Customer Segmentation: Validation vs. Foundational

Customer personas are critical for any company, but sometimes you need more quantitative rigor than personas can provide—here’s how you can use a streamlined customer segmentation approach to validate personas and fill in knowledge gaps.

Customer segmentation services can serve as the cornerstone for many business strategies. However, sometimes it’s not necessary to conduct a complete segmentation study from scratch. If your organization currently uses personas as part of its customer strategy, consider how you can achieve segmentation validation. Verifying personas through segmentation analysis can help you create deeper profiles of your customer base and equip yourself with additional tools for future research.

Segments vs Personas: A Quick Overview

Customer segmentation is a quantitative analysis used to determine how the marketplace is divided into different groups of likeminded consumers, and provides general profiles of each group. One of the key outputs from a customer segmentation analysis is a typing tool, which can be used to classify people into segments. A typing tool allows a company to recruit their key segments in future research in order to measure the progress they’re making with these top priority audiences. It also enables them to test new messaging or product innovations with these groups. For example, as part of your marketing strategy, Segment A may receive Email Newsletter A whereas Segment B receives Email Newsletter B.

Personas are created using qualitative research and help bring different customer segments to life and tell their story. They are extremely important when socializing customer segments around the organization, and help ensure your employees really understand who your segments are.

The Trouble with a Persona-Only Approach: No Typing Tool

We typically recommend beginning with a customer segmentation analysis and then building personas around the top priority segments. But some companies jump right to persona creation—usually because they don’t have the time or budget for a full segmentation study. As pragmatists, we support this—you need to do what is right for your business and build your strategy on whatever customer insights you’re able to collect given your time and budget.

There are several potential pitfalls that can arise from a persona-only approach, such as personas appearing overly simplified or not being MECE (mutually exclusive, collectively exhaustive). But most of our clients who have used qualitative research or digital ethnography to create customer personas are generally happy with the results… until they want to conduct additional research on their personas. Without a typing tool, they find it can be difficult to identify customers who fall into each group and replicate the personas in future research.

Segmentation Validation: Verifying Personas through a Focused Customer Segmentation Approach

If you’ve run into this issue, there’s no need to scrap your personas and start over. If personas have already been socialized within your organization and are helpful to your team, then you should continue to use them. To solve the issue of not having a typing tool, we can reverse our normal process and use customer segmentation analysis to validate your personas—and create a typing tool for you as part of the output. 

Here’s how segmentation validation differs from our typical approach to segmentation (i.e. foundational segmentation), in which we create segments from scratch:

Validation Segmentation

• Ramp up: Can jump straight to questionnaire design
• Questionnaire writing: Focused and streamlined questionnaire because we are mapping all items in the survey to your personas
• Analysis: Fast process because we know exactly what our output should look like and simply need to find the combination of variables that leads to the strongest results
• Output: Segment profiles, Typing tool

Foundational Segmentation

• Ramp up: Usually recommend initial qualitative research to help us hypothesize different segments that might exist and ensure we have all of the right inputs for the questionnaire
• Questionnaire writing: Longer questionnaire because we need to include questions that map to a variety of potential segment options that will be explored in the analysis process
• Analysis: Iterative process takes several weeks and involves a mid-point meeting with the team to discuss different solutions
• Output: Segment profiles, Typing tool

Whether you’re able to start your journey with foundational segmentation or choose to retroactively verify your existing personas with a segmentation validation approach, adding an extra layer of insights will help you to better understand, design for, and market to your target audiences in a more meaningful way.