Moving faster than you think is possible -
In a previous newsletter on segmentation, I suggested that marketers seeking growth should 'cross-reference multiple dimensions' of customer characteristics to delve deeper into segmentation. Several readers responded by asking how this worked and which dimensions were preferred and why.
Peeling the Onion
In that previous newsletter, I had suggested then that by using multiple dimensions, one can uncover growth in smaller sub-segments. But why does this work? This edition addresses how and why using multiple dimensions is effective...
[Note, if readers ever have questions on any newsletter, keep the conversation going by replying to the email or posting a comment on the web version]
Assembling a Whole Picture
There are two fundamental reasons why this first-step approach is so effective.
First is that different characteristics tell us different things about customers and markets. We think that debates about what is the “right” or “best” segmentation variable are often pointless. So choosing what to look at based on what you want to understand is a better approach. At the same time, starting with just one variable, is often problematic, because key information is lost. For example:
- Applications or Uses: Explain how a product is used and what needs are met.
- Customer Types: Illustrate customer behavioral tendencies and why they value certain product or service mixes.
- Area/Geography: Show where demand occurs and indicate zones of competitive pressure.
Each variable offers insights into different facets of demand. Intersecting these facets yields unique customer combinations, forming a nuanced understanding of customers. It’s a better basis for segmentation because of this, and that nuance brings with it: growth.
Acting quickly on these insights relies on the second reason. And that is that often, insight about these 3 customer characteristics is often already available, embedded in your organization. Why? Because different functions tend to gravitate to different factors.
- Sales is often organized regionally.
- Product Development often is aligned by application.
- Marketing and Supply Chain are often aligned to product and service, so Customer Type resonates with them.
What’s missing? The intersection. When each function thinks about customers on one dimension, and that information is not assembled, then key customer insights go unfound.
Each characteristic reveals a unique story about customers.
This information often exists but is siloed within your organization.
Growth is unlocked by assembling and acting on this information.
Actioning the insight
There are more and deeper factors for segmentation for later efforts, and we’ll discuss those in later issues. But an achievable Step 1 comes from mining what’s already known in your organization, and quickly actioning it for growth.
- Extract information from your org on these multiple dimensions.
- Intersect those dimensions to give you next layer of segmentation.
- Quantify and identify growth targets from this new segment view.
- Implement these insights to pursue new growth opportunities.
Until next week,
Kendall -
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