instinct and reason uses segmentation to build new business models for clients.

Having a good understanding of customer needs, how to reach them, and the different messaging required for each segment means the difference between success and failure in this increasingly attention devoid world.

Tailoring messages according to segments that matter can make a difference in both efficiency and effectiveness of the marketing efforts. In fact communicating with some segments in one way could be less than  ‘useless’ while a different message outlined in a personally relevant way could prove to be far more effective.

Other reasons strategic segmentation makes sense to instinct and reason:

  • understand customers and encourage changed behaviour through new product purchase
  • identify specific segments whose needs represent risk and address them
  • validate behaviours
  • identify opportunities to grow the business.

instinct and reason believe in the importance of having evidence to support a change in the way the business approaches its customer base, and that the instinct of managers or marketing staff is no longer considered enough on which to base business investments.

How we do it

It includes:

  1. Ensure the segmentation is embedded in every aspect of the operation by establishing a whole-of team responsible for managing the segmentation strategy (IT, R&D, operations, sales and marketing, corporate communications, and finance).
  2. A qualitative phase to explore attitudes and behaviours (this could be done with face-to-face focus groups, online forums or a mix of both). This phase is crucial to ensure the segmentation bases/variables are clearly defined and in simple language.
  3. A substantial survey should to enable the segmentation solutions to be robust.
  4. The survey should contain a discrete choice model element to allow a range of approaches to be tested.
  5. Segmentation analysis to identify the segments based on values and attitudes. This is an iterative process where 10–20 segmentation solutions are tested for efficacy and work-shopped with the segmentation team. The ultimate solution/s should be embedded into a decision support tool delivered by the discrete choice model. This decision support tool would be useful for:
    1. adoption initiatives
    2. marketing communications
    3. corporate communications
    4. research and development planning
  6. Advanced analysis modelling to develop an algorithm that will tie each customer to a certain segment
  7. Collect the key variables required by the algorithm so that every customer can be placed into a segment.  This should be able to be kept to (3–6 variables ) captured over time
  8. Develop strategies and new business models to meet the needs of customers.

What it means for clients

instinct and reason segmentations have driven the development of ongoing communication and marketing strategies for Australia’s largest banks, wealth management organisations, government agencies and not for profits.