Kristi Barrow

A recent post on Ad Age caught my attention: The Death of Consumer Segmentation? Michael Fassnacht challenges the assumption that consumer segmentation is “best-in-class” marketing practice.  The title of the article is a bit misleading as it does not dismiss segmentation as a practice, rather it suggests that we need to extend the  traditional “set and forget” segmentation approach and allow customers to self-select their segment.

It used to be simple.  We could organise consumers into the right segmentation buckets based on a couple of demographic identifiers and voila, we had our target segments.  Then we realised we could get smarter by looking at geography, and then behavioural characteristics and finally psychographic!

All of sudden we now have hundreds or even thousands of buckets!

The more buckets the better right?  The right message, to the right people at the right time.  Helping us to get closer to the key question:

What we think the customer will do vs what the customer actually does!

So why is it the death of Consumer Segmentation?

Well it’s not, (as I said earlier the title is misleading and there to grab headlines).  Fassnacht’s article argues that letting customers self select their segment will be more successful than marketing departments constantly refining and dividing into micro-segments.  He states: “But consumer segmentation and self-segmentation have now entered the stage of becoming equal forces in today’s marketing discipline”

However the “Four Ways Marketers Can Enable Consumer Self-Segmentation” he details are hardly earth shattering, and certainly not an absolute alternative to  traditional marketing segmentation:

1. Build correlation clusters between purchased products and services, and serve them up as recommendations

Numerous online retailers have enabled customers to “self-select” by offering up recommendations based on purchased products.  This i not new, but definitely something to consider if you are not already doing it.

2. Offer networking opportunity based on self-acclaimed interests

This is possible, but without getting too granular how is it really helpful.  If a customer joins your facebook group, do you really know anymore about them other than that they use facebook.  Are you really going to set up numerous facegroups for different segments?

3. Design and provide content or a deal-alert function that automatically informs consumers about something new or interesting in the “opted-in” interest domain of a consumer

This has been the stalwart of any serious ecommerce players marketing since day 1.  But what happens when the customers’ interests change.  Are they always going to go back an adjust their preferences or will they simply start ignoring the communication?

4. Enable sharing of consumer-generated content or feedback in the context of your brand

This is more of a brand engagement play, and I don’t really understand what this means in regards to self-selection.

Conclusion

I like the idea behind allowing customers to self select their segments, but at the end of the day, people are time poor.   Just as Fassnacht said, people change with time.   But assuming that a customer will let you know this and constantly self select into the correct segment is fraught with danger.

How many of you go back into your favourite Travel company’s newsletter and adjust your interests on a periodic basis?  Consumers also like the set and forget approach.

Original article:  The Death of Consumer Segmentation? by Michael Fassnacht