Devising strategy and direction for your organization should never be a one-time event. Any number of factors can affect what your business does, how you do it, who you sell to, and where you fit within the context of your industry and the world at large.
That’s why a segmentation exercise must be a regular part of your business planning activities. While foundational, segmentation cannot be static. As the world shifts, so too will your customers. Tomorrow’s best customer may not be your best customer today. Even if the definition of your best customers remains the same, their needs and problems will evolve over time
How do you know when it’s time to revisit your customer personas? And how do you approach the segmentation process again? We share some tips.
Get on a Schedule
You schedule bi-annual teeth cleanings and yearly car inspections. As with any preventative process, it’s important to check in on your segmentation strategy regularly. We recommend that you take the pulse of your market at least quarterly, although your individual schedule may vary based on the industry you’re in or the realities of your sales cycle.
Consumer-focused brands or those undertaking a strategic shift may need to pulse more regularly. Leaders of B2Bs with a longer sales cycle may live on the outer side of that quarterly schedule.
Regular check-ins on your segmentation, to coincide with your voice of customer activities, can help you keep an eye on subtle shifts in the market and your standing in it so you don’t find yourself in a reactive position.
View these regular check-ins as your maintenance plan for all the hard work you did building your segments in the first place. Deliverables age—keep them current.
Don’t Reinvent the Wheel
The good news is that once you’ve done the foundational work of undertaking your first segmentation exercise, you don’t need to start from scratch each time.
Think of these quarterly segmentation exercises as a pulse survey, rather than an in-depth data collection outing. These quarterly sessions can include a handful of interviews, plus a re-surveying of a sliver of your market. Your existing data can help trim your survey considerably. When you craft statistically devised questions, you can send a one-to-three-question survey, rather than a 12-15 question one.
Including a net promoter score (NPS) question is another quick, but effective way to get a high-level picture of how each segment feels about your business as a whole.
Once you have this data in hand, assess where you stand, segment by segment. Are there any subtle shifts in this representative pool of respondents that could signal trouble ahead? For example, did your NPS score change in any one segment? A downward trending NPS among your best segment indicates bigger issues, and if you’re only considering the average responses of your segments, you could miss crucial warning signs.
You’ll also want to review your numbers against your agreed-upon strategy. If you said at the start of the year that you wanted to grow Segment A, have you done that? How satisfied are those customers?
If things look alright, plan to re-survey again next quarter. If something seems off, dig a little deeper into those funky numbers to find the “why” behind them.
The Force Majeure Rule
Quarterly segmentation is all well and good in sunny skies, but what about when you come up against a world-rocking event? That’s force majeure. Literally “superior force” en français, it’s a helpful concept to frame when you need to go back to square one on your segmentation.
Whenever you come up against a force majeure event in your business, it’s time to revisit your segments—even if it’s before your regularly scheduled tune-up. These moments might be an unexpected global event, like an economic meltdown or a pandemic.
They can also be a seismic shift in your industry. For example, the Google Meet team should have rethought their segments when Zoom exploded onto the global video communications stage.
A big, unexplained shift in your numbers is also cause for a redo of your segmentation. Hopefully, you have a dashboard where you’re regularly checking in on your conversions, sales pipeline, recurring revenue, and other vital signs. If something is off-kilter in your dashboard, that’s cause for immediate investigation.
Finally, the shift may come from within. If your business decides to pursue a new strategy, pivot to new markets, rebrand, or introduce a new suite of products, new segmentation data will be needed before moving forward.
Even if it’s been smooth sailing for your organization, we recommend you completely revisit your segmentation every 18 to 24 months, on top of the quarterly refreshes.
In today’s highly digital world, a lot can change in a year and a half. Competitors can launch a new website in the blink of an eye to blow you out of the water. Disruptive new brands can pop up, seemingly out of nowhere. And, just as the tectonic plates shift under our feet, our customers can shift their behaviors, attitudes, and thinking over time. Remember: TikTok wasn’t even a twinkle in its creators’ eyes six years ago; now it’s a dominant marketing channel for younger consumers.
You must regularly reaffirm that the proof behind your personas is accurate and your old assumptions remain relevant in your present reality.
New Customers, New Products: A Real-World Example
We recommend ongoing segmentation efforts to each of our clients. One such organization doubled its business in one year after implementing a data-validated segmentation study.
Those results were impressive, but leadership knew better than to rest on its laurels. The team continues to monitor segment growth and NPS each quarter, keeping an eye out for opportunities or warning signs.
These regular refreshes have allowed them to identify bottlenecks in new customer acquisition and retention long before they became multi-car pileups.
Instead, the team was able to make simple tweaks to user experience and product features to address these customer concerns and grow the business an additional 30 percent in year two.
Recognizing that deliverables age, they also invested in a full refresh two years out from the original segmentation exercise. The deep dive identified a brand new segment in their audience that hadn’t existed 24 months earlier.
They’ve now developed a new product line aimed at this fresh, high-value segment, which has allowed them to drive customer lifetime value to 10X that of the average customer.
Embrace the Process
As with other maintenance-oriented activities, you may groan at the thought of revisiting segmentation so regularly. But think of it this way: Would you rather get a regular teeth cleaning every six months or wait until you need an emergency root canal?
When you reframe the process as an opportunity to ward off future crises, regular segmentation suddenly becomes a lot more appealing. Or at least, a lot more fun than some future catastrophe. And who knows? As you begin to embrace the process of regularly checking in on your segments and subsequently unearthing new ways to grow your business, it might just become something you look forward to. Kind of like that minty-fresh feeling you have leaving the dentist’s office.
About the Sterling Woods Group, LLC
The Sterling Woods Group’s mission is to help clients make sense of their data to predictably grow sales. We apply data science to help you optimize your sales funnel, improve your marketing ROI, launch new products successfully, and enter new markets profitably.
We use a hypothesis-driven, data-supported methodology to discover insights that no one else is paying attention to. Then, we help you assemble the right sales strategies, marketing plans, technologies, and resources to seize this opportunity.
About the Author
Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Starting his career at McKinsey, his focus has always been on embracing digital technology and data science to spur strategic growth.
Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.
He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.
Rob lives outside Boston, MA with his wife, two daughters, and black lab.