Segmentation: A homeowner is more than just a homeowner

January 16, 2020 by Jessica Childs, Product Manager

When looking at who to target as potential customers, financial institutions will usually rely on general segments such as younger borrowers, active checking account users, prime credit, middle income and homeowners. However, in today’s data-focused and customer-driven world, these broad segments no longer cut it. Consumers expect highly tailored advertisements made specifically for them, and they will not pay attention to these ads that are too general or too broad. This, in turn, makes these general segments obsolete and ineffective at bringing in new consumers.

In order to compete, marketers must adapt and understand who they are reaching on a much deeper level. Broad categorizations of consumers do not reveal the ideal customer, leading to wasteful spending and ineffective marketing campaigns. They must break down the consumer to their core and segment them into groups based on various factors, including geography, demographics, financials, behavior psychographics and social values.

Experian’s Mosaic® does just that, classifying all U.S. households and neighborhoods into dozens of unique types and overarching groups. This groundbreaking platform provides a full view of the consumer beyond the outdated broad categories. It gives marketers a look into their personal lifestyle, giving them a glimpse at the nuanced differences that drive their purchasing decisions.

Take “homeowners” as an example. Most banks, credit unions and lenders would list “homeowners” as desired members. However, as Mosaic shows, the group of “homeowners” is not as clear cut as its title suggests. America has many types of homeowners with different spending patterns, social values and geographic considerations.

The “Bourgeois Melting Pot” are middle-aged, blue-collar workers living in Suburban neighborhoods across the West and the Northeast. Most have high school diplomas and college experience, but few actually received a degree from a higher education institution. They shop at well-known department stores and rarely purchase products from the Internet. At this point in their lives, most are empty nesters. Perhaps most importantly, they are responsive to TV advertisements and still rely on television as their primary source of information and entertainment.

Compare that with “Flourishing Families.” Almost all these married couples are in their 30s and 40s attended college and hold lucrative white-collar jobs. They are scattered across the suburbs of big cities like New York and San Francisco, with most raising children between the ages of pre-school and post-graduate. These families have the money to spend on name brands, but are looking for bargains at major retail stores as well. They are average fans of TV and do most of their shopping and newsgathering on the Internet.

Both these Mosaic types are considered “homeowners,” but their lifestyles could not be more different. One group settles down in big cities; the other is not afraid to venture further into the suburbs. One holds predominantly blue-collar jobs; the other enters the fields of law, public policy and science. One is heavily invested in TV; the other relies almost entirely on the Internet.

These are significant differences impacting each type’s (specific or unique) loan needs, lifestyle priorities and preferences for engaging with a marketing offer. The same marketing strategies and loan offers will not fit each group’s preferences. Mosaic helps inform financial institutions of these differences so they can adjust their campaigns based on each group’s preferences.

This is why segmentation is so important and why Mosaic is an essential tool for any successful marketer. With competition coming from FinTech companies including Avant and SoFi, financial institutions must take any advantage they can to stand out from the rest of this crowded industry. They are already relying on data analytics and consumer segmentation to reach and engage a well-defined, ideal consumer. It’s time you do as well. If you don’t win your ideal member, somebody else will.