VOC Research Should Guide Segmentation
Every business performs some customer segmentation. That is, we do something to group customers in similar buckets. But what criteria do we use? Commonly, too commonly, we use demographic information. Why demographic data? Because it's available and easy to understand. But if we want to innovate and build winning new products, we shouldn't end there.
Imagine that we sell backpacking tents. Using demographic data, we see some correlations and define our target market as males, ages 18-24, within the U.S. and Canada. And this does provide some usefulness. For advertising purposes, we might target college magazines, sporting events, and Facebook groups with strong correlations for that demographic.
However, these seemingly scientific decisions contribute to our corporate delusion that this segmentation is meaningful. We will begin to see the cracks in our strategy as soon as we try to develop new product ideas. "Male, 18-24, in the U.S. and Canada" provides almost nothing.
Instead, we should pursue a needs-based segmentation, built upon a foundation of the customer's job-to-be-done and filled out by a voice-of-the-customer research initiative. For this example, perhaps our JTBD is "Backpack long trails for extended trips." Our VOC will uncover various challenges a backpacker has when pursuing these longer adventures.
After a healthy qualitative research phase, uncovering a large set of needs, and a subsequent quantitative phase, prioritizing those needs, we'll have the data to create a needs-based segmentation. Perhaps Segment 1, which we'll call the "Marathon Runners," wants the most miles in the least time. Their day begins early in the morning and ends at dark. And in-between, they want to cover the most miles possible.
However, Segment 2, which we'll call the "Creative Capturers, " wants to embrace every moment. They want to record videos, take photos, and spend time with wildlife.
When it comes time for Idea Generation for Segment 1, we'll explore how to make tents pack up as small as possible while keeping the weight to a minimum. It will need to go up or down quickly. Meanwhile, our Creative Capturers will need a bigger tent, as they will be editing videos along the way. Wanting to enjoy the journey, they may spend a couple of days in the same location, so the bigger tent helps them wait out storms more comfortably.
Note that both groups would like a lightweight tent, but it's a higher priority for the Marathon Runners. Also, both groups would like a large tent to relax in, but it's a higher priority for the Creative Capturers. Because both groups are backpackers, they share the same needs and are part of the same market. But because they have different priorities, they are different segments.
Using a Voice of the Customer-based process, we find useful information from which to create true segments for product development, marketing, and eventually, even sales.
For further reading:
Scott Burleson, "Market Segmentation: Bring on the Magic," AIM Institute Blog 2022.
Gerry Katz, Darin Eich and Jane Boutelle, PDMA Webcast: "5 Ways to Build Your Customer into the Front End of Innovation", 2015.
ABOUT THE AUTHOR
He has a diverse professional background within manufacturing engineering, product management, voice-of-the-customer training and SaaS development. Notable career stops include product manager for John Deere’s compact tractors, innovation leader for Actuant corporation, and Director of the Strategyn Institute. At Strategyn, he worked alongside the world's best jobs-to-be-done practitioners. Strategyn, founded by pioneer Tony Ulwick, is ground zero for Outcome-Driven Innovation (ODI).
Today, as Senior Vice President for The AIM Institute, Burleson leads product development for Blueprinter® software, teaches workshops on innovation using the New Product Blueprinting process, and advises corporate leaders and practitioners on growth via JTBD principles.
He has a MS in Management and a BS in Electrical Engineering from North Carolina State University.