Digital Finance Analytics has developed a series of multi-factorial segments derived from a combination of Demographics, Psychographics and Technographics, for both consumers and small and medium enterprises (SME).
The approach is derived from over 12 years of analysis of the Australian market, as well as prior experience in the UK, where the approach was initially developed and trialled.
Our partitional clustering approach means that the segments are defined using multi-factor cluster analysis and split into non-overlapping tribes, rather than in a hierarchical tree. To achieve this we developed a proprietary scoring system based on Lloyd's algorithm, (also known as Voronoi iteration) for grouping data points into a given number of categories. This is often referred to as k-means clustering. The modelling is iterated sufficiently to enable adequate separation between clusters, as determined by Lloyds’s algorithm.
This enabled us to develop models and descriptors for each of the clusters. Households are placed within the model descriptions in a best-fit manner. We believe that the results should be judged largely on the interpretability and usefulness of results, not whether the clusters are “true” or “false”.
When these stable segments are cross-linked with our research, we are able to compare and contrast the different needs and opportunities across customer groups, and we can prepare segment specific treatment plans (a business case for a segment which addresses elements including channel, brand, price, features and service) to concentrate marketing and execution efforts on the right targets. One size, or scatter-gun approaches can be replaced by targeted rife-shots which are much more effective strategies for customer acquisition or retention.
We are also able to execute in-market tests to validate specific segment treatments to validate the business case developed.
Our capabilities include Geo-Mapping, for example here is a snapshot of our Sydney households by geographic banding.
When segments are used well, overall marketing expenditure can be reduced whilst conversion rates and customer loyalty can be significantly enhanced, delivering significant bottom line improvements.
We are sometimes asked to remap our segmental analysis to existing segmentation within our clients. This approach can provide richer and deeper insights to our clients whilst retaining their already familiar segments. Other clients have chosen to adopt our segments in total or in part. We will willingly support either mode of engagement, knowing that superior segmentation delivers superior results - consistently!