Blah, blah… ‘Our app is for the tech-savvy, mobile-first millennial market segment.‘ Blah…
How many times do you hear marketers and founders say that? Yep, and I’m sick of it too.
They use labels like Millennials and Boomers and think they represent ‘market segments’. A millennial market segment does not exist. And neither does a boomer market segment.
Let me explain why.
According to Niraj Dawar (professor of marketing at the Ivey Business School, Canada), a market segment “must meet two simple criteria: (1) It must explain the variance in the behavior of interest better than other available variables, and (2) consumers within segments should be more homogenous than those across segments.”
He then goes on to argue that using an entire generation (within a country or even wider) as a way to segment a market is both insane and unnecessary.
He cites these problems:
- “Are the labels just shorthand for the age group, or do they provide some additional insight?” He argues for example that Boomers haven’t always been into savings, golf and cruises. Likewise, Millennials won’t always (hopefully) be into getting drunk every night and living at their parents. No, age brackets and generational labels are being mixed-up.
- The start and end dates of each generation (spanning about 20 years) are completely arbitrary. Should we be narrowing the net for each successive generation? Of course that’s not the answer.
- Back in the last century marketers didn’t have a choice. It just wasn’t possible to discern behaviour person by person. Mass media had to be ‘aimed’ at these broad swathes of the population based crudely on when they were born.
- But today is a different story. We can now track people’s individual media and consumption habits. As he says: “You can find and reach the 60-year-old who reads and watches Vice News (a news outlet aimed at younger viewers) and the diligent 25-year-old who is saving for retirement“.
- “Are consumers really more homogenous within generations than across them?” Of course not.
- “Are generation segmentation schemes really predictive of brand preference, or brand loyalty, or a preference for certain product features?” No, because “there are far better predictors; the best of them is past behavior. And past behavior is now recorded and available as a variable.“
So, the takeaway is to 1) stop segmenting your market by generation or demographics, 2) start building-up a rich profile of your ideal customer based on psychographic and behaviour data – based on talking with them, and tracking what they actually do. Boom.
Marketing on a Shoestring
Five tips here from Michelle Brown on how a financial institution (or startup in opinion) can begin to compete with deep-pocketed rivals: 1) Produce and publish content like articles that are laser-focused on your specific audience (you do know who they are don’t you?), 2) Double-down on email marketing so that you keep your list clean, split-test subject lines, ensure they work on mobile devices, and target the right people, 3) Use software to auto-detect the location of your audience, 4) By focussing-in on your audience, you don’t need to pay as much for paid search, 5) Use landing pages that are customised for each campaign. GOOD START
Before You Grow
Sam Altman at Y-Combinator reminds us that growing your startup is not the first priority. First he says, we need to make sure our product is loved. Why? Because those early customers will be easier to retain, they’ll spread the word for you. Do this for as long as it takes. Trying to grow before by buying customers through paid media alone is like building a house of cards. EXCELLENT
Neil Patel spills the beans on 6 mind tricks to boost your content’s impact: 1) Appeal to your audience’s emotions, 2) Incorporate images of faces, 3) Use colours to elicit emotion, 4) Focus on relieving pain points, 5) Capitalise on the law of reciprocity, 6) Use scarcity as leverage. ACE
Beware Liquidation Preferences!
Liquidation Preference describes how the proceeds are distributed between shareholders at exit. It describes what the holders of individual preferred share classes are entitled to receive before the rest get served. Pawel at Point Nine warns founders against accepting this form of investment – except in their simplest form. He includes a handy explanatory Infographic too. GOOD TO KNOW
The Fastest Unicorns
How long did it take for the top-20 US unicorns to reach a $1 billion valuation after their first equity funding? Well SnapChat and Magic Leap did it almost immediately, and a quarter did it within 3 years. BTW: Oculus is the fastest to exit at >$1 billion in just 280 days. Instagram and WhatsApp were in 9th and 10th places at around 1,000 days. INTERESTING
Mark Suster reflects back at his 10 years as a VC and concludes that “the role of VC is ‘chief psychologist.’” INSIGHTFUL
The Fintech ‘Trust’ Factor
According to the 2017 World FinTech Report, 46% of consumers are using 3 or more fintech services and yet only 23% trust non-traditional fintech providers. Bottom-line findings: trust results from a positive perception of fraud protection, transparency and customer experience. TAKE HEED
The PSD2 Opportunity
Brett King hosts a discussion on the likely winners and losers of the upcoming European legislation forcing banks to open-up their data to 3rd-parties. MUST WATCH
Cognitive Systems in Finance
The irony is that financial institutions have too much data and too little insight. Current systems lump customers into crude demographic buckets like age: millennials and boomer again! Natallia Babrovich at ScienceSoft suggests 3 areas where a more nuanced approach with cognitive analytics could reap huge rewards: 1) Personalised customer Service, 2) Advisory and decision-making support, 3) Investment consulting. EXCELLENT
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