Applied AI for Market Segmentation and City Recreation Membership Redesign
Business Opportunity
By 2021, the City of Edmonton’s recreation membership suite, representing approximately $20 million in annual revenue, had reached market maturity and started to decline. Moreover, customer confusion was rising due to an overly complex structure of 36 different membership products spread across multiple facility tiers, demographic segments, and duration classifications.
Market research revealed a critical misalignment; while customers valued access to high-quality amenities at their local facilities, the City’s membership model was designed primarily around the number of facilities one could access.
Compounding the issue, years of underutilized data and limited analytical infrastructure had left leadership with an incomplete understanding of who their customers were, how they behaved, and what they valued most.
The opportunity was clear, redefine the City’s recreation membership products using applied artificial intelligence to gain new insight into customer segments, simplify the product suite, and realign it with citizen needs.
Actions + Outcomes
Actions
Led by Nathan K. Walters, Director of Customer, Analytics, and Digital Transformation, the initiative was delivered through a five-phase, data-driven transformation strategy.
▸ Phase One: Strategic Framing and Resource Alignment
Nathan authored a comprehensive business case that defined the problem, quantified the opportunity, and established the strategic framework for transformation. The document detailed projected expenditure commitments, return on investment, and organizational impacts, positioning applied AI as a core enabler of both financial and operational performance.
Demonstrating strong technical acumen, Nathan identified specific AI methodologies and modelling techniques to be explored, including customer segmentation through unsupervised learning and cluster analysis, and mapped their application to targeted business decisions around pricing, positioning, and product redesign.
He also secured executive buy-in and resourcing by the enterprise data science team, ensuring the initiative had the leadership endorsement, technical capability, and institutional support required for successful delivery.
In parallel, Nathan collaborated with the Law Branch and the Office of the City Clerk to ensure the initiative adhered to the City’s standards for ethical AI, privacy protection, and records and data management compliance. This governance alignment ensured innovation proceeded responsibly, embedding accountability and transparency into every stage of the project.
▸ Phase Two: Data Management and Infrastructure
Nathan oversaw the creation of a comprehensive data pipeline, capturing over a decade of facility usage, more than one million annual customer visits across all City recreation facilites. His analytics team collaborated with the City’s Open City and Technology branch to establish a dedicated data warehouse, enabling consistent data transformation and governance. Datasets were integrated from transactional, operational, and customer experience systems and further enriched with third-party psychographic data from Environics PRIZM5.
▸ Phase Three: Data Analysis and Insight Generation
Using advanced clustering models (including DBSCAN and k-means), the enterprise data science team identified five new customer segments based on 32 unique customer attributes across the data. Moreover, regression analysis revealed a key driver of satisfaction: access to valued amenities (pools, fitness centres, classes, and child-minding) within a single facility mattered far more to citizens than multi-site access.
▸ Phase Four: Product Redesign and Financial Modelling
Nathan led a cross-functional team through a full redesign of the membership suite. The goal: simplify, differentiate, and align to customer priorities. The resulting framework reduced membership categories from three to two core tiers, Value Membership and Benefits Plus, each mapped to distinct customer motivations. His team developed multi-year financial models projecting market uptake and fiscal impact scenarios for executive review.
▸ Phase Five: Marketing and Implementation Readiness
Grounded in the new segmentation model, Nathan guided the tactical marketing plan. Messaging, channels, and creative direction were informed by the psychographic and behavioural profiles of each segment, ensuring relevance and resonance throughout the customer journey.
Outcomes
New recreation membership structure successfully launched across 20 recreation facilities and digital platforms, aligning all products to the value drivers most important to citizens.
Reduced over-the-counter membership product variants from 36 to 24 SKUs, while simplifying product messaging, value propositions, and ease of choice.
Formalized data infrastructure for the Community Services branch, embedding analytics as an ongoing strategic capability.
Enhanced department literacy in applied AI, demonstrating the practical business value of data-driven decision-making within municipal operations.
Integrated ethical AI and privacy standards, ensuring the responsible and transparent use of data in decision-making across the Community Services department.
Promising first quarter growth in membership sales velocity that has sustained over time.
Reflection
“Transformational projects are rarely about technology alone, they’re about clarity. By using data and applied AI, we gave shape to what citizens were already telling us: that simplicity, access, and value matter most. This work was a reminder that innovation in the public sector starts with listening, then designing with purpose.”
- Nathan K. Walters