Demographics is Dead

By Brian Walker and Anastasia Lloyd-Wallis

You can't please everyone, and trying to is the kiss of death. I don't care about demographics. When I do, I'll know that it's time to quit. - Chris Angel

Australia’s retail spend is circa $320bn, if you accept that an average of 5% of spent directly and indirectly (way higher) then at least $16bn is spent each year in the pursuit of attracting consumers to become customers.

Now if you ascribe to the view of John Wannaker that 50% of all advertising and marketing spend is invariably wasted, then we have at least $8bn per year fundamentally wasted.

(Now I won’t even venture into the world of shop design, shop fitting, category messaging, point of sale and product ranging that also adds the most considerable cost to this “throwing against the wall and see what sticks" approach to retailing.)

Has our traditional perspective that demographic studies of gender, age, postcode, spend and the like. Provided us with the 50% of consumer data leading to well spent marketing and brand outcomes or indeed in the other 50% and therefore wasted?

Can we show a definitive lineage to demographics and therefore brand resonance in anything more than a generalised, largely uncorrelated relationship?

Can store and website design, customer navigation, path to purchase planning, brand and marketing segmentation be all accurately predicted and mapped as a consequence of classic demographics?

Perhaps in an assumptive manner, can we hope to predict in this manner – a far more definitive approach is to understand consumer profiling of the customer personality type.

Why is this?

Growing up we were all told about the rational consumer, lecture halls filled with rational students listening to rational lecturers saying that the human being is rational.

That all purchases decisions where rational and that demographics ruled the world.

As retailers we produced orderly rational campaigns to orderly rational customers who we believed would make clear decisions based on their age, gender & demographic region they lived in.

And guess what? We are not rational, we are in fact irrational, bounded to varying degrees by our emotional senses.

Do you know that:

·      95% of new products fail

·      Physical shop retailers only convert an average of 20%at best (Fashion averages 12%)

·      Online retailers only convert an average of 3%

·      98% of direct mail gets no response

·      98% of marketing emails don’t convert

Perhaps another way to understand this is to think of your brand as a human being.

It’s made up of a unique set of values, which create its personality. This personality attracts consumers who these exact values resonate with. Humans connect emotionally to others who share the same set of values. The same applies to a brand. These values are emotional and largely subconscious. 

Humans build friendships based on trust and the implicit knowledge that shared values are consistent and reliable. The same applies to building friendships with a brand.

Humanising your brand requires you to tap into these subconscious and inherent values and understand the consumers on an intimate and emotional level.

Despite the growing awareness of the power of the subconscious, most research and subsequent strategies still rely on the rational conscious mind, only 5% of our decision-making power – just the tip of the iceberg.

 Consumer neuroscience has discovered that it is actually our subconscious limbic system that determines up to 95% of our decisions. It is the subconscious that answers the question as to “why” customers behave the way they do, and this is far from random or unpredictable.

Consequently, classic approaches of demographic profiling simply don’t work because they try to speak to consumers as rational beings – and as we know but there is no such thing as a rational being or consumer.

Demographics are out – Personality profiling is in

Imagine you have a fashion brand, targeting women between 25 and 35 years, with income over $1 million – a classic demographic segmentation.

Two women who would fall into this demographic segment are Katy Perry, the Queen of Pop and Kate Middleton, the future Queen of England. However, it goes without saying that there are worlds between two women. Both, their life choices as well as their fashion choices can only be addressed by understanding their personality types, which will explain the ‘why’.

Imagine your customer, Brian, you know Brian recently bought a business shirt from your retail store at the airport, you also know that he has done that every 3 months for the past 2 years. You may even know Brian’s preferred store and the style of shirt he likes, but you don’t know “why” he is attracted to your store, to that shirt and at that time.

What subconscious mechanisms contribute to your decision to end up with 8 particular items out of a possible 26,000 SKU’s? The Limbic system in our brains acts as a relevance detector, when deciding whether a stimulus – and therefore in this case packaging or product design – is noise or is relevant, whether we perceive it at all, and whether we reach out for a product on the shelf.

What will resonate with us – even before we become aware of it – is determined in our Limbic system. So, when it comes to packaging, branding and overall product design, recognising the wishes of your target shoppers’ most dominant emotion system is crucial. Why? Because this system determines whether a product or brand stands out from the crowd, strategically attracts and enables us, as shoppers, to identify that it’s ‘the one’, amongst the sea of sameness.

For years, we have satisfied ourselves with the “how” consumers interact with our brands. The missing link has always been the “why” consumers choose our brands and products over our competitors.

Using Neuroscience to determine customers personality profiles

It is by understanding consumers’ personality profiles and their subconscious emotional drivers that we get to understand why they connect with certain brands – and why not.

So we determine our customers personality types, behind each type there is an amazing set of subconscious drivers which will determine how, why, and if they interact with brands, and which will help brands to differentiate.

By understanding our target customers personality types, we can:

?      Understand the market on a powerful, subconscious level that enables predictions of what will work with target consumers. This is achieved by scanning and analysing customer base.

?      Uncover the subconscious, real drivers of consumer behaviour

?      Brand cues & codes that maximise impact on the target consumer

?      Store experiences that will work

?      Strategic packaging

?      Understand consumers’ real path to purchase

?      Understand how to address these identified target segments more effectively, including wording, values, colour schemes for promotions etc. that appeal to them, the right media and retail channels to address them, specific expectations.

This is a little radical for some who prefer the tried and tested manner of understanding the historical transactional spend of patronage and defining this history as “evidence” of the orderly and rational behavior of their target consumer.

After all its only a 50 /50 bet they are right.