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Zero-Segment Marketing: Splitting hairs to deliver on 1-to-1 customer engagement

Posted by Kristin Hambelton on September 27th, 2012 at 4:52 am

You open your mailbox, and out falls a package from a nearby salon, offering samples of a new, “coconut-scented” hair styling product and a “Punk Pink” colored spray that promises “all-day hold for long, tangled tresses.”

While a nice offer, the package is unfortunately addressed to your father, who happens to be elderly, bald, and, well…male. It turns out that, years ago, he once bought a gift for your hip aunt (who has since moved away) at that store and has been receiving “gifts” like this ever since.

It sounds a bit like the punchline to a bad joke, but the underlying problem it describes is all too common. When it comes down to it, the fact is, that in today’s increasingly complex, real-time and cross-channel world, many marketing elements seen as “traditional” are quickly approaching obsolescence.

This assertion is guaranteed to send chills down the spines of marketers who have long relied on segmentation models as part of their campaign planning process. And, to be fair, segmentation models historically were sufficient for individual outbound campaigns because the variables were clearly defined to target groups of customers with fixed commonalities. Each campaign featured a specific offer that was targeted to a specific customer segment and delivered via a specific channel.

But the traditional rules of marketing just don’t work today. The reality is that current consumers are constantly plugged in to any number of channels, devices and services. Preferring to control the terms of engagement with their favored brands and companies—and seeking contextually-specific information precisely when and where they need it—they’re relying on inbound channels more than ever before and are much more likely to have a negative reaction to messaging that is not right on point.

According to Forrester Research, Inc., “Legacy segmentation models are no longer relevant to the way customers interact with brands — especially as the number of customer touch-points exponentially increases, creating a non-linear view of the customer.”

New channels and communication paradigms have stretched segmentation models to the breaking point. To drive customer engagement and business results, marketers must embrace what we’ll call Zero-Segment Marketing. Eliminating one of the last remaining obstacles to true 1-to-1 marketing, Zero-Segment Marketing discards traditional segments, creating an environment where offer targeting is defined by the individual.

At its heart, the issue is that segmentation classifies consumers in homogenous groups. But people simply cannot be fitted neatly into one bucket—making much of the work of segmentation akin to forcing a square peg into a round hole. As a result, marketers are forced to make decisions based on the qualities of the broader group, which means that individuals may not receive the best message based on his/her unique profile. As a result, response rates continue to decline.

With Zero-Segment Marketing, rather than assigning a specific offer to a specific segment, marketers assign decision criteria to each offer that are shared and consistent across all channels. When a message is generated via an outbound channel or a customer initiates contact with a brand via an inbound channel, these criteria—in conjunction with the customer’s detailed profile—facilitate a real-time decision regarding the best offer for that particular individual at that particular time.

Whereas traditional segments are one-to-many or one-to-few at best, Zero-Segment Marketing is truly 1-to-1 and customer-centric, and is the key to increasing engagement and response rates in the age of the empowered customer. No longer will companies send youthful, feminine hair improvement products to bald, male senior citizens who once swiped their credit card at the local salon. Zero-Segment Marketing means that my dad will receive golfing magazines and the outdoor grilling spice samples that he enjoys. And that salon? They’ll be able to send their samples to someone who will appreciate them.

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