What is segmentation

By Rob Couvillon
Vice President of Research and Analytics, Twenty-Ten Inc.

Segmentation is a tool to help companies better understand and interact with their clients. It groups consumers based on their similarities and differences and is uniquely useful for explaining or predicting behavior.

For those reasons, it is employed in a variety of tasks including designing new products and services and improving consumer service & sales.

Demographic segments?
For explaining and predicting behavior, consumers can be grouped or segmented in many ways. The simplest groups or segments are formed on demographic data. They divide consumers based on gender, age, and/or income.

Such segments are perhaps the most often used by business. Demographic data is usually easy to obtain, and demographic differences such as age and income can be compelling in explaining or predicting behavior in many consumer domains.

Special needs for health and finance segmentation
However, explanation and prediction of behaviors in the health and finance domains is only partially possible using demographic factors. Research and experience indicate that health and finance behaviors are driven at least equally by psychological and sociological forces. So, consumers in the domain must be grouped by more complicated and more numerous drivers.

To understand consumer behaviors in the health and finance domains sufficiently to be able to act on that understanding, one needs to group consumers based on their health and finance needs, attitudes and habits, in other words, all the ways they engage with the industry. For this, we turn to attitudinal segmentation – which groups consumers based on a rich understanding of their attitudes about health and finance.

The Persona^tm segments
The Persona^tm segments are designed specifically for the health and finance industry. They group consumers into segments based on how they engage and behave within the health and finance domains. For instance, consumers in Segment 2 tend to be financially savvy and already understand how to get good value from their health insurance plan. Conversely, consumers in  Segment 7 often struggle to understand the benefits of their health insurance and are often insecure about their health & finances as a result.

Thus, Segment 2 consumers are often prime prospects for upsell to value-added benefits, while Segment 7 consumers will benefit most from educational initiatives. Our detailed analysis of each segment during the development of the Persona^tm segments revealed a wealth of important and actionable insights like these.

Implementation for actionable segments
A discussion of segmentation is not complete without explaining how these new insights can be operationalized.

While forming the Persona^tm segments, we were connected to a major consumer database. This has made it possible to map the Persona health finance segments directly to your member file.

The result is to identify the best Persona^tm segment for each member on your list and apply segmentation insight directly to each of them.

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