Wednesday, April 22, 2009

Are Behavioral Segmentation and Self-Segmentation the Same?

Last week an Ad Age article with the headline “The Death of Consumer Segmentation?” caught my eye. I consider segmentation a fundamental tenant of marketing, just as catchy headlines are a tenant of journalism. Anway, I read with interest. I’ve been part of some of those really big segmentation studies he talks about as well as many smaller ones. All produced value in an earlier era. In my opinion, their day has past.

Michael Fassnacht’s three key points were:

1. Static consumer segments have little value in a rapidly-changing environment
2. Consumers are never part of just one segment
3. By controlling the communications they receive, consumers have control over marketing activities.

The key take-away: big segmentation studies are out; consumer self-segmentation is in. He also uses an interesting term, “enabled self-segmentation;” I’m unclear whether he meant that to be synonymous with “self-identification,” which he refers to in the preceding paragraph. He ends with a section on how marketers can enable consumer self-segmentation, which is reasonable but I didn’t think went far enough.

I looked at Fassnacht’s own blog and found a couple of interesting posts. I’d recommend his reflections on the election (Binary Thinking, November 9, 2008) in which he rightly states that human beings are not one or the other in a given situation, they are highly nuanced. I looked further and found a recent post describing "micro analytics," which I though was important. The key steps, developed by Huayin Wang, are:

1. Treat UGC as the raw gold of data information. Find the right methodology to score the individual UGC pieces by relevance and relationship to each other. This kind of quantitative exercise will enable one to decipher patterns within the large universe of UGC, either on Flickr, YouTube, on blogs, etc.
2. Identify the right UGC content clusters to understand marketing opportunities. This will enable one to isolate potential opinion leaders within a certain content grouping as well as unveil unleveraged perception spaces for a particular brand.
3. Build a persuasion platform that uses the different attributes of each UGC element for an interactive program, all based on the principles of behavioral targeting.
4. Analyze the modified UGC landscape after a sufficient period of time to understand if the interactive marketing program has created any positive impact for the brand.

Wonder how many companies are doing something like that--not many I'll bet! It makes wonderful sense, and it's also based on the analysis approach used in the really big old marketing segmentation studies. It just uses behavioral data, not survey data--a huge step forward.

The situation is, as I see it, that the marketer can use this approach--self-segmentation uncovered by micro analytics--for analysis of content data collected from across the web, provided by unidentified subjects, similar to anonymous visitors on a website. Yes, you could link a Facebook behavior to a member (a person becomes a fan of a brand page, for example), but would it be worth the effort? I sincerely doubt it!

But there's an even simpler solution that few companies (except publisher sites with an array of newsletters) seem to be practicing. ASK THEM! In other situations, I've called that expanded permissioning. Ask registrants what they really want to get from you and how often. That would let them self-identify, at least to the extent you offer options/segments that are relevant to them.

Then take the next step. You might not be offering exactly what they want--chances are good that you are not. How do you ask them or analyze their activity on your site to find out what else they are looking for? The answer is--you set up ways to Listen--in ways I've talked about before!

That sets up a virtuous cycle in which the marketer first asks then uses analytics for deeper understanding. Time-consuming expensive traditional marketing research need not apply!


Nick Wreden said...

I'm working on a book about segmentation so I read the post with interest. I would agree with the point that segmentation based on "externalities" such as age, income, residence, marital status, etc. etc. is weak (but still better than mass marketing). That's because they can change, and it's hard to track and follow (which is one reason why CRM efforts fail freqently). Segmentation is much more powerful when it is based on "externalities" such as faith, culture and ethnicity. More and more companies are waking up to this by hiring multicultural managers and initiating campaigns for the black, hispanic, asian and other markets. But this kind of segmentation is the easy part. Much much harder is finding the tone, language, images and media that will appeal to each segment.

MaryLou Roberts said...

An insightful comment--thank you! I did a lot of research with lifestyle segments when that was trendy,and you are right about tone, etc. As with so much marketing--easier said than done!
I look forward to hearing about your book when it comes out!