Segmentation methods need to change to achieve efficient Marketing Communication
In the past few months we have observed lots of posts on LinkedIn about the persona comparison of Prince Charles and Ozzy Osbourne as seen above. Here at BrandMind, it is this comparison we have been championing for over four years as it is a succinct summary of our philosophy. We are glad to see that gradually more and more people are understanding the superficial approach and we would like to explain where this approach is coming from, why it is useless for precise targeting and what kind of segmentation should be used instead to increase efficiency in marketing communications.
Where does the Persona Development come from?
In the beginning of the 00s, this was the only way known in the market to start a B2C Brand Segmentation where no customer or consumer data was available. After a few internal workshops, a handful of Personas were created as the basis for (Brand / Direct) Marketing Campaigns or for the Website-Content-Development. These stereotypes of Persona usually contained socio-demographic information (Gender, Age etc.) then were wrapped in a fictional story e.g. digital native or not, family father etc. As such, the Persona development was then simply based on assumptions of the marketing team and not at all evidence-based. Furthermore, these socio-demographics are simply too one dimensional and generic to generate high level information for effective communication, as the comparison of Prince Charles and Ozzy Osbourne highlights. Nobody would ever suggest the same products to both of them. As a consequence, it is commonly believed that even marketing teams do not actually truly know their consumers. Nobody does within the company, except the sales team. But they are not able to summarize a structured segmentation for the marketing team. And it is actually not their job. To really understand the customer, you need a lot of precise and actual data. Having no customer or consumer data at all to rely on for a segmentation, makes it extremely hard to be effective in marketing communication.
Why is it useless for operational Marketing?
Personas, wrapped in fictional stories are very difficult to grasp for a Marketing Manager. Although the original attempt was to make segmentation more graspable with Personas, in the end it caused more confusion, because 1) socio-demographics mentioned in the story are in most cases assumptions, 2) the whole story is fictional and that leads to 3) a one dimensional, superficial, not evidence-based and fictional segmentation for Marketing Managers. When selecting the segments in the CRM based on socio-demographics, it becomes very evident that the purchase behaviour of the selected socio-demographics don’t fit at all to the rest of these concocted Persona Stories. If the Personas are not linked with actual data to see if “Mr. Peter” really fits into the Persona “James” as believed in the first place, there is simply no solid basis for effective marketing communication. Many years ago, we tested this scenario with a client and could prove that “Mr. Peter” and many others didn’t fit into the created Persona profile of “James” as they were originally perceived they should. And not only that: in fact, the needs were also completely different. As a consequence, the whole communication was extremely inefficient – time and money wasted. In regards to Brand Marketing it is also very difficult to decide which media channel to use for the campaigns, because all the assumptions made in the Persona definition can be completely false and can lead to wrong media channel management.
What is the current status quo in the market?
Unfortunately, just using simply Persona’s is still a common way of segmentation because many companies have missed the boat on giving high importance to collection of customer data or companies are not able to get a 360-degree data overview of the customer. The reason for that is that companies have just struggled to centralize their data. So much important customer data is managed and stored in different, non-accessible systems. In very few and more advanced cases, the Persona development will be enriched with behavioural data or psychographics gained in qualitative market research. But also in these scenarios: psychographics are often understood as kind of lifestyle and will not be reflected in the CRM-system. Behavioural data can give insights about past product purchases, but this information does not solve how to actually approach the customer in communication (language, pictures, future (new) product preferences).
What would be the most effective segmentation?
The idea of a good and useful segmentation should be that operational marketing can derive essential information out of it for an efficient marketing communication and it should be easy to segment the intended targets within the CRM. It should be very clear how to design the communication part and which product to use per target. The essence of qualitative communication that triggers emotionally lies much deeper than just looking at socio-demographics and / or behavioural data. So an ideal segmentation should combine personality & motivational psychology with sensory preferences per psychological type, socio-demographics and behavioural data.
Why psychological types?
Because of three essential elements that help massively to manage the communication approach of the marketing mix: 1) Motives behind purchase (reason for product preferences) and 2) attraction / sensory preferences (language, pictures) and 3) Lifestyle of each psychological type. In the market, there are a lot of psychological models, which are mainly used in HR. Innovatively and uniquely, BrandMind has empirically developed together with the Zurich University of Applied Sciences and funded by the Swiss state, a psychological model for marketing purposes which combines personality and motivational psychology and the sensory preferences per psychological type.
The goal of this is to assess real psychological types from customers, match them with existing data of socio-demographics (age, gender, income, purchasing power, location etc.) and behavioral data (product, model, amount of purchases etc.) to a psychometric cluster segmentation and be able to label the (for the service provider anonymized) whole customer base with psychometric profiles through predictive models so that all customers are psychometrically labeled within the CRM-system. To be legally correct, all customers need to give their consent to this whole process. Requirements for a good psychometric segmentation are enough psychologically relevant customer data and complete, actual data as well as a 360 degree view of the customer.
Future of segmentation
Especially in digital marketing, an advanced segmentation is needed (e.g. sending push notifications to app users). Users expectations are extremely high and they expect high value of each interaction, otherwise they will go immediately to the competitor. To be able to deliver an outstanding experience, all of the above mentioned is essential. This is the basic work that needs to be done. Now it is time to decide, if companies want to set the baseline for their future or if they miss the train once and for all, because the market does not sleep. The big companies set the standard on a new level and old corporates can’t cope with the speed to deliver an outstanding experience. The whole strategic wheel in digital marketing will be an efficient segmentation that sets the basis for marketing communication of value.