An interesting update on one of the examples we used in our Choice Optimization paper.

We mentioned how credit card companies offering a complex array of products risk overwhelming their potential customers with too many choices (‘purchase paralysis’). One way to reduce this risk is to ask customers questions about the product features that is important to them (reward card vs. low APR card) and then use the answers to narrow down the choice of products (explicit filtering). However, as we pointed out

“….this process indicates to customers that there are additional options available to which they are not being exposed. Also, explicit filtering still introduces the risk of regret…”

Capital One seems to have figured out a way to overcome the risk of regret through their new online Card Lab feature. Built for customers who are evaluating new cards from Capital one, it uses a very simple intuitive design to let a potential customer understand the various tradeoffs between features and choose the card that best suits his/her need.

As the customer tries out the various options, a huge amount of data will be collected. This can be used to generate insights to develop new products.

This tool is applicable to situations where consumers are making trade-offs between product features and options while shopping online. Whether it is buying auto insurance, cable/wireless service or a digital camera – it makes choosing the right product a simple and transparent process for the consumer and might result in less abandoned carts and more sales for the company.

A recent article by Neil Davey echoes our perspective on segmentation ‘only a limited number of organizations are actually using segmentation to its true potential’. He talks about ‘The seven perils of segmentation’ which includes some excellent rules of thumb to keep in mind during a segmentation exercise:

• Keep it simple: A case in point is the adoption of ‘off the shelf segmentation schema’ which when combined with primary research can provide valuable insights and help create a rapid, scalable and actionable segmentation strategy. Read our white paper on rapid market segmentation here
• Size matters: ‘For all the planners, segments of varying sizes can pose difficult problems at planning and execution level’ says Julian Berry, managing director of Berry Consulting and director of the Customer Partnership. So next time when you perform a cluster analysis or a CHAID, keep a keen eye on the ‘n’; rather take the statistics with a pinch of salt
• Take a holistic view: In our recent engagement on web analytics, we identified core groups on the basis of ‘when was the last time you visited the website’, ‘how frequently you visit the website’ and ‘how much time on an average you spend in a visit’
• Don’t let market research results grope in dark: Always tie your market research survey results with other critical elements such as customer satisfaction scores, and acquisition and retention metrics across segments to get a comprehensive view of current and potential customers

For more of our posts on segmentation, click here