes, the data scientists may be able to identify additions variables in the database that were not provided up front.  Other times, it’s simply a matter of figuring out how to collect these values and have them appended to the database.

One part of the evaluation is to determine how many segments to have. Just because you have a segment, doesn’t mean you have to target that segment.   You should have at least one more segment than you intend to target.  Why?  This lets you identify an opportunity that you have left in the market for your competitors.  Just because there are segments of folks interested in zero-emission vehicles, or self-driving cars does not mean you need to make them.  Most companies can only afford to target a small number of segments.  Database segmentations with targeted digital campaigns are often easy to execute with a larger number of segments.

How long can you expect your solution to last?  Typically, segmentation schemes last as long as there are no major changes in the market.  Changes can come from technological innovations.  ZEV and self-driving cars have changed the auto industry.  Shifts in the size of the segments over time are just one indication that the segmentation could use refreshing.

Dr. Jay is CMB’s Chief Methodologist and VP of Advanced Analytics and is always up for tackling your most pressing questions. Submit yours and he could answer it in his next blog!

Ask a Question!

Topics: advanced analytics, market strategy and segmentation

Maximizing Segmentation Impact with Smart Trade-offs

Posted by Kate Zilla-Ba

Thu, Jul 11, 2019

choose

Every day we help our clients solve for as many needs possible while staying laser-focused on business objectives and decisions. It can be a tricky balance, but there is no better time to be in research—mobile stitching, AI, agile qual, etc.—are helping us extract more value in less time. So, with all that is available to us, why do we believe it’s so critically important to focus on best and highest uses?

The ability to make smart trade-offs is critically important in segmentation initiatives. The investment of time, money and resources mean stakes are often especially high. Here are a few recent examples of how we’ve helped our clients make appropriate trade-offs to get to a solution that maximizes impact.

What works:

  1. We can’t say it enough: communicate early and often. Our lift-off workshops spend a good deal of time surfacing stakeholder input that may indicate potential disagreement about the use of the insights and decisions that must be made. Often, once the different needs, wants, use(r)s are brought into the light, stakeholders can see and reconcile themselves to a greater good.
  2. “We know we need this segmentation, and we want it to be ‘actionable’ but our business handles customer type A through one department and customer type B through another, can we segment after splitting on this?” Yes, of course. But recognize you may be trading off tactical implement-ability against an incisive view that could change the way you approach customers—including not treating them in these silos. In other words, it may be fine, but let’s try to think through all the downstream implications and make the most informed decision.
  3. “We want to be able to track people by segment in our database.” Of course you do! We need to build in the elements that will create those linkages. Customer databases typically do not have some of the types of data we would include in a comprehensive segmentation—attitudinal and even behavioral can be quite sparse. We often find ourselves helping businesses determine what is critical now vs. what can be done in stages, later. Creating a smart segmentation that can be used immediately for marketing but will need more work to develop an implementation plan for back tagging your database for the longer term is something we address often.

And what doesn’t:

  1. Looking through only one lens. True or false: running a demographics only model because that is the only way the business believes they can find the people later. False! We often need to work in some demographics, but more often they will lead you down an overly simplistic (and non-strategic) path.
  2. Underestimating how much time is needed to socialize the segments. We have been a part of some amazing socializations in our day. Keep the engagement and excitement building through a multi-faceted, communications plan that begins at project inception and continues well past the release of the new segments. Have a release party, where people can “type” themselves and see, feel, hear, what it is to be the segment. In one of my favorites, posters were placed around the halls, updated over time to go from fuzzy to sharp images—to show how the business was gaining clarity on who its targets were but also just to build excitement through basic human curiosity. A common thread for successful socialization is to keep conversations going, planting seeds, and listening for pockets of resistance, so that when the full release is ready it has allies, and has lowered the risk of unexpected roadblocks. This is sometimes a hidden investment of time that researchers don’t adequately factor in.
  3. Overestimating accuracy. We will often find a desirable solution that resonates and feels actionable and sensible, but then in implementation, panic! Some of those typing into segments don’t feel exactly right. It’s important to deeply consider how a learning segmentation that has firm roots and a clear strategic vision, may need to be fine-tuned to become fully incorporated into business practices.

Smart trade-offs take careful planning, communication, and partnership. Taking the time to focus will make all the difference! Let us know your thorny trade-off challenges!

Kate is a CMB Account Director.

What's driving and deterring consumer adoption of Autonomous Vehicles? Listen to what people are saying and download the ebook here.

 

 

Topics: market strategy and segmentation

Category Disruption and Maximizing Insights Impact

Posted by Brenda Ng

Fri, Jun 28, 2019

You know it’s time for a new segmentation when significant category disruption is occurring.

framefuture

A successful category segmentation does more than pinpoint your primary and secondary target customers. It helps you and your stakeholders understand how disruption shifts customer beliefs, motivations, and behaviors related to purchase and usage.

Common category disruptors:

  • A new competitor is shaking up the category or maybe it’s you entering a new category. Amazon is one of the best examples of a new, disruptive entrant in a variety of industries. With a good segmentation, you’ll know which segments make up the bulk of your volume, which customers are at risk, and how to compete effectively.
  • One of my favorite disruptors is new technology. In the auto-industry, it’s self-driving cars, electric cars, and online car sales. In financial services, robo-advisors, mobile payments, and financial management apps are shifting the landscape. You could fill a fascinating book with refreshed segmentations for consuming digital entertainment and media in the past 10 years.  Think how much change was enabled by technology with on-demand viewing, streaming content, and alternatives to episodic content.  A new segmentation chapter is ready to be written with 5G, evolution of wearables, smart devices, and AI.
  • New pricing models can create seismic category change and the need to refresh a segmentation. Consider the growth of subscriptions versus transactional, à la carte pricing.  When I was at T-Mobile, it was delightful to shake up the wireless industry and win customers with no contracts and installment plans.

Sometimes your boss or another executive asks for a new segmentation.  That’s a very good reason to consider a new segmentation.  Why?  If they’re not asking for a new segmentation and there’s major disruption in the category, it’s imperative to secure senior leadership support. Senior management endorsement is a critical success factor in adoption of a new segmentation across an organization. 

Next time, I’ll share the recipe to ensure the successful embrace, adoption, and usage of a new segmentation.

Brenda is CMB's VP of Strategy + Account Planning

Learn how emotions play a key role in consumer acceptance and adoption of Autonomous Vehicles.

Get the Ebook

Topics: technology research, market strategy and segmentation

The 5 Keys to Successful Segmentation

Posted by Brant Cruz

Mon, Jun 17, 2019

SegmentationIn a world of constant change what can we truly count on?  For me it’s death, taxes, the fact that the Patriots will be playing football long after my beloved Chicago Bears have gone home, and another topic close to my heart: The 5 Keys to Successful Segmentation. 

While the 5 Keys to Success are evergreen, new data sources, empowered consumer behavior, digital disruption, globalization and 24/7 connectivity all impact what it means to build a successful Segmentation. Pair this with a growing consumer obsession with immediacy and personalization and you have brands facing a greater need for consumer-centric market strategies than ever before.

In the next couple of weeks my colleagues and I will share what we’ve learned over the course of conducting nearly 200 successful Segmentations. To start us off, I’m sharing the five critical success factors that ensure our clients not only build a true understanding of their target consumers and how to engage them but to also drive real strategy across the organization—including resource prioritization, marketing messaging, product development and innovation.

Key Success Factor 1: Focus on business decisions from the start

Segmentation is likely one of the largest investments your insights team will make—there isn’t room for failure, much less mediocrity. But, if your stakeholders aren’t engaged, invested, and aligned from the outset, you’re dramatically increasing your odds of failure. This is the opposite of the purpose of Segmentation (see below on Segmentation and Unicorns).

A clear focus on business decisions—communicated from the start and serving as guardrails throughout (and beyond) a Segmentation initiative is key.

Successful brands start by asking and answering questions like: How must this Segmentation support our organization’s goals?  Which specific business processes does the Segmentation need to dovetail with to be actionable, and what connective tissue do we need to build in to make that possible? Are we prepared to truly prioritize one or a small set of segments for better success at the risk of being sub-optimal with others if we can make a case as to why? How much complexity can we effectively handle (e.g., more segments, a matrix of segments) versus a need for a simple, unifying lexicon? 

These brands work with partners (cough, cough) that truly understand your business needs, clearly outline objectives, lay the groundwork, and design questionnaires that directly answer hypotheses. It may not be sexy, but I’ve picked up the pieces of competitive Segmentations and ignore this at your own (and your team’s) peril. You must: engage early and often!

We leverage several proven tools to inspire action and focus from the onset, including:

  • Stakeholder interviews—understand executives’ objectives and expectations
  • Lift-off workshops—identify success criteria
  • Business Decision Worksheet—to tie decisions and hypotheses to the questionnaire

Key Success Factor 2: Account for a wide range of influencers

Look around, consumers people are complex, but traditional frameworks just don’t account for that complexity anymore. Part of the art and science of Segmentation is considering these diverse attributes: motivations and drivers, product preferences, future goals, needs/barriers, beliefs and perceptions, habits, and of course behaviors. A strictly attitudinal-based (or behaviorally-based) Segmentation is always sub-optimal in today’s marketplace.  Age and gender Segmentation have never been less relevant. 

For example, later in this series, my colleague Dr. Erica Carranza will share more about our proprietary Habit Loops Segmentation framework—an approach that delivers more nuanced marketing, communications and product development implications vs. Segmentations based on behaviors alone. Understanding the psychological motives, attitudes and values that drive behaviors can help uncover strategies to activate segments—promoting desired routines and revealing opportunities for disruption.

Key Success Factor 3: Anticipate trade-offs

Segmentation schemes have strengths and weaknesses—there are no silver bullets and it’s nearly impossible (okay actually impossible) to satisfy everyone’s wishes.  If you see an agency promising to deliver anything resembling perfection, avoid them!  Perfection plus Segmentation is a unicorn.  Segmentation is not about perfection, but about increasing your odds of success at the individual level, by having a way-better-than-coin-flip hypothesis about their relevant segment and applying treatments that will yield materially better results than a vanilla product or message

The best schemes will balance those business needs with practicality. This is where the real art comes in—evaluating the trade-offs and making an educated and calculated recommendation for a path forward.

Key Success Factor 4: Leverage existing resources

Most, if not all, of the companies we work with sit on troves of customer data that—when harnessed correctly—provide powerful insight into existing or potential segment groups.  How big a role various forms of “big” data can and should play in any assignment should be drive in roughly equal parts by the three keys above, and the quality of the data your company owns and/or can access.  Coming soon, my colleague Dr. Jay Weiner will discuss some of the technical aspects of marrying survey data with other data sources to complete segmentation missions.  No need for me to try to communicate those complexities concurrently; those of you with sharp data chops know that I’d be a poor surrogate for Jay anyway, right neighbor?  (How was that for a little data geek humor?)

Key Success Factor 5: Empower decision makers to act

The most sophisticated Segmentation scheme will collect dust if it’s not evangelized throughout the business. As I shared in Key Success Factor 1—a laser focus on decisions and getting buy-in from stakeholders starts at the very beginning and must be rigorously pursued throughout.

We keep insights fresh and meaningful, and stakeholders engaged by drumming up excitement and bringing segments to life across the organization.

Our strategic qualitative team draws from a comprehensive toolkit, combining traditional with agile and cutting-edge strategies to foster active participation and build enthusiasm. We frequently leverage activation and socialization workshops, persona development (more on this to come), as well as creative deliverables and immersions.

But it doesn’t stop there. Segmentations are living, breathing frameworks—and should be treated as such. The work doesn’t end when the workshops are over. We help clients realize the potential of these powerful insights and empower executives across the organization to advocate and build empathy for these customers (or prospects, depending on who you’ve segmented). The use for Segmentation extends well beyond marketing and we help executives realize the full potential.   

And even that ending is a new beginning.  Once business leaders have bought in, Segmentation enters the realm of learn>test>re-learn.  Seeing segments come alive and become accessible to researchers and non-researchers is one of the most fulfilling parts of my job, but it doesn’t happen all at once—it takes careful planning, a great team, and experience.

You’ll be hearing more about these key success factors in the coming weeks but you don’t have to wait to learn more, let me know your thoughts in the comments or shoot me an email and let’s chat.

Brant leads CMB's Platforms and Digital Media Practice. 

Learn how we helped Netflix create binge-worthy insights with A Global Segmentation with—and for—UX Designers.

Check out the case study

 

 

 

 

Topics: market strategy and segmentation

To Label Me is to Negate Me (Sometimes): The case for occasion-based segmentation

Posted by Peter Cronin

Wed, Aug 29, 2018

beer

One of my favorite lunchtime routines is to walk from my office over to the Trillium Brewing Company in nearby Seaport to grab a 4-pack of their current small-batch, limited-time, freshly brewed double IPA.

As far as Trillium knows, I’m an “Epicure”—a beer drinker characterized by my ardor and appreciation for craft beer.

During the summer months, I occasionally stop at BJ’s Wholesale Club to get a 30-pack of Corona (along with a couple of limes) because I like to have something to offer guests when hosting a cookout. In these instances, I’m looking for value, but not necessarily the cheapest option because quality and image are still important to me. BJ’s might consider me your average “Cost-aware Enthusiast.”

Every year on my birthday, which typically coincides with the start of March Madness, I stop at my local beer store to buy a six-pack of Samuel Smith’s Oatmeal Stout. They probably consider me a “Sports Oriented” beer drinker.

So, who am I? A beer snob, a deal-seeking but conscientious host, or a sports fan?

The answers are “all of the above” and “it depends.”  

In some categories (like beer) the same person may experience a variety of needs in any given time and make different choices based on those needs. Segmenting people by their dominant motivation/need risks majorly oversimplifying reality.

To understand opportunities for growth in categories like this, a better alternative is occasion-based segmentation. Rather than segmenting people into groups, occasion-based segmentation considers multiple use occasions instead of just one. As you can see from my example, I’m more apt to purchase one type of beer over another based on the occasion (e.g., time/day, who I’m with, what I’m doing).

Occasion-based segmentation is particularly successful when anchored in the psychology of habits. When a behavior is rewarding, we tend to repeat it. The more we repeat it, it eventually becomes a habit. For many people, drinking beer is habitual. Take my backyard BBQ, for example. Throughout the summer, I repeat the cycle of having friends and family over, eating good food, drinking Corona with lime, and feeling relaxed, restive and connected. This occasion has all the key components of a habit: my craving (motivation) to host triggers a routine of good food and drink that results in feeling connected (reward). Feeling connected makes me to do it again.

When we ask people about their occasions at CMB, we also ask what motivates these choices and to describe the rewards—including the emotional and functional outcomes. These inquiries become the base of the segmentation. 

Segmenting your market by usage occasion can be a powerful source of insight about your consumers. By linking brands to occasions and understanding the psychological needs and emotions that drive choices, marketers can position their brands to be the preferred choice. They can tailor messaging to each occasion to build engagement, preference and loyalty.  

Brand managers at The Boston Beer Company, AB InBev, MillerCoors, etc., should be less concerned about whether I’m a “High Impacter,” a “Macho Male,” a “Trend Follower,” or a “Chameleon.” Classifying me attitudinally will dramatically underestimate the complexity of my buying habits. 

Instead, understanding the core types of beer drinking occasions (and the driving psychological needs and emotions of each), how much volume each occasion represents, and which groups of people over-index on them, can enable marketers to make informed decisions on where and how to focus their messaging, promotions, and product development efforts.

Peter is a brand guy who is fascinated with understanding how others see the world, and an equal opportunity beer drinker who refuses to be labeled.

Learn more about segmentation and market strategy:

Learn More

 

Topics: research design, quantitative research, brand health and positioning, market strategy and segmentation