Segmentation that works!
Trying to define your core audience isn’t easy. Companies spend millions each year on segmentation research, devising sophisticated ways to categorize existing customers and prospects. More often than not, segmentation leaves businesses with catchy, but useless solutions.
Even more challenging is when a company needs segmentation for a new product or service outside of its core competence—when you are no longer a category expert. Such was T-Mobile’s challenge. They wanted inspiring segmentation not for their core wireless base, but for uncharted Internet and TV users.
We recently caught up with Brenden Elwood at T-Mobile to query him about MDI’s recent segmentation work with his team.
Senior Consumer Insights Manager
Here are highlights from that conversation...
When you commissioned this research, what were you hoping to achieve?
“We have emerging, non-wireless businesses. It’s a brave new world for us. Our core business is wireless. How do you get that wireless brain to think differently? That's where segmentation came in.
Our segmentation research needed to be simple, digestible, and intuitive. It had to identify different consumers out there, but it also had to resonate and be relatable to colleagues. I wanted the segments to be instantly understood. That’s gold. If it’s complicated or requires much explanation, that will create doubt. Then, you're going to have people challenge the research, and rightfully so.
My thinking was that as we started adding color to the segments and began talking to business leaders about these segments, they could take a step back and say, ‘Yeah, that makes perfect sense.’”
Was there anything during the segmentation work that really stood out?
“Two things stood out: First was the use of qualitative work. It set the stage for quality later on. MDI suggested that we take our time and give due diligence up front with online focus groups. These allowed us to develop good hypotheses and an intuitive survey that provided the right data for the complicated science part of segmentation. We felt really confident about the approach.
I've done segmentation work before, using cluster analysis and K-Means. In this case, I also thought we should have no more than a few segments. When MDI started running the models, the segments just weren't clicking.
So, MDI recommended using Latent Class for the analysis. When we did, it made six solid segments. They came to life in a better, more meaningful, organic way. I appreciated the recommendation. I liked how they challenged my thinking about how to derive segments that made me even more confident about it.”
What surprises came from the effort, if any?
“I’d envisioned that our drivers would largely be attitudinal. But when we got into the nitty gritty analysis, demographic and usage variables were stronger and made the segments come to life. At first, it was surprising to me that attitudes were weaker. But when I took a step back and thought about it, it absolutely made sense. One or two attitudinal variables had some impact, so I wasn't completely off base in thinking they would factor in.
My colleagues challenged me and asked: ‘Where's the attitudinal variables, the value, the psychographics?’ But, because of the process we took—not rushing, taking time to think through all the nuances, I had complete confidence. Our partnership with MDI was great because we also got a lot more out of the segmentation work than just the deliverable.”
What’s the biggest benefit that has come from this segmentation?
“We’re trying to tackle a new line of business: Internet. Everyone had their own anecdotes to help them try to understand the space better. I did too. But the segmentation helped us ground the discussion on real people, real consumer households. Our anecdotes actually played out in the different segments. ‘Oh, I'm that segment,’ we said. ‘My parents are that segment. My friend is that segment,’ and so forth.
We now trust the segments because they are relatable. My colleagues now say, ‘Here are the insights we've garnered.’ We’re now focusing the conversation on who can benefit most from the products and services we're trying to introduce into the market.”
What would you say to someone who is thinking of doing segmentation?
“First, go with your instinct, but then challenge it with some good qual work.
Second, partner with people. Collaborate. In this segmentation, for example, a colleague and I came from completely different households. MDI had a unique view. We all came from completely different angles in different households. Bringing diverse people into the fold is valuable because it helps you bulletproof your thinking and makes you smarter.
Third, don't rush things. You want to be thorough, methodical, so that you can feel confident and able to stand up against the most ardent challengers and know you did it right.
Finally, take time at the end to ensure your segmentation story is clear. I’ve had segmentations that failed because they didn’t stick with people. Colleagues didn’t relate to it. Make it approachable and understandable. Then people can walk away understanding what you're talking about. I can’t stress the creative piece enough. Segmentations fail because they’re too technical, not relatable, and you just didn't take that extra step to properly explain. Internal audiences just want to know what they need to do. If you can first give them a clear picture to look at, then they’ll listen to you and run with it. I credit your MDI team with helping us do that here.”
We agree with Brenden at T-Mobile. To get to final segments that are clear, backed by data, and relatable to those who must ultimately run with them, consider the following:
· Use qual to refine hypotheses, challenge assumptions, and ensure you don’t miss important characteristics.
· Collaborate. Others will bring useful points of view to the process.
· Then, use our guiding principles to good segmentation, based on the acronym, A-E-I-C:
A-E-I-C has helped MDI provide segmentation that works.
We’re all about you… Strategic. Fast. Value-driven. Clear. In the moment. Experienced. Resourceful. Confident. And of course, Mobile. We love collaborating, always keeping you top of mind. That’s why we’ve worked with some of the world’s biggest companies in over 40 countries—and right in your own neighborhood.
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