How to pick a segmentation agency

The trouble with segmentation is that once you start looking…

…you’re faced with endless agencies claiming to offer it.

But be wary, the world is littered with mediocre segmentations

But be wary, the world is littered with mediocre segmentations

or worse.

How can you be sure you’re making a good choice?

How can you be sure you’re making a good choice?

An agency with

real segmentation expertise?

So if you’re thinking of appointing a segmentation agency, here are three areas

worth exploring…

#1The methodology

Technique has a

massive impact on segmentation outcomes.

So make sure you ask

what technique they use

and why, and watch out for

bland, generic responses.

And if they suggest focus groups…

STOP RIGHT

THERE!

Qualitative data

cannot deliver a

meaningful

segmentation at all.

And if they suggest focus groups…

In quantitative, the traditional and still most

commonly used clustering techniques

(such as K-means) have major flaws…

You have to guess the right number of segments

1

You have to guess the right number of segments

1

It can produce different results from the same dataset

2

You have to guess the right number of segments

1

It can produce different results from the same dataset

2

3

It often creates one big lumpy segment and a load of fuzzy, too-similar segments

You have to guess the right number of segments

1

It can produce different results from the same dataset

2

3

There is no error-checking mechanism

4

It often creates one big lumpy segment and a load of fuzzy, too-similar segments

Ensure that the clustering method used

can overcome these flaws and provide a

high level of accuracy.

#2Variables selection

Clustering can create segments from

any data you put into it…

…but this doesn’t

mean the segments

will mean anything.

?

It’s critical that your agency fully understand your business objectives and

market characteristics in order to select the right variables that will generate

meaningful segments that are useful for decision-making.

#3Communication of segments

Segmentation

generates a large

amount of data.

But your agency should distil

the results to be easily

absorbed and used across a

whole organisation.

The most important two questions the segmentation answers are

“who do we need target, and how?” and

“who should we avoid?”

Once you have your targeting strategy,

you need to understand each priority

segment as a real person: how to interest

and engage them, and how to convince

them to buy and use your products and

services.

Of course there is more to good segmentation than these 3 areas.

But any segmentation agency worth its salt will get all 3 right.

12

3

Unfortunately, many agencies deliver great

creative outputs and workshops, but at the

expense of analytical rigour, potentially leaving you

with a vivid, but wrong or bland, set of segments.

By asking some tough questions, you stand a better chance of getting a segmentation that’s

both vivid and rigorous.

If you want to know more, please get in touch:

chris.cowan@clusters.uk.com

020 7842 6830

Visit our website: www.clusters.uk.com

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