What is the science of segmentation and how does it affect our lives?
Segmentation is one of the cornerstones of marketing and underpins the entire marketing strategy. Any organisation dealing with large numbers of customers or large volumes of data, will be using segmentation to find patterns and to understand what is happening beneath the top line numbers. In the 1980s, marketing luminary Peter Drucker said that “the aim of marketing is to know the customer so well, the product or service fits them and sells itself”. For us as customers, marketing – or segmentation – done well, makes us feel that a product or experience is perfect for “me and people like me”. Clever marketers can make the same brand connect differently with customers who have very different behaviours and needs – for example Nike’s product positioning with professional athletes, weekend warriors and the leisure and fashion user. The challenge for marketers is that many of the tools and approaches for segmentation are routed in the 1980s too.
Data and customers have moved on, both change incredibly quickly across multiple channels, and customers are active data creators now. Too many segmentation approaches are slow, taking months to build. They also tend to have fixed rules meaning that new sources of data or important changes in what customers are thinking, doing or saying can be missed. I have seen organisations start to fail by missing clues in data and segmentation – this is what has driven us at Outra to try to bring segmentation into the modern world of marketing.
How do you see the impact of GDPR evolving over time?
The number of consumer complaints to the ICO since the introduction of GDPR have risen by 160 per cent – customers are much more mindful of their rights and how their data is being used. For too long, data was used to do things “to” customers – I think it is right we know how to use data “for” customers. A study by NTT Security claims that it will take at least five years for true levels of compliance to be reached. This means for marketers that GDPR compliance is not a destination – it’s a journey. The data picture is much more complex, fragmented and regulated than ever before and it places demands on segmentation science and approaches too. Our new approach to segmentation is already proven to be 20% more predictive than traditional methods. It is exciting that GDPR is engendering innovation in the market, and I expect we’ll see increasingly inventive solutions coming to the fore to solve modern marketing challenges.
What excited you most about building Outra upon leaving dunnhumby?
Building businesses with great data, science and people has been my passion for over 30 years. What was striking for me was how clear an opportunity, a fresh start is for a start-up business today – to take advantage of seismic changes in opensource and cloud technology, to harness the power and productivity of AI and to help clients build their own capability and skills, to build stronger relationships with their customers. Outra is that business.
What are you most looking forward to discussing at the show this year?
I am delighted to announce that Professor Richard Webber will be joining me on stage. As many people will know, Richard is widely accepted as the originator of segmentation having developed ACORN for CACI and MOSAIC for Experian over 30 years ago. What he doesn’t know about the topic isn’t worth knowing! Richard and I will be discussing the evolution of segmentation, and the challenges faced by marketers in the wake of GDPR and upcoming ePrivacy compliance. It will be a must-see session for all marketers that want to understand how to navigate profiling in this legislative environment.
This article was published by Technology for Marketing reporter John Bensalhia ahead of Simon Hay’s speaking appearance at this year’s event.