Demographic segmentation is the process of organizing consumers based on external or physical factors, such as age, gender, location, or ethnicity. Because this type of information has traditionally been easy to obtain and provides data points that are fairly straightforward, demographics are the most common variable that brands use to identify their consumers.
– Audience Segmentation: Why Demographics Are No Longer Enough
The dominance of old school demographic segmentation is quite obvious when looking at products offered by Canadian banks – offers for students, seniors, newcomers, howeowners are industry standard.
Government programs often tied to these offers also originate from demographic segmentation – RRSPs, RESP, HBP etc.
This is a sensible way to operate in the era of pen and paper, but digital tools enable a better way:
“While demographics are certainly valuable pieces of information and provide a great starting point when it comes to building customer personas and developing target audience profiles, they are becoming less and less capable of offering a complete and comprehensive illustration of consumer behavior.”
Modern tech enables modern marketing. No more need to use a hammer when you can use a scalpel.
“Effective marketing strategies are ones that focus not on general awareness amongst a generic group, but on reaching a specific target audience that has high conversion potential. Results-driven marketing requires defining that target audience and getting to know them so that you can deliver exactly what they want.”
This is where Neo’s technology advantage + obsession with learning from user feedback can do magic.
Think of any group of users sharing a pain point → Neo solution to a specific pain point → user acquisition+retention
Examples:
-
[Users who frequently donate to charities] who [don’t like filling out forms and send paper cheques and receive tax receipts in the mail and manually file taxes] can [easily find charities and donate in three taps and get tax receipt automatically in the app that is autoexported to CRA and tax filing software].
-
[Homeowners] who [don’t like the hassle of paying property taxes] can [pay property taxes easily with the amount owed autoimported into the app, with smart autoreminders and autopay]
-
[Users] who [always run out of mobile data] can [be automatically offered better plans that they like or be reminded to top up their plan with extra data with a single tap when it’s relevant]
-
[Travelers] who [don’t like being gouged on exchange rates] can [buy relevant foreign currency directly in the app and pay using a virtual card without having to guess the exchange rate]
-
[Users] who [get parking tickets] can [autopay for parking using the app so they never get a ticket]
And so on and so forth.
A lot of pain points would be obvious (and many not so obvious), but the specific solutions to pain points and the best converting audiences have to be tested and carefully iterated on.
A result of this kind of alignment between product and marketing could potentially turn every new feature into a customer acquisition and retention tactic for any random audience that would be impossible to even define with traditional marketing. Why would anyone spend money on old school billboards that can’t measure conversion rate when you can build tech that is so good and so relevant that users will sign up themselves and pay extra for a product that solves their problems instead of having to be paid a sign up bonus? Could it be that most companies aren’t tech companies and simply can’t create great tech, resorting to print ads hoping that they will work? I don’t have an answer to this question, but these are the questions that come to mind.
The asymmetry that can give Neo an unfair advantage comes from the fact that while Neo can copy legacy competitors by talking cashback and rewards and putting up billboards, print ads, and generic ads on Facebook, legacy competitors can’t easily copy Neo by copying modern tech when their everything runs on legacy tech.
An extreme version of product development as marketing strategy would be something like Telegram that solved countless pain points in one product and gained a billion users with zero marketing budget.