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Future State - The Oracle Consulting Blog

The 5 Ws of audience segmentation

Louise Tegner
Social Communications Manager

Author Stephen Hanvey, DMP Expert Services Consultant at Oracle Consulting

 

"The aim of marketing is to know and understand the customer so well, the product or service fits them and sells itself"

 - Peter Drucker

Who are your customers?

There was a time when if you asked this question, most businesses would say "everyone is my customer" and at it's most basic there is some truth here, but the problem with this belief is that it puts your business at a disadvantage. Is it right to expend equal resource and effort on a random vs. a primary target, will that lead to realising value and growing your customer base?

Concluding who your customer is cannot be done at an ambiguous superficial level, but with determination for granular details: who are they, what are they buying, what do they read, act like & do, where do they live, with whom, what do they drive, where do they holiday, what did they last buy, why did they buy it? This exercise exists already in marketing in the form of persona development, and the DMP is an ideal tool to assist in building detailed digital personas of who your customer is. The power of having access to a vast panel of anonymous customer identities, being able to correlate ideal known customer traits with those of potential customers creates the conditions for sophisticated audience segmentation, rather than audiences based on generalities.

The advantage of course in defining your ideal customer, is you immediately see the other side of the coin: who is not your customer. This is a frequently overlooked capability in the DMP: suppression based on traits, behaviours and demographics. As soon as we distinguish between an ideal and imprecise customer - we start to become efficient.

What are your customers thinking, doing, going to do?

At the risk of sounding obtuse: if you don't know what your customers are thinking - are you really listening? If you don't know what they're doing - are you really observing?

If one thing is true in modern life it is there is an abundance of data about people: what they're thinking, doing & planning to do - you have access to this data through 3rd party data sources and within the tracking and segmentation capabilities of your DMP. I know what you're thinking - that this type of data is in rapid decline due to GDPR regulations and yes there has been an impact on available reach since May 2018. But is this decrease a herald for continued persistent decline or a temporary dip due to over cautious practices post GDPR? I have experience of some businesses who, rather than trying to maintain reach by gaining ad-hoc consent, they simply purged their customer data and sought to rebuild with guaranteed consent - if we hold it, we got it via consent!

I am buoyed by reports that despite the media suggesting the opposite, Research from the DMA states that "most consumers now feel more comfortable sharing their data than ever before. In a survey of 1000 UK consumers, 62% said their confidence about sharing data with businesses has been improved." If you hold your nerve, we will watch that 3P data dip turn into an ascent pretty soon.

Where in their journey are your customers?

Consider this scenario - Two friends decide to meet in the town centre for lunch, but one arrives early and decides to do a bit of window shopping, she walks into a shoe shop and is immediately set upon by a tenacious assistant who wants to know "What are you looking for, can I help you with a size?". What should have been an enjoyable, relaxed browse became an uncomfortable exchange and the lady immediately leaves. Later the second friend is late returning to work after the lunch and breaks her shoe heel on a curb, she quickly rushes into the same shoe shop and picks up a nice pair of shoes but there is no assistant nearby to help with a size, and she gets immediately frustrated at being left unattended.

We see manifested here the typical customer buying journey from Awareness & Consideration to Decision, Retention & Loyalty to Advocacy played out. The first lady is at the awareness stage, the second at the decision stage, neither reach the loyalty and advocacy stage.

Audience segmentation in a DMP needs to be based not only on a reactive seasonal campaign need, but on how you want to communicate with your customers based on where they are in the purchase funnel, their own purchase funnel, not a modelled and generic one. Both of the women in the example are demographically, geographically, behaviourally identical and yet they're in very different places in respect to their need for the shoe shop's product.

Why are your customers coming to you?

It is said that there are 5 essential needs which when met will dictate whether customers will keep coming back:

  1. Empathy - customers need to feel their circumstances and needs are understood and acted upon by a brand in a sympathetic supportive way.
  2. Fairness - customers want to be treated equally, without bias whether they are a new customer or a loyal 10 year customer.
  3. Transparency - customers expect openness on pricing: sale prices + hidden charges, information about all the options available to them - "I didn't know it came in green!"
  4. Control - customers don't take well to company policies, rules, Ts&Cs etc - especially if those are restrictive to their overall experience and end in a 'no'. They want to feel like they have influence on the way things will turn out.
  5. Information - customers expect to be educated and informed about everything, regular communication, guidance, returns policy, delivery options. "Help me do my homework so I have confidence I am buying the right product"

When creating audience segments, it is important to be mindful of whether any of that segregation goes against one of these basic needs. Is the segmentation sympathetic to the customer need or are we falling into a product before experience trap, as Steve Jobs said:

"You've got to start with the customer experience and work back toward the technology - not the other way around"

When are your customers engaging?

If you want to increase conversions, the number one factor is arguably the 'right time'. Event driven marketing is a discipline that's easy to dive into and with the right customer knowledge, simple to become good at.

Think about what information from 1P and 3P sources you have at your disposal. We can categorise these in terms of:

  • Real time triggers - such as clicking in a promotional 30% off today email, add to cart and abandon cart activity.
  • Predictable events - end of contract, end of subscription dates, product release cycles
  • Major life events - baby, wedding, holiday, house, new car purchase.

Event driven marketing is proven to have more incremental impact on conversions than standard segmented campaigns. But the key to success is in getting your message out within the right conversion window and it is the DMP that provides one of the best vehicles to build audiences and control campaign exposure on the right channel at the right time. Critical to a successful outcome is having a good taxonomy that reflects real time trigger data capture, timely ingestion of predictable and life event data from CRM/offline sources.

Each customer sees the world very differently to the next and only through solid strategic preparation can we hope to be more efficient and effective in how we communicate with them. As Seth Godin said:

Be personal. Be relevant. Be specific.

 

Read more by Stephen Hanvey, DMP Expert Services Consultant:

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