GUEST COLUMN: The untapped potential of segmentation

Lucian Camp is a financial services brand consultant, copywriter, author and blogger. He co-presents the On The Other Hand podcast.

I think it was back in the mid-80s, right at the start of my financial services marketing years, that I first came across an “attitudinal” market research segmentation study.

This one, produced by Consensus Research, said that the consumer financial services market was made up of five segments – Connoisseurs, Pragmatists, Traditionalists, one I can’t remember, and Laggards.  As a writer, I was tremendously excited about this:  the segment definitions gave plenty of detail not only on which products and services would appeal to which segment, but more importantly on how you should shape your communications about the products and services in ways that would most appeal to each one.

However, I quickly realised the weakness of the study:  while you could use it in broad-brush, unpersonalised media like advertising, the fatal flaw when it came to any kind of direct communication was that you had very little idea of who belonged in which segment.  You had no idea at all about your target groups’ attitudes, obviously, but even tracking backwards from their behaviours was next to impossible.   Even when you were targeting an organisation’s own customers, you didn’t have anything approaching what we used to call a “single customer view” (you just had a load of lists of holders of each product), and anyway any insight you could muster into people’s product holdings was highly unreliable.  My mother might have looked like a Connoisseur, for example, on the basis of her investment portfolio – but in fact she was the ultimate Laggard who happened to have been left a bunch of stocks and shares when my father died.

So I just used the study as the basis for some ad campaigns.  I remember that the first financial ad I wrote, for a free guide produced by Flemings, had the headline “How to become a successful investment trust bore,”  which was a pretty good attempt at Connoisseur targeting.  But in those days financial product ads were almost invariably aimed at Connoisseurs, appearing in newspapers’ personal finance sections, and the study didn’t seem to tell us anything about them that we didn’t already know:  before too long, it rather faded into obscurity.

All these years later, two huge things have changed.  First, we’ve realised that to marketers, consumer behaviours are incredibly much more important and relevant than attitudes.  As behavioural science has shown us, it’s what they do that matters:  how they think and feel is just workings in the margins.  And that’s good, because the second thing that’s changed is that we now have absolutely stacks of behavioural data.   It’s still not perfect.  But as we move into the era of Open Banking, we have more than enough behavioural insight to create any number of worthwhile segmentations – whether following something like the old Consensus model or using other parameters entirely.

But, I don’t know, maybe I’m missing something – maybe I’m missing a lot of things – but I don’t feel I see much of it going on.  In the briefs I get as a writer, in the communications I receive as a consumer and in the stuff I see in the media, I have very little sense that anyone is trying very hard to connect with any particular behavioural type.  It seems everyone just wants to make everything as clear and simple and accessible and engaging as possible.

By contrast, when we launched what’s now St. James’s Place, for example, we had that large segment which the Consensus study defined as Traditionalists uppermost in our minds.   Traditionalists like to engage with financial services which seem established, proven, reliable – well, traditional.   Accordingly, we went out of our way to make the brand look as established and traditional as possible, all heavy cream papers, gold embossing, heraldic lions and never using any language that made it seem at all new and alarming.  No-one would do that now.  Anyone launching a new financial proposition would do all they can to emphasise its newness and differentness.

The Consensus study was ahead of its time, and like many trailblazers it got quite a lot wrong.  The same sort of thing could be done miles better now.  But for a completely synthetic heritage created for a brand launched in 1992 I still think that St. James’s Place (launched originally as J. Rothschild Assurance) felt pretty credible.  And for a smallish off-the-page personal finance newspaper ad, I still think “How to become a successful investment trust bore” isn’t a bad headline.