McKinsey & Co. conducts a bi-annual survey among top CEOs to determine which strategic management tools they plan to use over the next two years. Segmentation research is always one of the most powerful and frequently mentioned tools. Unfortunately, history makes clear that roughly 70% of segmentation initiatives fail to deliver on management expectations. More often than not the cause of failure is not that the research was done incorrectly, but rather that the segmentation was too narrowly focused on new product development, targeting of alternative promotions or identification of new customer and prospect groups. But when the time came for implementing the segmentation the sales force was not aware of the new company targets, or the fulfillment group was not aware that a new incentive program was coming online, or that customer service was uncertain how to respond to callers questions, and so forth.
Market segmentation is not just a marketing strategy but an enterprise wide business strategy that affects every touch-point that a company has with its customers and prospects. Our first recommendation to a client when asked to conduct segmentation research is to assign a cross-functional team including marketing, CRM, finance, customer service, sales, manufacturing, advertising, etc. to ensure that each functional group
We never nor do we allow clients to start discussions on any segmentation initiative with any a-priori segmentation solution in mind. The type of segmentation must be consistent with the company’s business strategy and objectives. ResearchLink Partners has significant experience in the various forms of segmentation including:
Some key deliverables clients should expect from segmentation research are:
Regardless of which form a segmentation is selected, it is extremely important to match segmentation to Customer Needs.