If you’re a marketer who segments customers and runs targeted campaigns, chances are that you’re doing it in the least-effective way possible.
Let me explain.
When companies first started collecting data, it was relatively easy for them to gather demographic information. Customers were assigned to categories by age, gender, and sometimes even social class, and with these categories came a lot of assumptions about their behaviors and preferences.
To be sure, demographics definitely hold some influence over consumer behavior. For example, according to the 2016 Aimia Loyalty Lens study, which surveyed more than 15,000 consumers in nine countries, 40% of U.S. consumers ages 18 to 24 are likely to use a digital wallet, compared with 25% of those ages 55 to 64. Demographic data like this certainly provides insight into tendencies and attitudes.
However, when companies use demographically based assumptions to inform blanket marketing tactics, they ignore reality. There are intrinsic and sometimes significant differences within each demographic group. Without understanding these differences, companies put their communications at risk of being generic at best and useless at worst. In either case, the blanket approach can lead to wasted investment.
What’s missing from demographics-based targeting is an understanding of consumer mindsets. If you understand how someone prefers to share personal information and how much he or she wants to share, it tells you a good deal about the person as an individual. And it informs you, the marketer, of how you should communicate and engage with the person to encourage and develop a relationship.
Aimia teamed up with Columbia University to uncover what motivates consumers to share their information. Our research uncovered four unique groups, each with its own attitudes and behaviors toward data sharing with brands. (We call them data-sharing mindsets.) Here’s a quick primer on the characteristics of each group and a few tips on how marketers can best interact with them.
According to the study, this is the largest group of the four, comprising 34% of consumers. It’s also the youngest profile, with 45% of its members between ages 18 and 34.
Savvy mediators place the highest value on their personal information, will pick and choose what information they share, and have the highest expectations for personalized communications from brands. They also have the highest loyalty participation rate at 89%.
They understand the value exchange and expect better experiences from companies they know hold their data, and they will reward those brands with more loyalty.
- How to spot them: Consumers in this group are most likely to be early tech adopters, use digital wallets, and download and use e-coupons.
- How to communicate with them: Get to know their interests and purchasing behaviors, and invest in personalization. Sending relevant offers to their mobile phones could play well with this group. Ask about their communication preferences so you can break through their email clutter. Since they understand the data value exchange, it’s important to work hard to make sure they recognize an obvious value exchange in the message to get them to interact with the brand.
These consumers make up the second-largest group, comprising 28% of consumers. It also has the second youngest profile (39% aged 18 through 34).
They are defensive of their data, and more than 50% of them worry companies won’t keep their information secure. They are picky about who they engage with and will carefully curate their experiences.
- How to spot them: They share the least amount of personal information of any group (an average of less than seven pieces of information), and it’s likely that customers with the least complete profiles belong to this group.
- How to communicate with them: Override their privacy concerns by clearly stating in plain language exactly how you’ll use their data. Improve the relevance of your message and give them the opportunity to opt-out where they aren’t comfortable.
Can’t Be Bothered
This is the second-smallest group, comprising 20% of the population. It has the lowest level of participation in loyalty programs, at 77%. While this group will share the bare minimum in terms of personal information, it is the least concerned out of all groups about data security.
These shoppers also have the lowest expectations for personalization, and only 14% feel that brand communications are relevant to them. This same group is also less likely to interact online with brands, and it is the most likely group to be late technology adopters.
- How to spot them: They are unlikely to share anything beyond basic information such as email address and date of birth. They are also unlikely to proactively manage email settings or unsubscribe, even though they find most communications irrelevant.
- How to communicate with them: Here is where you want to focus on quality over quantity, and make each interaction really count. Show this group the benefits of personalized communications to increase their expectations and create a memorable and relevant experience for them. But don’t expect them to join in on a social media contest, for example. Meet them at their level and consider sending good, old-fashioned snail mail to catch their attention.
While the Sign-Me-Ups are the smallest group at 19% of consumers, they are willing to share personal information to receive relevant offers and rewards.
This group has the second highest loyalty program participation rate (at 88%). About 50% expect personalized communications from brands and want brands to use their personal information to give them offers. They employ fewer coping mechanisms and are less likely to delete or unsubscribe. This group is also the most likely to claim better service and benefits from companies with whom they share personal details.
- How to spot them: They are happy to provide personal information and are accepting of the offers they receive. They share the most personal information of any group (9.2 pieces) and hold the most complete profiles, sharing information like mobile numbers and household details.
- How to communicate with them: You’ll need to cut through the clutter and millions of messages with these consumers to grab their attention via personalized communications, such as email subject lines with names or geo-located communications to their phone, as they are 28% more interested in receiving their offers on their mobile phones than the global average. Focus on improving customer experience to maximize the possibility of purchase conversion.
Of course, targeting by data-sharing mindset may not be the right strategy for all industries and all marketing campaigns. For example, if you have a limited budget and your goal is to drive sales in the short term, it might make sense to target one or even two of these groups. However, if you have a larger budget and aim to reinforce a brand reputation instead of driving sales, targeted marketing may not necessarily be the right thing to do.
In short, the more details you have on a customer, the more accurate you will be in targeting the person. You will be spending your marketing dollars in the most efficient and effective way, since you’ll be delivering the right message to the right customer in the right way.