[Audio Insight] Part 1: The Value of Strategic Segmentation During Disruption

By: Max Kenkel


Thanks for tuning in to Audio Insights—you’re listening to: The Value of Strategic Segmentation During Disruption. This is part one in three-part series on strategic segmentation.

This week’s Insight features Chadwick Martin Bailey (CMB) CEO Jim Garrity interviewed by ITA Group customer experience expert Max Kenkel discussing strategic segmentation, the shifting attitudes and behaviors of customers, what changes are likely to stay and which will pass. Plus, why historical data can’t be relied on like it was in the past. 

Listen to the audio above or check out the transcript below.




Max Kenkel (MK): Hi everybody. Welcome to another ITA Group Audio Insight. My name is Max Kenkel and I am joined today by Jim Garrity, who is the CEO of Chadwick Martin Bailey (or as we like to call it, CMB). They’re located in Boston and Jim’s here today to talk to us about segmentation.

People want to get right to the meat of this, so I’m just going to jump in and start peppering you with questions.

Jim Garrity (JG): Go for it.

MK: We’ve had a lot of disruption in the last couple of years and I think this has had a dramatic impact on brands. Can you talk a little bit about what the last two years has meant in terms of disruption? And how disruptions have accelerated the need for new segmentation studies?

JG: Sure. Yeah. As you said, there’s been a lot of market disruption, right—you’ve got changing attitudes, changing behaviors, shifting personal priorities. It’s impacted every aspect of our lives: work, education, saving and spending, health, hygiene, travel, shopping. Those are the cornerstones of segmentation studies: behaviors, attitudes, preferences and priorities. With those shifting so dramatically today, it’s making old segmentations obsolete.

The question is now, “How do we move forward from here?” I think what we’ve seen is, a lot of people rightly take the approach, “We don’t know when this disruption is going to settle.” So, there hasn’t been much segmentation study over the past couple years until the last several months because no one knew what was likely here to stay. Now, people need to start thinking about, what is the New World Order? What does it look like from here?

MK: That’s a great point—you want to let it settle in before you jump the gun. Otherwise, it has to evolve again, right away.

What are you seeing brands talk about? Are they actively reaching out? Do they understand that they need to update their segmentation or are you seeing some brands that may not even be thinking about this yet?

JG: Brands are absolutely thinking about this. Yes. We’re seeing a lot of pickup in Path to Purchase customer journey work because brands are seeing that the old habits have shifted. Now, they’re curious as to which habits are going to stick and which habits are going to revert back. We’re seeing a lot of people picking up on that as well as strategic segmentation, or “Big S” segmentation as we call it. The big “S” means strategic.

It’s setting the business forward. It might be a company, might be an organization, might be a division of a larger entity or a business line, but it’s setting the pathway for strategy. That strategy could be product development, operational realignment, certainly marketing, communications, positioning and things of that nature. There’s a lot of a lot of work that’s just heating up right now because of all this disruption and the changing focus and the changing habits of consumers. A lot of a lot of marketers and product developers understand what they’re seeing in their marketplace, and are curious as to, “What does that mean for my business?”

So let’s give some examples: In terms of market disruption, “The Great Resignation” is the phrase of the moment right now as people are asking themselves, “Is this really what I want to do? Maybe I should retire. Maybe I should find a new job that better connects with my personal values.” We’re seeing similar impacts on the consumer side. Spending experiences have declined while product purchases have risen. Over the past couple of years, travel has been closer to home when it’s happened at all. There’s more online shopping and increased use of shopping services. Consumer behaviors have changed. And as I’ve talked about, some of those changes will endure, some of those will revert—but it's never all or nothing. It's always on a continual change.

Understanding how different segments have changed, and what new segments have been added over this time, is critical for companies so that it can drive strategy forward for their business.

MK: That's a great point. When it comes to those things that will stick around and those things that will probably revert back, is there anything you’re counting on reverting back? Or are you seeing trends that might return to pre-pandemic? And what do you think are maybe a few of those things that will endure as changes going forward?

JG: Yeah. I think there will be reversion on the travel side. There’s a lot of domestic travel and people are dying to get out and have experiences again. I think a lot of that stuff will come back to what it was before. But there’s so many other things that are going to stick—maybe not at the same level and not for every consumer at the same level. Think about grocery stores or online shopping and whether consumers want delivery of groceries or will drive to the grocery store and pick up the groceries. I think some of that, or a percentage of that, is going to stick.

We talked about “The Great Resignation” and its impact on retail and restaurants who are having a really hard time getting help. What do I expect there? I think there’s got to be more DIY in the restaurant space. I think this is only beginning. Right now they have worker shortages. The same DIY you see at your checkout at Home Depot or a grocery store, you’ll see QR codes on the restaurant table and the ability to order not waiting for a server. I think those some of those things are going to pick up.

In terms of travel, cruising is returning. That will be interesting to see at which percentage or what segments are interested in coming back at the same level and which ones are not. Healthcare is another industry. We saw a big pickup in telemedicine right at the beginning of COVID-19. Some of that’s going to stick. Certainly, this is always the time of the year (as we record this in early January) where people start thinking about New Year’s resolutions and their health. But even before this moment, health consciousness has been greater. A good chunk of that will stick but it varies by individual and so that's a great opportunity for segmentation to make sense of what is happening, to what level it’s happening and where it's going from here.

MK: To back up your point about some of the trends in the employee space carrying over into consumer space, I saw a study recently that said 50–70% of employees are willing to at least explore and apply to new jobs right now even if they’re happy. This echoes some of the stats for consumers that I've seen where they’re willing to switch brands even after a positive experience. There’s a lot of similarity between those two audiences right now and it stresses the importance of that segmentation. It’s a tighter market than ever to try to capture customers’ attention. Ensuring you know how to target those customers and their changing needs is critical.

JG: Yeah, absolutely. The marketplace has gotten more and more difficult, right? To your point, it’s not merely enough to satisfy. You’ve got to delight people and know them as individuals, what their preferences are, their attitudes, their habits. All of that puts you in a much better position to come to them and help with them as the individuals that they are rather than as a monolith and merely deliver on expectations. You've got to exceed expectations in order to prosper in this marketplace.

MK: Given those changing trends in consumer attitudes, is there anything that brands should do differently or are there ways they should approach segmentation differently, given the time and the place?

JG: Great question. This is going to seem obvious: A lot of segmentations are—if not built on entirely, certainly a core component of a good segmentation—going to be in first party data, historical data, behavioral data, transactional data.

And in this moment, as we’ve just spent the last few minutes talking about the amount of disruption, you can’t rely on historical data. If you’re using that to segment and knowing that we were in a moment for the past 18–24 months, that may, in some cases, be unique. Some of those will hold but some of that changed. Some of those behaviors change.

You’ve got to be really careful and thoughtful about how you incorporate historical data into your segmentation. The other thing to consider is the need to plan for a more significant exploratory phase to ensure that new attitudes and behaviors are accounted for. We feel really confident about a lot of our segmentation work because we’ve got a wealth of information, understanding and behavioral data so we can hit the ground running.

At this point, we’re recommending that people really take the time for the exploratory phase. And don’t assume that things will return to what they were. Nor should one assume that all recent changes are here to stay. Some probably are, but not universally; not for everyone; and, not at the same level. And so those are the key things to keep in mind when thinking about what’s different when running a segmentation study now as opposed to two years ago, when you felt more comfortable about the environment that you’re coming out of.

MK: We’ve been talking with Jim Garrity from CMB about segmentation. To learn more about CMB and the work they do, please visit CMBinfo.com or the link to them on the ITA Group website. Thanks.

Max Kenkel
Max Kenkel

As Customer Solutions Manager, Max leads our Customer Solutions line, ensuring all six components of a successful loyalty program deliver for our clients. With more than ten years of experience in strategy across customer, channel and employee loyalty programs, he’s seen a lot. You’ll often hear him talk about how important data is to brands. In his words, “It’s easy to make decisions on intuition, but it’s a lot easier to justify to shareholders when you can back it up with data.” Beyond his professional passions, Max plays bass in a pop punk band, visits as many national parks as he can and is an aspiring poet, publishing his first book in 2023.