12 minute read
Whilst having a unified, overarching, message is important, having the ability to tailor that message to different audience types is equally important. Different audience types have different needs, interests and levels of knowledge and therefore will be receptive to different types of content. Segmentation exercises are key to understanding who your audiences are, and what they are interested in.
Segmenting a market means identifying – not creating – ways to group clients and prospects based on common needs. The clients and their ‘needs’ already exist; you must identify which of these ‘needs’ to use when segmenting the market.
The ‘needs’ you use to group clients should relate to those ‘needs’ your products and services solve. If there is something unique about the products and services you offer, the ‘needs’ you group by shouldn’t be identical to the rest of the market.
To establish a more concrete understanding of market segmentation in your mind, White Marble’s Head of Digital, Tabra Trezise has identified and answered five common questions:
1. Sales already have their own way of segmenting clients – can we come up with a segmentation model that only the marketing team uses?
If market segmentation is all about understanding what your clients need, and organising how you think about and interact with your clients based on those needs, then shouldn’t every part of your firm want to agree on what those needs actually are?
Segmentation, when done properly, means aligning how a firm views its market and its clients. It’s important that every team in your firm is on the same page regarding the ‘needs’ they’re solving for, and has these needs at the forefront of what they’re working on.
Not to mention that both marketing and sales functions are far more effective when they’re aligned and integrated. Put in the effort to get the right people around the table to agree a segmentation model that everyone agrees on and understands how to use.
2. What should our segmentation decisions drive change in?
In a nutshell, almost everything. The vast majority of what your firm produces should be in the name of addressing client needs, and if your segmentation model organises these needs into clearly actionable groups it should regularly be referenced by all internal teams.
Here is a short and far from exhaustive list to give you an idea:
- Market research
- Product and service development
- Product and service value propositions
- Brand positioning and messaging
- Marketing communications
- Campaign targeting
- Channel mix
- Distribution strategy and prioritisation
- Pitch books
- Client servicing approach
- Client portal experience
- …and much more!
3. How many segments should we have?
There is no ‘one size fits all’ when it comes to the right number of segments. If you’re deciding how granular to get, consider that the best segmentation model is the one that actually gets used. If you get carried away creating loads of detailed segments, it’s unlikely the majority of your firm will understand the model, let alone use it.
Also keep in mind the amount of resources you have to support the number of segments. You may wish to identify a larger number of segments, then combine some segments into one group and treat all those segments in the same way. The audience will never know it, I promise. Just because you’ve identified a particular segment doesn’t mean you have to treat it in a special way.
As an example, a firm might be prepared to work with 40+ segments. Others would need to simplify to only six. And another firm might identify 60 segments, prioritise 21, and divide those 21 segments into 7 groups (3 per group).
Segment on needs that matter to your clients and to a degree that makes sense for the resources you have available.
4. What if we don’t have the data we want?
In every role I’ve ever had, data has always been a hot topic. Everyone always wants more data, better data and different data. Typically, we are sitting on too much data – and it’s never in a useful format that we can trust. As is often the case with B2B firms, the data also never gives you an end-to-end view of the client lifecycle.
Here are two tips to help you get started:
Use your CRM data. It’s real data about your actual clients. If you don’t know what data points you have on your clients and prospects, get to know them.
If you don’t have the data you want – find a proxy for what you’re trying to segment by and use that instead. Don’t wait for more or different data, just get started.
You don’t need all the data to make some segmentation decisions, you just need a few valuable pieces. Work out which ones they are and just get going.
5. What if our lack of data means we’ve incorrectly segmented some clients and prospects?
Your segmentation model, and the data behind it, will never be perfect. It’s highly likely you will have assigned multiple contacts to an incorrect segment – and that’s okay. Many of us are self-confessed ‘perfectionists’ but we need to become comfortable with getting things wrong. Of course, it’s still important to continually optimise the accuracy of your segmentation – but you should be cognisant it will never reach 100% accuracy.
If you undertake market segmentation and do it to the best of your ability, you will instantly provide yourself and your team with an improved understanding of your audience and the opportunity to provide them with better solutions or products. So the question shouldn’t be why should you use segmentation, but why haven’t you started already?
Listen: – Twink Field, CEO of White Marble, Tabra Trezise, Head of Digital at White Marble, Baba Awopetu, Strategy and Marketing Consultant – Segmentation as part of your marketing strategy
- Segmentation offers companies a powerful opportunity to get closer to the customers, and potential customers, through better insight.
- Segmentation is about identifying needs, not creating something. It is a way of organising your customers so you can serve them better.
- Segments should be grouped based on similar needs.
- Perfect data doesn’t exist – pragmatism is key. Data is valuable when it comes with insight about an individual’s, or an organisation’s, needs, and we can often bridge the gap where there are gaps – data is a proxy for the variables you are interested in.
- Most asset managers are grouping clients in the same, not particularly nuanced way, by:
- Assets under management/ assets under advice
- Building on these aspects can give much more insight, eg:
- Investment time frame
- Risk appetite
- What service do they offer their end client?
- What industry do their end clients belong to, how does that inform their investment objectives & criteria?
- There is no value in segmenting based on needs that you cannot service; it is important that what you are isolating actually ladders back to what you can offer your client.
- Segmentation is a process of discovery, and must be contextualised – so two different companies in the same market could reach different conclusions.
- Segmentation enables alignment to needs, and ways to solve those needs, rather than product comparisons.
- In the asset management industry – in the case of an individual investor the competitors are not just other products, but a broader consideration set. Eg. Active funds are competing at some level with passive funds, savings accounts, real estate etc.
- It is important to have a vision of how the outputs of a segmentation exercise are going to be used – both in marketing and product development.
- It is also important to design something that works with the capability, capacity, and culture of an organisation – keep it as simple as possible in order to ensure that it works effectively.
- Taking a different approach to the same market has the potential to offer competitive advantage.
- Collaboration with sales, client services and other departments, is key to access data on audience and run an effective segmentation exercise. A segmentation exercise needs to be across company effort in order to be insightful and effective.
- Segmentation, as it cannot be refined to an individual level for obvious economical and logistical reasons, is inherently somewhat ambiguous. But any segmentation is better than none at all.
- The more segments you have the resource to identify, the more understanding you can have. However, this doesn’t mean you have to treat all segments differently – they can be clustered for efficiency and monitored – if you notice different behaviour in one segment it is easier to assess and address that if that behaviour was subsumed in much larger single segment.
- Good segmentation allows you to reassess where you sit in the market and who your competition is,
- Segmentation, and an understanding of the priority or segments, should inform branding and positioning.
- Markets are evolving and changing, segmentation has never been more important – it enables us to keep on top of changing needs and concerns in this environment. It can also inspire innovation in terms of service, offering, engagement in order to meet those evolving needs.
- In the context of marketing responsible investing and sustainability, segmentation can provide the solution to one of the biggest challenges facing asset managers – how to avoid being forced to prioritise the needs and preferences of some at the cost of risking alienating others.
- Given the regional, demographic and sector variation in receptiveness to ESG, RI and sustainability – audience segmentation enables marketers to dial up or down their messaging depending on who they are talking to.