Segment strategies are ways of focusing on the needs of specific segments of customers in order to provide a differentiated service. All too often firms approach markets at too high a level of generalisation, wasting resources and achieving poor returns.
Segments enable a degree of focus on customer needs, provide a basis for innovation in proposition and communication and help to create a real sense of purpose in management and staff. They also provide a better basis for on-going management of customers to achieve improved retention and share of wallet.
The skill is in defining the segments at a level of aggregation that enables the returns from focus without dissipating effort. Counter-intuitively, this approach is especially important for larger firms, who are at risk of losing out to smaller competitors who focus on specific niches.
In the past two years we have been working on a number of segment strategies and the results are beginning to come through, despite the economic environment.
For an experienced fund manager with award winning performance and sound ethical credentials we helped to identify the markets where they would have most traction with clients that shared their values. After a first year in which they gained more new assets in the first 3 months than in the previous year, they are well on their way to implementing a segment strategy in defined parts of the institutional market where they have a natural competitive advantage that will quintuple AUM.
For an advisory firm making the transition to IFA in preparation for the RDR we helped to define a niche in the faith market where they have unparalleled contacts and credentials but had not been able to identify the significant pockets of private wealth that exist. One year in they are reporting growth and are on track to quadruple the scale of the business in the next 5 years
For a private wealth manager working in worksite we helped to create a fresh approach to a strategy that appeared to have run its course. We helped them develop an understanding of how HR policies vary and how this can be used to create a new approach to segmentation and to re-define the opportunity they face. From an initial bridgehead in the very large corporate market offering retirement services, they have now broadened their proposition and are tackling a much larger segment of directors and employees of large and medium sized firms and wealth-creating SME proprietorsconcerned to ensure a sound financial future .
For a general insurer operating in the charity market, we are in the process of developing a new strategy. First we defined the segment of prime interest and shifted their attention away from the mass of tiny organisations with high cost-to-serve and little business. Then we defined attitudinal and activity- based segments that enable them to offer a fresh and distinctive customer proposition to people who will welcome the firm’s underlying values
Please see our Projects Pages for more examples of our recent work