So, you have already identified your shopper segments. But, how do you prioritize the most important and high-value segments?
The reason prioritization is important, is that it helps you understand the segments you are not going to attack. It’s a process of eliminating segments within your business, rather than selecting segments.
What does that look like?
There are some pretty easy techniques that you can apply. The one that I like the most, is to think about each segment as an opportunity to grow. That opportunity or potential growth can be evaluated in two really simple ways.
1. How big is it and what is its value?
If you can understand the worth of each segment, it’s pretty easy to identify that you would like to prioritize the segment that is worth the most. Naturally, you would for example, prioritize a segment worth 100 Million dollars vs one of 1 Million dollars.
2. Scale of ease and difficulty
I like to look at it as a matrix, where on the Y vertical axes you look at the value, and then at the X axes you look at how easy (on the right) and difficult (on the left) it is to access that opportunity. ‘Accessing the opportunity’ refers to the idea of creating a behavioural change. Every time we think of a segment, we should think about what behaviour we want to change? What would this behaviour be worth (the value side of our prioritization) and how easy would it be to change that behaviour?
If we lay out our Matrix, we start to create four quadrants. Quadrant 1 is where you see it’s really easy to access the segment and it’s worth a lot of money. That’s absolutely our preferred place, as we want to grow the business quickly and easily.
Underneath that, you have another quadrant where growth is easy, but it’s small. So you are going to have to question whether that is a priority for you.
To the left of our preferred box, you have the third quadrant where the opportunity is great, but it is also difficult to access. We then have to have different thoughts. Generally for me, this is a different long-term strategic priority. Things we’d like to work on over the course of many months and even years. What we stop doing and ignore completely, is the box which is full of segments that are both difficult to influence, and do not offer a great deal of value.
Once we have the matrix, we can make selections. Logically we first choose those segments that are big and easy to access. Secondly, you might then choose your big strategic ideas that will build your business in the long-run. And then lastly, you are going to look at the things that are small, but easy to access. You are going to look at these as ‘quick wins’. If your budget isn’t quite on track this year, or you find that in September you fear you will under perform in the final quarter of the year, maybe these are the quick wins you would want to address.
Once you have these priorities laid out, you will be able to see which segments are your top priorities and go on to decide how you are going to target each of these.