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Your new segmentation is now in place, what’s next?

Wednesday 29 April 2020 Data Insight & Analytics

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Ed Sewell's picture
By Ed Sewell

So, you’ve delivered a brilliant customer segmentation. You’ve incorporated demographics, lifestyle, engagement and value data, established real clarity and for the first time you can tell your organisation who your customers are, where they are, what they like, what differentiates them, what they want and how you can most effectively engage them.

Now there’s some new challenges – how do you turn this rich new insight into action that drives tangible business value? Equally importantly, how do you get the buy in and engagement from stakeholders and colleagues needed to get the organisational adoption that will make your segmentation a genuine strategic asset?

These are certainly challenges that I have faced on numerous occasions and one I know many marketers, analysts and data leads will recognise.

Building a strategic asset

Typically, a great segmentation can deliver strategic benefits across 3 core areas. I like to break them down as:

  • Better Effectiveness – such as selling more through optimised marketing activity
  • Improved Efficiency – for example, deducing costs through channel optimisation
  • Reduced Risk – such as identifying and puting action in place to support vulnerable customers

Often the business case for the segmentation will have defined goals in theses areas. If not, now is the time to get those use cases defined. Once you have them you will be in a much stronger place to deliver value.

It can take time though to achieve success, so getting moving quickly is important. Once you have them, what’s next?

Data Science in action

This is where getting the data scientists involved can really start to add value. This is often a great place to initiate a collaborative effort with them - you’ve got the opportunity and they have the wizardry to help make it happen.

There are a range of approaches that can work here, but taking the example of a commercial organisation aiming to sell more product to existing customers, we’ve seen the following work incredibly effectively.

In this example, the vision is to combine the customer segmentation you have created with dynamic models that will create an optimised platform for selection and conversion. This approach would ensure that each customer is targeted appropriately with the product most likely to deliver long term value growth.

  • Step 1 Leverage insights and learnings from your Customer Segmentation to inform tailored messaging. Making your content relevant always makes a difference.
  • Step 2 Overlay optimised Next Best Product, Channel Preference and Lifetime Value models to inform targeted product offers. Don’t just focus on what a customer might buy next, consider what will build long term, incremental value.
  • Step 3 Test and refine in a small pilot, be prepared to fail, to learn and improve. It’s rare to get it right first time.
  • Step 4 - Deliver measurable, incremental uplift in product holdings through an integrated programme of optimised communications, founded on the Segmentation and enhanced with Data Science – initiating a cycle, of testing, refining and improvement. It may take a little time, but it will deliver significant results.

In this example this activity combines to inform the delivery of a cross channel marketing programme that will drive ROI from increased sales. We’ve seen this work in multiple sectors, including Financial Services, Retail, Automotive and Media. It is also highly effective in driving positive behavioural change in Public Sector applications.

Making it happen

The key principle is to test and learn in focussed pilots, to enable the timely realisation of insights that will inform you before you move to a full roll out.

In our experience the approach achieves buy-in demonstrating tangible results, building exec level appetite, growing stakeholder confidence and informing the business case for further investment. It will create success stories that will inform the vision and demonstrate success to the organisation. Your customer segmentation will become the foundation of a transformational initiative.

And that’s a key learning I have taken from my time working with customer segmentation. They are great initiatives and often create the most impact when they are used as an enabler to driving significant business value. 

If you’d like to hear more about this or how CACI can help you deliver more from your Customer Segmentation, we’d love to talk. Get in touch at info@caci.co.uk.

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Your new segmentation is now in place, what’s next?