Segmentation of the market: Why your customers are not who you think they are.

Why your traditional approach to segmentation of the market is always wrong

In an age of growing competition across the digital ecosystem, understanding the target user and segmentation of the market is becoming increasingly important. However, just because you have some demographic data insight into their age and gender does not mean you know who they are. That is like saying you know the random guy you see on the train each morning because you can describe his appearance. Despite his boring grey suit and receding white hairline, the man may love musicals. He may even enjoy dancing in the rain and listening to punk rock. Here is where most organisations fail when creating user personas. Your segmentation of the market is wrong. It is not about who people are. It is about understanding their “why”.

How your segmentation of the market attracts polar opposite people

Still not convinced? Let us conduct a thought experiment. (Do not worry, this will not involve anything mind-blowing like illustrating quantum indeterminacy). Imagine you have a new health intervention. Your intervention can transform the health of people who have lived a life of excessive partying. Using a traditional approach to segmentation of customers, you find the demographics of the perfect target audience. You high-five each other in your meeting as you decide to launch the campaign on social media. Boom – this is going to be brilliant!!! 

Two different men see your campaign. Both were born in the early 1940s, have children and are in long-term relationships. Excellent, you think. They are ready for the intervention as they have settled down. They are leaders in their industry with multiple awards. The campaign cannot fail, you conclude. They have the income to buy your new intervention and must have been to a few parties in their life. They are native English speakers and have been to university (although one went to a university that is amongst the  400 best globally whilst the other man went to one in the top 30). The result? Congratulations. You have identified a new segmentation of the market. Joe Biden and Mick Jagger have seen your campaign. 

It is time to start using behavioural analysis to perform segmentation of the market

Admittedly we are not familiar with Joe’s partying habits in his youth. However, it feels unlikely he spent his 20s throwing TVs out of his hotel room. Although, since it was Jagger and not Biden who went to a top 30 university, anything seems possible. It is an outdated approach to use demographics to build user personas and segment the market. For too long, people have confused audience targeting with segmentation. In an age of increasing information, it is time to start using behavioural analytics. Just because people are the same age, sex or ethnicity does not mean they are similar. Instead, we should look to science to understand humans. 

The new way to perform segmentation of the market: Developing psychographic profiles

At Antlerzz, we conduct our digital ecosystem data analysis partly through the lens of cognitive science. The limbic system is a group of interconnected structures located in the brain. It is responsible for emotions and behaviour. It is the part of the brain that lights up when people discuss their beliefs, attitudes, perceptions and motivations. Marketers should consider this when targeting audiences and building personas. It should be the focus when creating new segmentation of the market. Demographics target what people are. Behavioural data analysis targets an individual’s raison d’être, the future way of targeting your audience. We call these behavioural profiles, psychographic profiles.

Behavioural data analysis can sound sci-fi, but it is not. Tech behemoth Netflix already embeds some of these principles into their technology. They run approximately 250 A/B tests per annum to see how people respond to slight differences in shows or how the platform looks. Furthermore, they create over 76,000 micro-genres to understand what each person likes to watch. Consequently, the platform can understand people’s behaviour and develop bespoke viewing. They are allegedly excellent at creating psychographic profiles for each user. However, I do publicly question how effective it is. After all, Netflix continually recommends I watch a dating show called “Too hot to handle”. Why? It certainly has nothing to do with me secretly watching “Love is blind!”

Psychographic profiles: The way forward

You do not need machines or algorithms as advanced as Netflix to get started with the segmentation of customers. At Antlerzz, we ask our clients to answer a set of questions based on cognitive science to understand their audience better. For some organisations, this can be straightforward as they already have the data to make those judgements. For others, it might be a hypothesis before they can test them. As an organisation, we can provide input as we can extract data points across our client’s online digital ecosystem like affinity data from Google. However, this will only offer a partial view of your segment.

We believe our clients are the experts when it comes to their organisation. We often find our clients already have extensive behavioural data they can use to segment customers without realising it. Our clients do not need fully developed psychographic profiles before working with us. Our machines can extract data insights about our client’s digital ecosystem without a behavioural analysis. However, psychographic profiles can provide better data insights and targeted recommendations. 

How to do segmentation targeting the correct way: Developing psychographic profiles

To get started, consider the following steps. These can guide you on your journey from demographic to behavioural targeting. 

1. Identify data sources for customer engagement and behaviour. You could include a variety of sources such as CRM data, social media, websites, and user engagement surveys.
2. Look for general behaviour trends. Categorise these under beliefs, attitudes, perceptions and motivations.
3. Review your initial categorisation and challenge yourself. What are the political beliefs, worries, dreams and social pressures of your audience?
4. Use your data analysis to build your target personas. Feel free to give them a name. However, you may want to consider something gender, ethnic and age-neutral.
5. Keep iterating. It is pointless having user personas last updated in 1982. The world is changing – fast! Keep updating them and learning from your data.

If you want to know more about our insights and the reports we provide, please feel free to reach out to us at info@antlerzz.com or follow us on Instagram @antlerzz_longevity