Segmentation in a Web 2.0 World—and Beyond
Imagine using a piece of technology from 1964 and expecting it to be relevant. Is anyone still using an IBM System/360? No? Then why are you still using customer segmentation that's as passe as old hardware?
In 1964, in the Harvard Business Review, Daniel Yankelovich introduced the concept of "non-demographic" segmentation. Before that, the common classification of consumers was by rough cuts of attributes like age, home ownership, income levels, and others that could generally be found in census-type information.
By moving past demographics, Yankelovich's goal was to look at things that mattered more—customer usage and adoption patterns. This meant that marketers could craft better messages and develop improved channels to reach them.
While this revolution helped us to understand customer requirements and interests, it has its own limits.
Traditional segmentation does broad well
Because marketers haven't been able to do an infinite cut of segments, we end up with segmentation based on attributes like these:
- Usage. Users who select and use devices for information gathering vs. entertainment.
- Interests. Women 20-40 interested in recording family events and creating movies to share online.
- Priorities. Which nonprofit (social justice nonprofit vs. clean water nonprofit) receives the greatest amount of funds.
- Purchase drivers. Ease of purchase (read: online shopping, simple return policy, purchase guarantee) may trump many other product attributes (price, quality, brand) for time-starved consumers.
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Nilofer Merchant is the CEO of Rubicon Consulting (www.rubiconconsulting.com), a strategy and marketing consultancy based in Silicon Valley that solves complex business challenges for high-tech companies.
