In our last blog I talked about the challenges that firms face when it comes to segmenting the contacts and clients with whom they have relationships.   As you will of course all know there are a lot of issues to tackle, so in this blog I’m going to try and summarise some of the golden rules that I think you should consider following.

Rule 1 – Start with the outputs not the inputs.

One of the issues that firms often run into is that systems are designed with the inputs in mind.  A review of your data sources and discussions with internal stakeholders will probably leave you with a Chinese menu of segmentation options,  but the reality is that segmentation for professional services firms is not that complex.  A great deal of importance is quite rightly placed on key information such as the financial relationship you have with your clients, sector, job function and of course personal relationships.  But how many of us really segment on numbers of employees and turnover, even if we could rely on the quality of the data?

Rule 2 – Be ruthless in terms of your field specification.

Following on from Rule 1, you have to adopt a fairly ruthless standpoint when it comes to creating your segmentation model.  By being clear about what the outputs are then it will drive the way you capture the information in the first place.   My experience tells me that it’s much better to ensure reliability of 2-3 key pieces of information rather than trying to maintain a whole shopping list of data points.

Rule 3 – Make sure you differentiate between inward looking and outward looking segmentation.

Possibly the greatest issue that firms struggle with is separating the equally important but very different firm-centric view of the world from the outward looking perspective.  Work Type and industry sector are often combined.  Practice Area and sectors of interest similarly can often be confused.   Both perspectives are valid but going back to Rule 1, knowing ultimately what the outputs are will determine which view you need to take to satisfy each requirement.

Rule 4 – What’s your primary segmentation and what’s secondary?

As discussed with Rule 2 you need to be realistic about what you can maintain well.  That doesn’t mean that there won’t be other requirements in the business.  So once you start to get to a point where your primary segmentation i.e. those fields that you MUST have are well maintained, then you can start to focus on those additional requirements that only certain offices or practice areas may need.

Rule 5 – Be clear what role financial information plays in your overall segmentation model.

Financial information is almost certainly one of the primary means by which you will segment your data.    However people have a tendency to believe what they see on a computer screen and if you’ve had to do some manipulation or deduplication of client records to display the data in CRM then you could be opening the door to data credibility issues.  Ask yourself if you actually need to show the numbers.

Rule 6 – Implement a clear data management plan.

There are a number of questions you need to ask yourself when it comes to defining how you’re going to maintain all this data, once you’ve decided that you actually need it.  Firstly where’s the most appropriate place to hold something?  Is it ever likely to need to be sub-segmented?  How unique to you is a piece of information i.e. could you get it externally? How important is a piece of information in the business development or marketing process?  Taking these last 2 questions, ideally you should be focusing your effort on those items that are BOTH unique to you AND important.

Rule 7 – Understand what data should be held at company level and what should be held at person level.

There is often an assumption that segmentation can be inherited from companies to people or aggregated from people to companies.  Whilst this can work, there are issues.  Banks or private equity firms are good examples, where more often than not you want to segment the people at those organisations, based on what they do and the sector focus that they have, rather than the fact that they work for a bank or a PE firm.

Rule 8 – Clarify the role external information sources have in your segmentation model.

Following on from Rule 6,  external information sources can be extremely valuable in enhancing your segmentation.  There are a few things to consider though.  Firstly, at the end of the day their data comes from just another database which will have its own issues, challenges and problems, so it’s never going to be perfect.  Secondly, different data sources are collected for different reasons and therefore may be good for different things.  Finally, the cost benefit.  How much will you gain by subscribing to 3rd party data sources compared to the benefit they bring?

Rule 9 – Where possible rely on dynamic segmentation rather than static lists

I can’t tell you how often I’ve counted the number of records in the “Top 100 clients” list for it to equal, 96, or worse, 135!  Where possible you should always rely on the original criteria.  What I mean is,  ask yourself “What defines a top client”? And then aim to capture the original criteria,  rather than trying to clean the list manually every time it’s published by finance.

Rule 10 – Be clear that if something is not being used, then by definition it’s not useful!

A client once asked me if capturing a particular field was useful for the purposes of segmentation.  I asked him if it was being used by anyone in the firm,  to which he answered “no”.

He had his answer.