Persona and Data Driven Approaches to Market Segmentation

Akcela have been delivering market segmentation consultancy for a number of years. Whilst many businesses will, over time, develop in-house segmentation, and processes for supporting different segments in different ways. The drift in customer demands and outputs can, over time, create business processes filled with friction and mistakes. If you are a start-up business, you may not have any internal structures for your different segments at all, nor the data to drive them. In this instance, a persona-based approach to market segmentation is the best (and only) way to address the problem. Something we have implemented time and time again as part of our many startup consultancy projects.

This insight is split into three elements:

• The Personal Approach to Market Segmentation – Perfect for start-up and early-stage companies. 
• Data Driven Approach to Market Segmentation – For larger organisations, with a defined customer base and usually some segmentation already in place. 
• A Practical Guide to Market Segmentation – A video we delivered to the Norfolk Chamber of Commerce outlining our approach and an example of market segmentation in action.

Persona Approach to Market Segmentation

Whilst personas can be attributed to a data driven model, generally, persona-based approaches to market segmentation are utilised where a business doesn’t have the required data to create their own market segmentation.

When creating a first business plan, many businesses will outline roughly what different segments of their target market look like. This helps in defining messaging to each type of market segment, as well as the marketing strategy that surrounds each persona.

An example of this may well be a clothing brand that offers handmade jeans. For one segment within their target market, say eco-conscious consumers with an age range of 18-21 may focus on the longevity of the product.  Their messaging and marketing campaigns for 40–45-year-old fashion conscious individuals may be more around the hand-crafted nature of the jeans and the quality of the cut.

Whatever the business with early staged businesses, persona-based market segmentation is more judgement and desk-based research, than quantitative, in business-based intelligence.

Data Driven Approach to Market Segmentation

A data driven approach to market segmentation can only occur when a business has a sufficient amount of data to start to extract a level of information around its customers. Generally, over time a business will its business up with divisions that match and interact with segments of customers in “verticals” of interaction type. For example, smaller clients with no credit account and a low order frequency may be directed to a call centre team, or online. Whereas the largest accounts may have a full account management team allocated to them, with individual order processing teams.

Whilst segmentation that is defined over time may achieve the lowest friction and associated cost service. Rarely is it truly optimised without ongoing market segmentation. Starting with a mile-wide, inch-deep overview of customer habits allows businesses to start with a blank canvas of how best to serve customers. Defining their needs through questioning and velocity and frequency of complaints and issues is also a profound way to define friction within current segmentation approaches for a company.

Once new patterns in customers wants and purchasing behaviours are defined. Processes that create frictionless ordering, processing and delivery of the product can enhance customer experience and outcomes for both the business and its customers.

Increasing Revenue Through Customer and Market Segmentation

In this video we review how market segmentation can increase revenue and ultimately profits, with an overview of how the process works, when to run a segmentation process and some key elements to consider.