Avinash summarizes the interesting insights from the recent Emetrics- the online marketing conference. One graph that particularly caught my attention, from a presentation by Tim Hart of J. Paul Getty Trust, is an analysis to determine content consumption of a website.

The blue bar shows the type of content on the site: Education, Research, Collections etc. The red bar shows the percent of Visits to that content.

To put it another way “what are the large chunks of content on the site, what are visitors to our website looking at”.

I am sure the insights will scream out at you. 86% of the content was being consumed by 23% of the visitors. For 25% of the visitors were looking at 4% of the content (Research).

This analysis helps to set the baseline for content consumption at the highest level and informs about the needs of the online visitor to the website. If your website uses any web analytics tool, it should be pretty simple to create the above graph.

In earlier posts, we discussed the goals of an ideal segmentation scheme and issues with most segmentation initiatives. Based on our experience at more than half a dozen clients, we have developed a five-step “Rapid Segmentation Methodology” process to create a comprehensive customer segmentation platform and have applied it to solve both strategic and tactical marketing decisions across the various groups within a marketing organization. To summarize the five steps:

1. Select standard schema
   Customize an array of rich data from an off-the-shelf schema that is pre-segmented into groups of the U.S. population.(e.g. Claritas’ segmentation products)
2. Prioritize segments
   Use business goals to filter criteria to create a shortlist of high potential targets.
3. Survey target segments
   Ask detailed questions of potential customers to pinpoint which specific products will resonate.
4. Dive deeper into the data
   Develop datasets to further parse the preferences of potential customers and predict customer profitability.
5. Disseminate data to different departments
   Distribute valuable insights about customer segments to various groups across the sales department-product development, marketing, communications, distribution and after-sale services.

The methodology is useful for guiding marketing decisions ranging from new product development and pricing to ad campaign development and media buying. More details about the approach and a few client examples are available in the recent Diamond white paper, which you can download here.

In a previous post we talked about the goals of a market segmentation study and this post will focus on some of the common pitfalls we find in most segmentation initiatives undertaken by marketing departments.

The fundamental problem with most segmentation studies is that individual marketing groups’ commission segmentation studies for their own use without much thought to how it can be leveraged by other groups within marketing. Direct marketing department is concerned about lift in response models, market research wants a sample of people to understand needs of potential customers, product strategy is interested in sizing up the market for new products and branding folks want to develop psychographic personas of target customers which they can share with the creative agency. To meet their diverse needs, each group normally develops its own version of segmentation. This results in a very fragmented view of the customer. The same customer is seen through different lenses by different marketing groups and a holistic picture of customer fails to emerge. A classic case of elephant and blind men syndrome.

So what is the solution?

In our opinion the solution is a platform approach to market segmentation, where one starts with an off-the-shelf segmentation schema and customizes it to a situation to answer specific business questions of interest without limiting its use to a particular marketing group. More on the approach and link to a whitepaper will follow in a later post.

It is universally accepted that segmentation is a key tool that marketers use to identify and acquire profitable customers and an effective segmentation is the foundation of a customer centric strategy. The idea is so pervasive that it is not even considered a ‘buzz-word’ or an innovative concept in marketing departments. However, this does not mean that companies are able to effectively develop and execute on segmentation strategies. Far from it: In our experience it is probably one of the most fundamentals of marketing techniques with which companies often struggle. And, the problem starts right in the beginning, when companies define the goals of the segmentation exercise, which in most cases is narrow and focuses on one specific use of segmentation (scoring direct marketing models or defining branding profiles)

So what should your segmentation scheme be able to tell you?

From our experience, the two main goals that any segmentation methodology should be able to address are:

1) At a strategic level, segmentation should be able to help an organization rapidly evaluate new business opportunities

• Geographical expansion: Should the retail chain expand to north east?
• Product expansion: Should the electronic manufacturer launch a smartphone?

2) At an operational level segmentation should yield information to help craft successful marketing offers for specific prospects.

• Product: What product features are must haves vs. nice to haves?
• Price: What is the price point that customers are willing to pay?
• Communication: How to message to the target customers?
• Distribution: Where do the target customers live?

Does your segmentation scheme meet these goals?

In subsequent posts, we will talk in detail about some specific issues around most segmentation schemes and an interesting approach we have seen work in many companies.

Customer risk segments are used to identify relevant product offerings. However, it seldom acts as a key service differentiator. Focusing on customer risk segments, especially as a grievance redressal tool, can help break down the century old cycle of (1) investigate, (2) verify, and (3) process the transaction. This three step procedure proclaims the customer guilty even before the verdict is out. Reengineering the resolution process can turn dispute resolution into an opportunity to build relationships.

When a customer disputes financial transactions, banks start internal investigations, verify the customer’s claims and then reimburse/waive-off the transaction amount or reverse the financial cost that has been levied on the customer. All these happen only if the customer claim is found to be true. But what about the grey areas where the verification process could be inconclusive?
Well, most retail banks have exception handling policies. Impressive!! Just that they are implemented long after the customer is fuming with anger. Is the customer going to be satisfied? The answer seems to be an emphatic No.
The three step resolution procedure can be strategically changed with the customer being “trusted” first, and the investigation, verification steps being done in the background. To implement this, we need a customer risk score available to all customer touchpoints (phonebanking, internet banking, etc.). The risk score identify customers that can be trusted.

Expertise in building  robust scoring models and process re-engineering can help identify process pain points that need correction. This can be leveraged to reinforce the relationship the customer shares with the bank, thereby increasing the lifetime value of a customer.