Ever struggled with segmentation?
I’ve seen smart teams tie themselves in knots on this topic.
Usually it’s people armed with in-depth methodology and insights clashing with those concerned about real-world application and actionability.
They immediately get sucked into debates around which demographics, needs, priorities, motivations etc, but zooming out for a second can be helpful here.
First of all, let’s not forget that segmentation is simply breaking up an audience into meaningful chunks.
So really what we’re debating is what does ‘meaningful’ mean to us?
Minimum Viable Market
Ultimately segmentation is a balancing act - we’ve decided that treating the whole market as one homogenous group is a bad idea, and that by treating different groups of people differently we can drive greater impact.
At the same time we have finite marketing resources and it’s unlikely to make financial sense to try and tailor our approach to every single person individually (that’s what sales is for).
(Remember: Sales is about driving change at an individual level. Marketing is about driving change at scale - more here)
So how do we strike a balance?
I like to ask this question:
What’s our minimum viable market?
- Minimum Viable Market
- The smallest group that it makes financial sense to market differently to
Minimum Viable Market, Jed Casey (2024)
Minimum - what’s the smallest group
Viable - that it makes financial sense
Market - to market differently to?
This means thinking not only about the size and potential of possible segments but also the likelihood that an investment in finding and addressing those people separately carries a better ROI than addressing them as one.
Now our conversations about which way to slice the pie have meaning and a clear metric for success.
This means avoiding the following pitfalls
Over-Segmentation: You think you’re being smart by hyper-segmenting, but you're not if you lose sight of the goal. No one is asking for a personalised toilet seat - don't segment just for the sake of it.
Under-Segmentation: The opposite is equally dangerous. Trying to be all things to all people is dumb - you end up being for no one (Marketing 101).
Chasing Shiny Objects: It’s tempting to jump into personalisation tools and AI-driven segmentation. Implemented well, technology can make it more economical to reach certain segments but don't forget the other side of the equation - unless that drives even greater change with those customers then it's still a waste of time.
⠀
So perhaps this is really just a call for getting back to basics.
Don’t chase ‘personalised customer engagement’ because you saw it trending on LinkedIn. Look up and remember why you're doing all of this in the first place.
A clear why and a little bit of pragmatism goes a long way.