Using Segmentation to Sharpen Your Focus

Craig Apatov / Strategic Marketing Practice Leader

Targeting and market segmentation are terms that get thrown around a lot these days.

The fact is these tools, used thoughtfully, can help almost any company drive focused and profitable growth in even the most difficult economic times. The most successful global companies understand that insight and data-driven decision making is the key to insuring return-on-investment from their marketing and sales activities.

A recent IBM global study by of Chief Marketing Officers revealed that demonstrating ROI to support their decision making was one of their greatest areas of uncertainty and unpreparedness as they make their future spending plans.

There are several different ways to analyze your target market and current customer base to strategically determine where to make growth investments. In our work with clients all over the world we suggest they consider the following analytic exercises:

Market segmentation – The process of segregating current customers and/or potential growth prospects by financial or psychographic factors and organizing them into definable segments. These segments can be organized on the basis of financial measures (e.g. profitability; annual revenue) or by behavioral factors such as needs/wants or demand characteristics.

Customer Tiering – A financial exercise intended to organize customers/prospects into three tiers – high, medium, or low. These definitions could relate again to revenue or profitability performance factors over a one or more year time horizon. Typically Pareto’s Principal or the 80/20 rule applies in most businesses. That is 20% of the customers drive 80% of the revenue or profit for the enterprise.

Customer Profiling– This refers to the use of primary market research targeting specific segmented or tiered  customer or prospect groups to understand – what they look like, where they live, what they need/want. Building strategic customer profiles for each customer segment or tier can be a valuable tool to inform a company’s going forward growth planning.

The goal of doing this type of analysis is to invest in activities that help drive more of the profitable customers and less of the ones that cost an organization money.

Importantly these principals don’t just apply to major corporations.

We saw how purposefully executed market segmentation was artfully used by the Democratic Party to micro target four demographic groups to ultimately win re-election for President Obama in the 2012 national election.

Key Questions to Ask Yourself
Before getting started in strategic segmentation exercises, we recommend clients always begin with an honest assessment of themselves and their true appetite for pursuing a segmented growth plan. Many companies find market segmentation to be the latest “shiny object” but fail to conduct the required analysis correctly or simply do not have the resources to get the job done with internal resources.

This is where the objective support of an astute consulting firm can help augment internal talent and available strategic and analytic resources. Once a decision is made to move forward we recommend that ask themselves the following questions and let the answers guide their going forward actions:

Data Access – Current + potential customers are your best source for new business. Do you have empirical data that will allow you to understand size characteristics and relative profitability?

Insights – Do you have information on your current customers and/or prospects that will allow you to understand their needs/wants and attitudes relative to your product/service offerings?

Organizational Alignment – Are you organizationally prepared to align your product processes and distribution channels to meet the specific needs of your target customer segments?

Customer Considerations – Do you know and understand the regulatory, technological, and practical needs of your best customers/prospects? If not how would you acquire this information to drive your segmentation model?

Financial – Do you have the financial tools/information to accurately value the potential of one segment vs. another?

Return – Can we estimate the return to your organization of executing a segmented go-to-market plan?

Activating Segmentation as a Tool for Your Organization

Before moving forward with any effort to segment your market make sure you have the necessary resources on hand. This means data, people, systems, and strategic thought leaders.

In our work with clients we find most companies could do the required data analysis and planning themselves. However given the pressing demands of day-to-day operations and the lack of on staff resources it is often helpful to have the help of an objective outside consultant to drive the process working collaboratively with your internal staff.

Leverage the tools used by the most successful companies in the world to drive growth for your organization. If you don’t have the resources in house find a capable consultant to help you. It does not take long or cost a lot of money to get focused on driving informed growth in the year(s) ahead!

How to Leverage Strategic Segmentation for Your Company

Taking an objective and thorough look at your customer and prospect financial data is critical to effective market segmentation. If your company has not analyzed the profit dynamics of your business in a while – the time may be right to get some help.

At Ascension, our team of data and financial analysts use powerful SAS based tools to quickly and efficiently help our clients understand where they do and do not make money.

Strategic analytics leads to important going forward marketing and sales plans that are targeted and informed thereby improving the overall ROI on marketing and sales investments.

If you company could use some help getting its arms around customer and market segmentation, contact us at

In less than 60 days we will provide you with insights and strategic recommendations that you will surely want to leverage in you’re going forward plans!