This document discusses three key areas to consider when selecting a segmentation agency: 1) The methodology - ensure the agency uses a rigorous quantitative technique rather than qualitative focus groups. 2) Variable selection - the agency must understand your business objectives to select the right variables that will generate meaningful segments. 3) Communication of segments - the agency should distill results into an easily understood targeting strategy that defines priority customer segments as real people. Considering these three areas can help identify an agency with true segmentation expertise.

1. How to pick a
segmentation
agency

2. The trouble with segmentation is that
once you start looking…

3. …you’re faced with endless agencies
claiming to offer it.

4. But be wary, the world is littered
with mediocre segmentations

5. But be wary, the world is littered
with mediocre segmentations
or worse.

6. How can you be sure you’re making a good
choice?

7. How can you be sure you’re making a good
choice?
An agency with
real segmentation expertise?

8. So if you’re thinking of appointing a
segmentation agency, here are three areas
worth exploring…

9. #1
The methodology

10. Technique has a
massive impact
on segmentation outcomes.

11. So make sure you ask
what technique they use
and why, and watch out for
bland, generic responses.

12. And if they suggest focus groups…

13. STOP RIGHT
THERE!
Qualitative data
cannot deliver a
meaningful
segmentation at all.
And if they suggest focus groups…

14. In quantitative, the traditional and still most
commonly used clustering techniques
(such as K-means) have major flaws…

15. You have to guess the right number of segments
1

16. You have to guess the right number of segments
1
It can produce different results from the same dataset
2

17. You have to guess the right number of segments
1
It can produce different results from the same dataset
2
3
It often creates one big lumpy segment and a load of fuzzy, too-similar segments

18. You have to guess the right number of segments
1
It can produce different results from the same dataset
2
3
There is no error-checking mechanism
4
It often creates one big lumpy segment and a load of fuzzy, too-similar segments

19. Ensure that the clustering method used
can overcome these flaws and provide a
high level of accuracy.

20. #2
Variables selection

21. Clustering can create segments from
any data you put into it…

22. …but this doesn’t
mean the segments
will mean anything.
?

23. It’s critical that your agency fully understand your business objectives and
market characteristics in order to select the right variables that will generate
meaningful segments
that are useful for decision-making.

24. #3
Communication of
segments

25. Segmentation
generates a large
amount of data.

26. But your agency should distil
the results to be easily
absorbed and used across a
whole organisation.

27. The most important two questions the segmentation answers are
“who do we need target, and how?”
and
“who should we avoid?”

28. Once you have your targeting strategy,
you need to understand each priority
segment as a real person: how to interest
and engage them, and how to convince
them to buy and use your products and
services.

29. Of course there is more to good
segmentation than these 3 areas.
But any segmentation agency worth its
salt will get all 3 right.
1
2
3

30. Unfortunately, many agencies deliver great
creative outputs and workshops, but at the
expense of analytical rigour, potentially leaving you
with a vivid, but wrong or bland, set of segments.

31. By asking some tough questions, you stand a
better chance of getting a segmentation that’s
both vivid and rigorous.

32. If you want to know more, please get in touch:
chris.cowan@clusters.uk.com
020 7842 6830
Visit our website: www.clusters.uk.com

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