For a long time, demographic information (such as age, gender and location) was the only way companies could segment their customer base. Today that is no longer the case. The wealth of consumer data now available means brands can layer attitudinal and behavioral insights on top of demographic data to paint a far richer, more nuanced picture of real people.
At the same time, the demise of globalization has given birth to a new social order. The world is no longer a global village, but a theatre of disparate tribes. As seen with the unexpected election of Donald Trump, U.K.’s Brexit divide and the rise of Extinction Rebellion. The digital age has enabled the creation of modern tribes, united by a shared mindset, rather than age or location. Unlike the punks, hippies and goths of yesteryear, these new tribal allegiances are invisible. Modern tribes live inside echo chambers on Facebook, Twitter, Reddit, Twitch and Discord.
The rise of modern tribes has major implications for brands and marketers. By 2020, Gen-Z are set to overtake Millennials as the biggest generation globally. If brands want to reach the next generation of consumers, they will need to gain deeper insights into the different needs, behaviors and attitudes of distinct youth sub-segments. Going beyond demographic profiles is no longer a nice-to-have, but a business imperative.
Young people are not a marketing segment
To begin with, Millennials and Gen-Z make up 64% of the world’s entire population. That’s a jaw-dropping 4.7 billion people. How can they all possibly think or act in the same way? For every report stating young people are lazy, there’s another stating they’re workaholics. For every article stating they’re individualistic, there’s another stating they’re community-minded. And for every account stating they’re narcissistic, there’s another stating they’re going to save the world. Such contradictions are an inevitable outcome of painting a rich, varied and plural demographic group with the same brush. Young people are not a monolithic marketing segment. To treat them as such says more about the prevalence of lazy marketing than it does about the audience in question.
Demographic segments rarely reflect differences in consumer needs
Now, there’s no denying that each generation experiences unique historic, social and economic events that shape their outlook and life chances. Sure, this happens. For instance, the Great Recession has meant that young adults now earn 20% than their average compatriot. The rise of digital devices and social media has made young people lonelier than any other age group, in the U.K., at least. Whilst the existential threat of climate change is forcing young people from all around the world to take action. But there’s as much diversity within generations as there is between them. To think otherwise strips people of individual agency. For example, Donald Trump and Barack Obama are both Baby Boomers. Jay Z and Jeff Bezos are both a part of Generation-X. Cristiano Ronaldo and Mark Zuckerberg are both Millennials. And Malala Yousafzai and Kylie Jenner are both a part of Gen-Z. As you can see, age alone is a poor determinant of individual identity or needs.
A new age of tribal marketing
The start of a new decade awards marketers a chance to take a fresh look at their customer segmentation strategy. A great example is Danone, which has ditched demographics for tribes with shared passion points. In the U.K., Danone identified 16 distinct tribes for its Volvic water brand. Enabling them to serve more personal video content based on people’s interests, not age. This led to significant uplifts in campaign metrics. Similarly, Netflix divides its 139 million subscribers into 1,300 “taste communities” based on viewing behavior instead of demographics. To quote Todd Yellin, vice president of product at Netflix, “Because, here’s a shocker for you, there are actually 19-year-old guys who watch Dance Moms, and there are 73-year-old women who are watching Breaking Bad and Avengers.” Behavioral insights into user preferences save Netflix $1 billion per year by reducing subscription churn. According to Gallup, organizations that leverage customer behavioral insights outperform peers by 85% in sales growth and more than 25% in sales margin.
We live in a post-demographic world, where patterns of behavior can no longer be predicted by age alone. Therefore, brands need to move away from traditional demographic segments towards tribes: gathered around a shared mindset. Doing so isn’t easy, it requires major investment, first-party data and qualitative insights into the underlying thoughts, dreams, challenges and needs of both individuals and groups. Yet, the long-term benefits far outweigh the short-term costs. By building modern consumer tribes, brands have a once-in-a-lifetime opportunity to win the hearts and minds of the next generation of consumers.