More than 6 in 10 (61%) UK marketers believe that customer segmentation is outdated and no longer fit for purpose, with 63% considering it to be totally redundant, according to research by customer data platform Treasure Data.
The news comes despite the fact that 96% of marketers still use the method. Having surveyed 500 members of the industry, Treasure Data found that whilst 86% updated their segmentation every two years, 56% still said that they struggled to target their audiences effectively.
Many marketers believe that this may be a direct consequence of the pandemic, as consumer behaviour is now much more unpredictable, with 66% of respondents saying that it was now ‘trickier to understand’.
The unprecedented speed of access to unlimited information online has led to constant customer behaviour evolution. Over three quarters (73%) of marketers now believe that customers simply cannot be categorised as a result.
Subscribe to Marketing Beat for free
Sign up here to get the latest marketing news sent straight to your inbox each morning
“The findings of this research validate what we knew to be true – that outdated models of segmentation which fix consumers into rigid and permanent groups simply don’t work.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,” Treasure Data director of marketing EMEA and India Andrew Stephenson said.
“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.”
Treasure Data is instead urging brands to take a new approach rooted in first party data to ‘segment by situationship’ in real time. Its new report, ‘Better Decisions: The era of consumer situationships’, defines such ‘situationships’ as a momentary mindset based on an individual’s current mood, needs, priorities and circumstances.
Having surveyed 2,000 UK adults, the firm found that the most popular of these momentary mindsets included ‘Family Firsts’, ‘Safe shoppers’, ‘Infrequent buyers’, ‘Purpose shoppers’ and ‘Seasonal Spikers’.
Although marketers look set to struggle on with their segmentation targets, as four in ten (39%) recognise that consumers will opt out of sharing their data with brands they don’t trust to handle it properly.
