- Customer buying habits vary according to occasion, not just demographics.
- Brands can respond to this by tailoring content to person, place and time.
- By taking five steps towards understanding data, marketers can make the move towards providing occasion-based offers and solutions.
One of the biggest misconceptions when it comes to understanding customers is the timeworn belief that buying habits are always somehow the same. To dispel this belief, picture for a minute a week in the life of Greg, a 38-year-old finance manager who lives in the inner suburbs of Melbourne with his wife and young family.
Chances are that the Greg who’s rushing through the supermarket on the way home from work to pick up last-minute ingredients for dinner will display a wildly different set of behaviours from the Greg strolling through a department store with his children on his Saturday family outing and the Greg who’s browsing on his iPad late the week before his wife’s birthday.
In the first instance, he might be motivated significantly by convenience; in the second, he might welcome activities and services that foster an enjoyable (or distracting) experience with his family and in the third, he might be a high-value customer for whom price-point is far less important than a present that matches his wife’s discerning taste.
Saying goodbye to static segmentation
In the last few years, brands have had to learn how to adopt an agile mindset, invest in creating a seamless customer experience across multiple touchpoints and anticipate disruptive trends before they break.
But these approaches are often still based on a traditional view of customer segments, a model that crafts marketing offers based on some combination of static demographic information.
Given that customers no longer obtain their information from a handful of TV channels, radio stations and newspapers and that the needs of the modern-day customer are dictated by different life occasions, these well-worn targeting strategies start to come up seriously short.
Fluid, occasion-based marketing, then, offers a compelling alternative to static segmentation by looking beyond solely demographic data to glean customer insights tailored to person, place and time.
Unlike its predecessor, it acknowledges that an individual customer’s buying habits will not be the same every hour of every day — despite fitting into a certain persona or segment. Instead, it integrates what we can call the customer’s ‘digital signature’: the trail of data across physical and digital domains that reflects their real-time actions, location, intentions and interests. It then correlates this with occasions such as friend’s birthdays, first dates or life events such as the birth of a first baby, to offer products and services that display a nuanced understanding of a customer’s life.
Putting the customer’s occasion front and centre
For brands, the ability to serve up highly personalised, relevant offers — at precisely the moment that the customer needs them — can dramatically impact loyalty, sales and ROI.
A bank that knows that Sophie is confirmed to be starting a family in six months can anticipate that she would be more open to moving out of her studio and present her with a competitive offer for a starter home loan, or even start with family home discovery services in areas that she is known to favour.
A retailer who knows that Matt bought his Christmas presents on Christmas Eve last year will probably have more luck up-selling their gift wrapping and fast delivery service to him this year than one blind to this information.
Increasingly, conversion is as much about grasping the pre-factors for a customer purchase than it is predicting what a customer will buy. This approach works equally well for less frequent but higher value purchases (think mortgages) or high frequency purchases (think grocery shopping).
Preparing for an occasion-based future
Interestingly, the shift from static segmentation towards fluid, occasion-based targeting can be simpler for smaller, agile players who can afford to re-imagine what they offer and move from selling products to providing services that meet changing customer needs. That said, the decreasing cost of working with data and insights technologies means that just about every business can start saying goodbye to static segmentation.
A few steps to start the move towards an occasion-based future:
- Understand your existing customers and potential customers as fully as possible, by combining first- and third-party data to develop more granular and informative segmentation models.
- Overlay qualitative detail to the data-driven views, creating distinctive personas for each data-driven segment… this helps to drive offers and marketing messages that are likely to land best with the segment.
- Begin to capture real-time information about each identified customer, starting with their digital behaviours (browsing events, shopping cart adds, clicks, likes, etc) and then overlaying physical location and time – near ubiquitous smart mobile ownership makes this achievable. Use this information to refine your segmentation (to find, for example, the consistently time-poor convenience shopper).
- Start engaging for the occasion – initially with simple responses to identified triggers (re-targeting, proximity offers, etc). For example a text: “We can have your regular top-up basket ready for you in five minutes as you pass our store, Greg” or an email: “Any of these three carefully selected gifts can be wrapped and at your home by tomorrow morning, Matt!”
- Measure, adapt the model… then measure again. Through ongoing test and learn, you’ll continue to refine your understanding of which interventions positively move the dial with which segments/occasions… and which don’t (or may even irritate Greg, Matt or Sophie).Calculate the ROI on different interventions. Invest in the ability to test and learn about these interventions at scale and with rigour, as this is your key capability differentiation from less agile marketers.
In the next article in this series I investigate how to use behavioural science approaches to better ‘nudge’ consumer behaviours within this fluid targeting and execution environment. Click here to read Working with, not against, the psychology of customer loyalty.
With thanks to Matt Kuperholz.