Over sixty per cent of UK marketers believe consumer segmentation – the categorisation of customers based on shared traits – is an outdated method of marketing, with 63% considering it totally unfit for purpose.
That’s according to new research from enterprise customer data platform, Treasure Data. This is despite almost all (96%) marketers in the UK still using segmentation within their organisations – even though its effectiveness is being called so clearly into question.
The findings, which surveyed 500 UK marketers, found that whilst 86% of respondents update their customer segmentations at least every two years, well over half (56%) still struggle to target their audiences effectively.
And marketers think this new challenge is a result of consumers becoming trickier to understand, with two thirds (66%) concerned that consumer behaviour has become more complicated since the pandemic.
In fact, with easy access to more information and choice than ever before – especially online – priorities, preferences and purchasing habits now have potential to change at any given moment. Almost three quarters now agree it’s hard to group consumers into one segment because they’re always evolving.
The new era of targeting through consumer ‘situationships’
With this research exposing the shortfalls in traditional customer segmentation methods, Treasure Data is calling upon brands to rethink their approach and instead aim to make use of first party data to ‘segment by situationship’ in real time.
In its new report, ‘Better Decisions: The era of consumer situationships ’, situationships are defined as a momentary mindset based on an individual’s current mood, needs, priorities and circumstances.
Treasure Data further surveyed 2000 adults in the UK to gauge the modern consumer mindset, finding that many consumers in fact flit between mindsets or ‘situationships’, derived from numerous behavioural traits. The most popular of these momentary mindsets included ‘Family Firsts’, ‘Safe shoppers’, ‘Infrequent buyers’, ‘Purpose shoppers’ and ‘Seasonal Spikers’.
First party data to pin down consumers in real time
The report highlights prevailing gaps in the data management strategies within many brands, with 64% of UK marketers admitting that data blind spots are preventing them from getting a full picture of their customers. And with four in ten marketers (39%) recognising that consumers will opt-out of sharing their data with brands they don’t trust to handle it properly, marketers look set to struggle with elevating their segmentation efforts.
Commenting on the report findings, Director of Marketing EMEA and India at Treasure Data, Andrew Stephenson said:
“The findings of this research validate what we knew to be true – that outdated models of segmentation which fix consumers into rigid and permanent groups simply don’t work. And marketers will face an urgent problem if they don’t take the need for better first party data seriously.
“If they are to have a real time, fluid and evolving understanding of their customers, then brands must look to eliminate data blindspots, access and invest in data security measures to win consumers trust and from there, achieve the gold standard of targeting; segmentation by mindset and situation.”
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Over half of UK marketers believe consumer segmentation is an outdated and oversimplified marketing method
