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How much does a segmentation cost?

A great question, but not the easiest to answer. When looking at the cost of a segmentation there are a number of things to consider:

  • The business problem you are looking to solve with a segmentation

  • What type/s of segmentation is needed (often it is more than one)

  • The factors that can influence the cost

  • How the segmentation will be maintained and applied

Let’s tackle each of these in turn.

Please do keep in mind that the pricing structure we outline below may vary by supplier, but this is our approach to segmentation pricing and will give you a reliable benchmark for comparison.

1. What business problem are you looking to solve with a segmentation?

The reason we start with this is that different segmentation methodologies and outputs support different objectives. Defining the business problem won’t impact the cost but is just a critical factor in any analytical project.

2. What type/s of segmentation is needed?

There are many different types of segmentation, and we are of the belief that one uber-segmentation model does not exist that will answer everything. As a business, you may just need one tightly defined segmentation model or you may need a suite that can work independently and in conjunction with each other. Only by defining the business problem can you best identify what the right solution for you is.

For instance, if you are looking to identify and grow the value of your customers you may want to start with an RFV segmentation (a customers recency, frequency and value of purchasing) using transactional and customer data points.

If you want to develop personas to inform advertising, you may need to enhance your own data first to build the personas. This may include adding data to your own first party data with things like demographics (age, gender), lifestyle information (number of children, marital status), financial information (household income, home ownership) etc.

If you want to be relevant to customers' attitudes, you may need to commission research to explore these attitudes and capture new, bespoke data points that enable the attitudinal statements to be modelled across your database.

We have a great article on segmentation that explains in more detail different methodologies

For MoJo, most segmentations we deliver cost from £20K.

3. The factors that can influence the cost of a segmentation

The methodology used has the most direct impact on the cost for a segmentation project.

If there is little existing knowledge about the customers or datasets being analysed we recommend starting with an Exploratory Data Analysis. This provides a fantastic base to defining the segmentation variables - what is interesting, well populated, what impacts behaviours and value.

Any external data collection, whether that is through data appends or via research, would increase the cost and would need to be scoped and priced based on the volumes and number of questions being appended or asked of the respondents.

Another factor that influences the cost is the volume and cleanliness of the inputs into the segmentation process. If the data inputs are unclean, then time needs to be spent cleaning and standardising the data for effective and accurate analysis.

The visualisation of the output is also a factor - we once worked with a client who wanted lego figures representing their segments on everyone's desk. That is obviously going to incur a higher visualisation cost than a written pen portrait.

4. How the segmentation will be maintained and applied

This is often missed in the excitement of defining a segmentation, but it is a critical part of a segmentation's successful impact on your business. You need it to be operational against your database and into any platforms used to reach customers and prospects e.g. marketing platform, customer service platforms.

Any segmentation algorithm can be applied within the database, or run externally and segmentation scores updated on a periodic basis. The best route will really depend on your data landscape but make sure you cover this when scoping requirements with a supplier.

Also bear in mind that segmentation parameters may change, so a segmentation model is not fixed for the next 5-10 years, it will need monitoring and maintenance to ensure its application continues to be accurate and impactful.

Get expert advise in scoping your segmentation project

If you choose to work with MoJo on your segmentation needs we will go through requirements with you in a lot of detail to ensure the solution we recommend is right for your business, and will be actionable in marketing, sales, customer service etc - however you want to use it!

Hopefully this information has given you a good steer as to what may be involved in the pricing of a segmentation project and what to consider when initiating such a project.

Do get in touch with us if we can help you develop your segmentation needs.


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