SG360° Blog

Still Segmenting Customers By Generation? It's Time To Update Your Strategy.

(March 13, 2018)

Customer segmentation – it is and forever will be, one of the most critical practices undertaken by marketers in the pursuit of increasing the delivery, response and overall impact of their marketing efforts. 

In years past, customers were primarily segmented by generation and for the time, this was arguably the best method.Due to what we now consider limited technology and communication methods, generations – arbitrarily defined into 20 year periods – were rather homogenous in their attitudes and experiences.

shutterstock_562249684.jpgToday, however, focusing your segmentation strategy on generation is one of the biggest mistakes a marketer can make. The proliferation of technology into almost every aspect of our lives and the myriad of communication platforms now at our fingertips has led to the broadening and sharing of information beyond our physical social circles. The result – we are now connected by common attitudes, interests and motivations that transcend age.

Missed Connections and Wasted Spend

With the amount of data that is now readily available – from demographic and transactional to psychographic and behavioral – it is surprising how common it is to find marketers who still use generational segmentation to guide their targeting strategies. The perils of doing so are two-fold:

Same Generation ≠ Same Actions and Motivators

Let’s look for example at the oft-talked about Millennials, those included in this generation currently range from roughly 21 to 37 years in age. Pick two people within this generation and chances are they’re in vastly different life stages. One may be a carefree twenty-something college student whose priority is to make it to class on time and pass the next test. The other is in their early 30’s working full-time to support their family with two kids, car payments and a mortgage. The motivators and feature preferences of these individuals are vastly different. Yet, too often marketers group them together with a one-size-fits-all approach for creative, messaging and offers. In doing so they’re creating inefficient campaigns that miss the mark for either one, and often both individuals.

Targeting Issues and Wasted Spend

We know that targeting broad generational segments creates challenges with nailing the right art and copy – but let’s not forget the targeting and media spend. The broader and less exact the prospect pool, the greater the wasted spend. Fortunately, today both digital and traditional media channels – like direct mail – allow for advanced micro-segmenting, behavioral targeting, lookalike modeling, etc. – for more efficient message delivery and ultimately, increased response rates.

Life Stage Segmenting — The Strategy of Modern Marketers

Life Stage Horizontal Layout.png

Technological advances and the continued integration of data analytics have significantly increased the ease at which marketers can obtain and slice data, making the ways to segment audiences countless.

One method we’ve seen our customers use with great success is to segment by life stage. Certain life events dramatically impact buying behaviors and almost guarantee specific behavior. For example, if you’re having a baby, not only will you need diapers and bottles but you may identify the need for life insurance as well. Buying a house? You’ll probably purchase at least a few new pieces of furniture and will need to transfer or setup new internet service, but you may also need a new doctor, dentist, salon, dry cleaner… the list goes on.

As you can see, these types of milestone-related indicators span several product and service categories, from the obvious needs, so to speak, to the peripheral. In many cases these indicators often transcend traditional segmentation criteria as well; meaning, consumers will often take similar action/make similar purchases regardless of factors like gender, household income, education level, etc.

For marketers, there’s no better opportunity to strike while the iron is hot. What’s more, these milestones offer unique opportunities to acquire new customers who might have otherwise remained loyal to another product/service or brand. And, as we know, a perfectly-timed communication can forge brand loyalty for years to come.

Redirecting your customer segmentation strategy to focus on life stage will indeed yield results – increased leads, lower cost per acquisition and even higher lifetime value. But the data you use – and how you use it matters. At SG360°, our industry leading data solutions help marketers accurately target audiences in the midst of key life stages and orchestrate true 1:1 omnichannel journeys.

Interested in learning more about our customer modeling and data analytics solutions?

Get in touch today.


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