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Case Study: The Power of Grouping Customers into Segments

Updated: Nov 2, 2021

Updated 10/23/21


I'm always encouraged when I connect with marketing leaders who recently joined a new company and are shocked their teams have done little to no customer research. Why should I be pleased to hear this? For two reasons:

  1. I've faced it myself (believe me, it's all too common) and can relate.

  2. I love a good customer study and can help.

There are various customer research studies depending on your objectives:

  • Customer surveys are asking for feedback about your brand, products or services and can "grade" your company's performance.

  • Customer segmentation studies are designed to better understand what makes your customers tick and involves grouping customers (and prospects) based on shared needs, demographics, firmographics and/or psychographics (see below). From there, personas can be developed to 'lift' segments by providing a much richer qualitative picture of a typical 'fictional' customer within that segment, animating their personality and values. (Here's a great article describing the difference between personas and segments).


Customer Segmentation in Four Steps


I've built multidimensional customer segmentation models (demographics x needs) for companies looking to understand and group their customers into segments so they can tailor products and messaging to meet priority segments' needs. I typically follow the following process:

  1. Develop hypothetical "working" segments and dimensions that will create customer clusters after evaluating existing client insights and third-party data. Sometimes I refine the hypothesis through a few customer interviews to stress-test my assumptions. For example, in a segmentation study for an education publisher targeting college professors, we believed teaching at the undergraduate (vs graduate) level, personal values and motivation towards teaching and attitudes towards technology would create significant "cut lines" so we made sure to ask survey questions that would garner those insights.

  2. Conduct primary research of customers and prospects (typically an online survey) paying close attention to the sampling approach to secure the right sample size for all audiences and screening criteria/questions

  3. Analyze survey results which can involve partnering with an analyst if using K-means cluster analysis which assigns a set of respondents to groups called “clusters” on the basis of one or more responses, so that respondents within the same cluster are in some sense closer or more similar to one another than to respondents that were grouped into a different cluster.

  4. Iterate and refine segments, collaborating with the analyst and client as often times assumptions are rejected based on survey results and we need to revisit them in light of the findings. In the case of the segmentation study for the publisher, there were many behavioral factors that proved universal so we had to revisit behavior with a smaller data set (by title or role type) where we then discovered measurable differences when you combine these factors: employment status (tenure track vs. adjunct), years teaching, and class format (lecture vs. discussion based).

Successful brands produce offerings and messaging that resonate with customers.


Meet your Customer Segments


To successfully bring the segments "to life" for my clients so they can operationalize the findings, I often start the project by asking a few questions:

  • Who on your team will be using this information? What are their roles and how will they use this information?

  • If the segments are successfully adopted, what will that look like in 6 months or a year for both the customer segments AND your staff?

Based on the client's needs, deliverables can include:

  • Segmentation Profiles: These are like factsheets for your segments with a readout on the segment's key differentiators in terms of needs, demographics, behaviors and/or psychographics (including what questions to ask to enable grouping new customers in this segment).

  • Presentation: A presentation to relevant product and marketing teams describing the project and bringing the segment profiles to life can include up to 40-60 slides. Here's a "sanitized" slide from a recent presentation highlighting a segment's needs, aspirations and behaviors:

  • Messaging Framework: A messaging framework (sometimes referred to as a message map) highlights key messages and priorities for each segment, a very useful tool for content creators.


Applying the Findings


Successful brands produce offerings and messaging that resonate with customers at each and every touchpoint. As a first step, many companies conduct a gap analysis, methodically reviewing customer touchpoints against these new findings to ensure that the right products or services and the right messages are being presented to the right segments. This can include everything from:

  • Product design and packaging

  • Customer service messaging, FAQs, etc.

  • Website design, navigation, key landing pages, etc.

  • Messaging across social media channels, email newsletters, etc.


Ready to better engage your customers with messages that resonate? Let me know how I can help you launch a customer segmentation study.


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