A New Twist on Segmentation

by Jane Thurston

Segmentation as a tool is not new, and neither are in-home interviews or segmentation activation workshops.  However, these tools can be used to great effect when leveraged through creative combinations and for different purposes – including enhancing the customer experience.

Segmentation has typically been used to determine the appropriate target segment or developing positioning for a brand or new product.  However, segmentation can have many other uses.  For example, one of the most unique applications I have come across is a segmentation of types of freight in order to identify the most profitable type of freight for a trucking company.  More recently, I have been using segmentation as a tool to enhance customer engagement and improve the customer experience.

One of my clients, an energy company, was interested in understanding more about its customers and building a more customized approach to the way the company handled customer service calls. In addition, the company wanted to decrease the number of calls into their call center and explore new and different ways they could work with customers who have trouble paying their bills.  While this situation doesn’t immediately bring segmentation to mind, that is indeed the approach we took.  The segmentation provided insight into different customers’ lifestyles and how they interact with the energy company.

One key characteristic of this segmentation analysis is that it did not rely on any survey data! Instead it was driven by behavioral and geo-demographic data.  We guided our client to select the right variables from a third party supplier of demographic, lifestyle, and credit data.  We then managed the process of appending that data to the energy company’s entire database of customers along with internal data such as energy use, bill paying history, home heat type, and participation in various programs.  From there, we analyzed the entire database and classified all customers into one of seven Customer Engagement segments.

The lack of reliance on survey data to create the segments meant that all customers could be accurately classified into the segments, unlike many survey-based segmentations. Segmentations developed through survey research often end up with scoring accuracy in the range of 30% when applied to a database, so the accuracy of this method is a great advantage.  However, with the scoring accuracy comes the disadvantage of potentially leaving some of the deeper insights and “whys” behind the segments unknown.

In order to dig into the whys behind the segments, we complemented the database segmentation analysis with in-home ethnographic research.   The ethnographic research served to bring the segments to life and allowed us to create compelling video back-stories and personas for each segment – which have been used in many ways across the organization!  The video back-stories are used to train customer service representatives in the call center and increase empathy with customers.  Mini-posters of each segment posted at workstations keep the segments top of mind. When customers call in, they know to which segment they are speaking and can tailor their approach to the customer appropriately.

That is not the end of the story.  What really made this segmentation valuable and actionable was the way we combined the research with Burke’s online reporting tool, Digital Dashboard®, which provides a platform to impact the customer experience across the organization.  The Dashboard houses all of the secondary data appended from the third party supplier along with internal data from the energy company.  Within the Dashboard, the client conducts additional analysis and generates reports.  They can easily dig deeper into a specific segment or demographic group and better understand their behavior and the use of the company’s programs and resources. In addition, the Dashboard can be used to generate lists of customers who receive specific mailings or e-mails targeted specifically to their preferences and needs as a member of one of the engagement segments.

All in all, the tools leveraged in this project supported a customized approach to customer engagement that formed the foundation for revolutionizing the way the company approaches the customer experience.  And on a last note, think about your next research project – are there any opportunities to creatively leverage traditional research techniques in new and exciting ways?  If so, go for it!

Jane Thurston is Vice President, Client Services at Burke, Inc.

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