The New Science Behind Audience Segmentation

The New Science Behind Audience Segmentation

With COVID-19 we’ve seen a groundswell of companies initiating socially responsible statements, commitments, and campaigns. Compared to other funds, sustainable funds — or portfolios for ESG (environmental, social, and governance) — showed strong outperformance across indexes, such as the MSCI equity index and S&P 500. Sustainable investment funds in the U.S. saw a record $10.5 billion of net inflows during the first quarter, according to Morningstar.

Still, the real question marketers are grappling with as mandates are slowly lifted is if the disruption in purchase routine will affect consumer behavior long-term — and if so, how. 

Marketers typically rely on segmentations that change slowly over time to understand consumer behaviors and psychographics. The pandemic has shattered many segmentations, as consumer behaviors have changed drastically over the past several months. When it comes to segmentation around the socially conscious consumer, it’s not monolithic anymore – and requires the same discipline and data as traditional segmentation.

There is a multitude of data available outlining how consumer behavior has changed. Just think about all of the people who made it a priority to celebrate frontline workers and offer resources – financial or otherwise – to support workers through the pandemic. Companies have also stepped up to the plate. For example, Sweetgreen, a popular salad chain, has joined forces with World Central Kitchen, a disaster-relief not-for-profit founded by chef José Andrés to create the Sweetgreen Impact Outpost Fund – and they delivered 100,000 healthy meals to healthcare workers on the frontlines of the pandemic for free. 

We can discern these changes, even without data, based on the disruptions playing out in news headlines. What is not being discussed is the underlying psychological impact that the pandemic is having on consumers that is likely to last for the long term.

As consumer psychographics change, companies need to pay close attention or risk wasting marketing investments. As companies launch socially responsible campaigns, it’s even more critical to know their audience. With a wealth of data available to marketers, it’s becoming essential (and expected) to target the right audience with the right message – at just the right time.

When it comes to audience segmentation, marketers typically look at traditional demographics like sex, age, education, occupation, household income, and geography – but these are less revealing than they used to be.  To make things even more challenging, we don’t have historical data to look at buying trends for the socially conscious consumer. So we need to focus on what we know, what we can learn from a multitude of data sources, what works, and what doesn’t – then iterate, evolve and improve engagement.

To better understand the socially conscious consumer, companies need to focus on more revealing (and harder to acquire) factors including:

  1. Values and Beliefs – Values are stable long-lasting beliefs about what is important to a person. They become standards by which people order their lives and make their choices. A belief will develop into a value when the person’s commitment to it grows and they see it as being important. Examples: authenticity, reliability, loyalty, commitment, open-mindedness, consistency, honesty, compassion, optimism. 
  2. Psychographic – People have different interests, attitudes, and traits. For example, some people really care about the environment, while other people don’t. Some people are very fitness and health-conscious while others are foodies. Some people take sports very seriously, while some just want to have some fun on the weekends. Psychographic segmentation occurs when you break your market down along these interests and attitudes so you can market the appropriate product to each segment of the market.
  3. Behavioral – Behavioral segmentation is the process of sorting and grouping customers based on the behaviors they exhibit. These behaviors include the types of products and content they consume, and the cadence of their interactions with an app, website or product. Behavioral segmentation doesn’t just tell you what product or service a certain group of customers likes. It helps you understand what channels they frequent and what type of messaging they respond to, so you can boost your conversions.

To understand who your audience is, and the ones most likely to embrace your message and take action – you need to examine these attributes. Using these types of data, companies can build much more effective campaigns – designed to spur action – and to drive better engagement by connecting with their audience on a deeper level.

So what can companies and marketers do to access and use the “right” types of data more effectively? 

Skills: Collecting and understanding psychographic and behavioral data require a combination of disciplines including data science, anthropology, and psychology. While data scientists aren’t new to the marketing function, introducing these other disciplines is key to surfacing new insights and actions.

Marketing Intelligence (MI): While many companies have an MI function, it needs to evolve and adapt to the changing nature of what makes for meaningful data. There are new data sources and new ways of collecting and analyzing data, and the MI function needs to lead the way in understanding which factors carry the most weight, and how companies can use these new insights to improve engagement and conversions.

Brand Marketing: This function is at the heart of shifting customer beliefs, building awareness, connecting with the socially conscious consumer – and ultimately earning brand loyalty.  At a time of extreme clutter (messages, labels, products), conscious consumers value transparency, accountability, and authenticity more than ever. They are looking for deeper, more meaningful relationships – a chance to participate in brands and be empowered by them.  Companies that align their values with their actions will earn enduring loyalty among conscious consumers.

As you start to think about new approaches to dissecting your target audience, start with the big picture, and then dig deeper. For example, you can start by looking at these four types of consumers:

Enlightened consumers are the most driven by their values when making purchasing decisions and will go out of their way to reward companies who align with their social goals. What’s more, a recent study found these consumers are willing to pay 5% or 10% more to purchase from these companies over others. 

Aspirational consumers are more likely to balance their ideals with convenience and often switch between social concerns, availability, and price when making purchasing decisions. This is a highly engaged audience; they’re typically 20-30% more likely than the average internet user to have interacted with a brand in some format in the past month – according to GlobalWebIndex.

Practical consumers are looking for convenience and prioritize products based on price, quality, and energy efficiency. In fact, more than two-thirds of U.S. adult shoppers said they value price, product, and convenience above other considerations when making a purchase. And convenience, in particular, is becoming a much more important part of the equation, according to Deloitte’s 2020 Retail Industry Outlook.

Indifferent consumers are the least motivated by social concerns and prioritize price, quality, and convenience. These consumers are least likely to be persuaded by social responsibility efforts and campaigns.

So how are you currently segmenting and targeting the people who are most likely to be receptive to your product, brand, and messaging? Are you meeting their needs and expectations with an authentic message that resonates with them? Or are you simply reaching out to the masses and hoping for results? These are questions to consider as you take a close, honest look at your current brand and marketing efforts for the socially conscious consumer.

This article is co-authored by Kevin Thompson and Matt Berry, longtime friends and colleagues who share a past at IBM Corporation. Kevin and Matt each had roles in shaping both Marketing and Citizenship programs at IBM, and have continued to explore ways of combining socially conscious brand development with marketing and revenue generation goals. GOOD/Upworthy and Conversion are seeking opportunities to jointly support innovative marketing teams with new program development. Please visit: www.goodinc.com and www.conversionam.com.

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