Customer segmentations are underutilized. They typically inform marketing and product decisions, and only marketing and product decisions. This approach can be very successful, but it only touches the surface of what a segmentation is able to do. We recently worked with a B2B telecommunications client eager to leverage segmentation to not only inform marketing and product decisions – but also to drive a business transformation. Using research to guide their shift to a customer-led organization, we had the unique opportunity to design, deliver, and operationalize a segmentation that fundamentally changed our client’s business.
Embracing Change in a Dynamic Landscape
In early 2022 our telecom infrastructure client found themselves at a crossroads. Technology was changing, the market was growing, and customer expectations were shifting. Their company was changing too, with new offerings and an expanding client base across a broader range of industries.
With these changes, traditional strategies based on industry and geography were no longer sufficient. They soon found these methods lacked the required depth, as different sectors within the same industry had vastly different telecommunications needs. For example, a hospital and a pharmaceutical brand are both in the healthcare industry and can even be in the same geographical area but have very different telecom infrastructure needs. To better meet the needs of their changing market, our client realized they needed to transform into a customer-led business. And to do that, they needed research.
From the initial discussions with this client, it was clear our research would need to go beyond the typical segmentation. An effective segment model was only part of the equation. Truly supporting our partner’s goals meant thinking bigger – ensuring every phase of the research was designed for how they intended to use our segments to transform their business. Here’s what we did (and some of what we learned) in this unique approach to segmentation.
Three-Pronged Implementation Strategy
Our three-pronged implementation strategy was instrumental in guiding our thinking and decision-making throughout this transformative journey.
The first prong is communication. We aim to socialize our segmentations with every part of our partners’ organization – both top-down and bottom-up, tailoring messaging for individual teams to deliver actionable insights. For example, to drive adoption we delivered product data to the product team. To inform the sales communications and structure, we delivered psychographic data to the sales team.
The second prong is education. End users don’t need to know everything about a segmentation; just two things: (1) can they trust the data, and (2) how can they use it? Trust is about the sample, especially tricky to get right in the B2B space, and approach to targeting. After that, end users don’t need to understand the details of the model that got us our segments, they just want to know how to use it. Which brings us to…
The third and final prong of operationalization. This is where the segmentation comes to life. With this client, we did this in a few ways:
- Prioritization of Segments to Inform Operations. Prioritizing a customer base for marketing means you are prioritizing how you spend your dollars. For business transformation, it means prioritizing how you structure your organization.
We used customer lifetime value (CLV) to inform the prioritization of the segments – along with several strategic conversations regarding the organization’s strengths, weaknesses, and future direction. This valuation allowed us to inform a restructuring of sales approaches, product bundles, and services the organization would and would not offer. - Connecting Datasets to inform Sales Infrastructure. We worked with our client to merge their existing internal and third-party datasets and subsequently type customers into segments based on available information. This allows sales teams to quickly get to know their clients and prospects.
- Predict Customer Behavior. By modeling churn and next logical product (NLP was not done in this case but is a typical solution), we are able to predict how a customer might act in the future, and intersect them before they churn, or offer up the next logical product before they ask.
- Inform Product Bundling. At the same time as the segmentation, the organization was re-thinking its product bundles. Overlaying the segmentation product bundles allowed us to determine the optimal bundle of products (via choice-based modeling) for the optimal set of customers.
Lessons from the Journey
Segmentations are an excellent marketing tool, but they can be truly transformational to a business when considered through the lens of the larger organizational strategy. What led us to success within this organization was a baseline of trust between PSB and our client partners – partners who had the credibility and clout to make this type of internal transformation possible – and an organization that was ready to change.
Customer segmentation isn’t something that can be achieved at a single point in time. It’s an ongoing effort, a continual push towards an agreed-upon strategy. Having the north star of implementation is just the beginning for a successful, dynamic segmentation.
If you want to know more about successful segmentations, don’t hesitate to reach out: [email protected] or [email protected]
Written by Colleen McCauley, SVP of Marketing PSB Insights
Support by: Allison Shellaway, VP, PSB Insights