Global Blue

From its headquarters near Geneva in Switzerland, Global Blue offers a range of services
which help retailers to increase their revenues from the lucrative international traveller
market by offering VAT/ GST refunds. Having introduced the concept of Tax Free Shopping
over 30 years ago, Global Blue now works with over 270,000 of the world’s favourite
retailers, shopping brands and hotels in over 40 countries.

Like many other B2B businesses, Global Blue believes that the purchasing behaviour of their target
market is largely influenced by their ‘firmographic profile’ – their size, their speciality, their home
country and so on. However, examples of retailers behaving in unexpected ways, given their
firmographic profile, led Global Blue to consider a different viewpoint. Are a retailer’s needs and
attitudes not a far more powerful predictor of behaviour?

If this was the case then it had far-reaching implications. Product development should be driven by
the needs of each segment, separate marketing messages should be tailored to resonate with their
particular world view and sales teams should potentially be organised along different lines. This was
an important and exciting revelation.

To assess what drives retailer behaviour, series of workshops/ focus group studies were conducted
within the company including with the Country Managers – a key audience that would be instrumental
in implementing any new approach to segmentation. The next stage involved carrying out qualitative
research amongst Global Blue’s customers. This was designed to fully explore the drivers of customer
behaviour and identify the different segments in the market. In total, more than 50 in-depth, hour
long interviews were held with Global Blue customers in Austria, Finland, France, Germany, Italy,
Singapore, Spain and the UK. Care was taken to ensure that a wide mix of different customer ‘types’
were represented in these interviews so that all possible behavioural motivators were identified.

The findings from this stage of the project clearly supported the view that the primary drivers of
segmentation were not only firmographic, but were largely defined by retailers’ attitudes towards Tax
Free and their requirements from a Tax Free supplier. It resulted in a provisional segmentation model
and identification of several distinct customer segments.

The company went on to further develop and substantiate the view via a wider, global quantitative
research study carried out online. This allowed the company to see if the provisional segmentation
model held true across a wider range of countries and amongst a much larger group of customers.

Finally, the information from Global Blue’s internal systems were added into the mix (e.g. sales data)
and applied a statistical technique known as Cluster Analysis which sifts through survey data and finds
patterns in how people are answering. These patterns identify the different segments in the market,
size them and place each survey respondent into one of them.
The survey identified several distinct segments – groups of customers who shared notable similarities
in their needs, attitudes and behaviours. These segments were then cross-analysed with firmographic
information to allow them to be more easily identified in real life and effectively targeted.

“We ended up with a number of customer segments and a clear cut description of who they are, what
they need and so on” explains Alexandre. “The first very big value that we got from this segmentation
exercise is that we realised some services were requested across all segments, and some services were
very specific to individual segments. This was a critical part of the findings.”

Because of merging internal data, the company was also able to attach revenue and profitability
estimates to each segment – invaluable knowledge when deciding which segments to prioritise. And
to add a further element of ‘actionability’, they also identified a handful of ‘Magic Questions’ which if
asked to any customer would immediately place them into one of the segments. This is an invaluable
tool for sales teams operating on the ground and for those at Head Office seeking to profile the entire
customer database.

A series of pen-portraits brought each customer segment to life. Each pen-portrait included:

 Their beliefs, attitudes and behaviours in regard to Tax Free

 Their key drivers when it comes to choosing suppliers
 Their interest in different product types from Global Blue
 The marketing channels most effective in targeting them
 Firmographic details of where they are most and least likely to be found

Each segment was also given a memorable, descriptive name to help Global Blue’s staff to identify
them and associate with them in a human way.

“Once the naming and the description of the segments were finalised, the same was presented to the
board in order to gain validation from the management. This was very important to do, in order to
gain support for the next steps, both with the senior management and the sales organisation. With a
clear understanding of the different types of customer which they are aiming to support, Global Blue
has now begun a transformation. It is moving from a ‘one size fits all’ approach to a much more
targeted strategy. For example, specific marketing messages have been developed to resonate with
each segment and a number of new product concepts which tap directly into the needs and wants of
specific segments are in the pipeline.

More details about the company can be had from the website http://www.globalblue.com/

Questions:

1. How can Global Blue generate new market opportunities?

2. What are the bases on which Global Blue has originally segmented the market?
3. What are the bases on which the company is proposing the segment the market? What are the
benefits the company is seeking in this approach?