The Segmentation Challenge

The Segmentation Challenge

Perhaps the most critical challenge in marketing is to identify your most likely buyers or participants and understand how to reach them and what messaging will resonate with them. There are a wide variety of segmentation approaches to tackle this challenge. Over the years, we’ve created custom segments (via survey methods) for clients and we’ve utilized off-the-shelf psycho-demographic or “lifestyle” systems in support of direct marketing initiatives.

We’ve also developed targeting models, based on analyses of past program participants. These kinds of models assume that the most likely future buyer/participant will look like past buyers. This is an assumption that, while usually true, can be wrong. For example, a utility’s HVAC rebate program could be built on the backs of one or two enthusiastic contractors in a limited geographic territory. Current participant profiles may not match likely future participants at all.

In addition, we’ve seen these kinds of models built strictly on geography, consumption and age/type of home. While better than nothing, these limited data models don’t include critical information. For example, just because a household is a heavy user in an older home doesn’t mean they’re likely to do anything about it. They might not care or have the available funds to take on improvements. Customers also do things for very different reasons. If you don’t know more about them, you have to utilize a one-size-fits-all approach to communications – which is why so much energy efficiency marketing messaging is simply about saving money.

The challenge is particularly compounded for our clients in the utility industry who are often tasked to support multiple (very different) initiatives: new homes programs, green power or community solar programs, EV initiatives, traditional DSM/rebate programs, and customer service/communication choice initiatives, etc. Can one segmentation system support all?

An Effective Solution

Shelton Group has developed a proprietary consumer energy segmentation system based on data from the Energy Pulse™ study, which has been published each year since 2005. This online survey of over 2000 American consumers, asks a battery of self-reported behavioral, attitudinal and demographic questions to understand habits, propensities, attitudes and the various spheres of influence related to energy consumption and product selection. The resulting consumer energy segmentation system addresses both the “Who” (as in who’s the best target) and the “Why” (why they will or will not engage/why they are or are not satisfied) that is critical for energy-related marketing and customer communications.

Over the past ten years, we’ve consistently found four stable segments that have barely shifted in their market size and composition. Each segment has a distinct demographic and attitudinal profile. True Believers are pro-environment and undertake the highest number of energy conserving behaviors. Working Class Realists are struggling to make ends meet and are difficult to engage in energy conservation initiatives. Cautious Conservatives care about “the ROI” of any undertaking, yet are surprisingly good targets for solar due to their desire for “control”. Concerned Parents are busy and convenience and comfort drive their decisions.

In our ten years of Energy Pulse studies, we’ve built a warehouse of segment responses to questions about communication preferences, social influence, personality characteristics, media consumption, technology usage, home technology product interest, energy efficient product purchase propensities and rebate participation, interest in load control and time of use billing, and attitudes regarding solar and other renewable energies. We’ve also tested hundreds of messages both in surveys and in segment-specific focus groups to learn what resonates with each and how to connect with their underlying drivers.

Segmentation Appending

Shelton Group has created a predictive algorithm that allows us to append our energy segments to our client’s customer records using third-party data from a provider like Acxiom. The right segmentation system can help you market in a much more cost-efficient manner. Response rates increase when communications are targeted to the most likely prospects and are written/designed to specifically connect with their underlying drivers. Shelton Group has a proven approach to help you do that. Shoot an email to lhead@sheltongrp if you’re interested in learning more.


Posted on

August 4, 2016

About the Author

Lee Ann Head

Lee Ann Head

Lee Ann started Shelton Group's research department in 2000 and paved the way for us to become the insights-grounded creative agency we are today. After 17 years leading our research team, she recently moved to New Orleans, handing down the title of Vice President of Research & Insights, but remains an integral part of that team as she continues to oversee client projects and proprietary studies.

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Suzanne Shelton

President and CEO

Suzanne is the voice and the vision of Shelton Group. Drawing on her extensive experience in energy and the environment – and 25+ years in the marketing and advertising industry – Suzanne provides high-level strategic insights for our clients and guidance for our research and creative departments. She regularly speaks at conferences around the country, including Sustainable Brands, Fortune Brainstorm E and the International Builders’ Show, and serves as a guest columnist for publications like Fast Company, Green Builder and

Susannah Enkema

VP Research & Insights

Susannah directs our research team and plays a key role in extracting the nuggets of information that pave the way for recommended marketing strategies and creative approaches. Susannah has nearly two decades of market research and strategy experience, including her role as president of SE Consulting, where she led the services for the likes of DIY Network and the makers of GORE-TEX®.

Laila Waggoner

VP Client Engagement

Laila leads our client engagement process, overseeing activities from both a strategic and a tactical level to ensure our work generates desired results – and clients’ satisfaction. She brings 25+ years of marketing leadership experience to her client relationships, with particular expertise in the homebuilding and remodeling industries as well as member-driven organizations, such as the Vinyl Siding Institute and Plastics Pipe Institute. Before joining Shelton Group, she led strategic marketing teams for Owens Corning’s insulation business.

Matt Brass

VP Creative

Matt steers the creative department in concepting, designing and producing campaigns. He ensures sound strategy and deep insights inform everything his team develops, and works closely with the accounts department to ensure copy and designs will meet our clients’ goals. As a designer and filmmaker himself, he’s also a principal contributor to all of Shelton’s in-house photography and videography work.

Courtnay Hamachek

VP Operations

Courtnay oversees our day-to-day operations to keep us running smoothly and support our growth. She establishes project management systems and processes to help our teams anticipate bottlenecks, prevent process issues, and keep projects on time and on target. Courtnay has built extensive experience over 25 years in all aspects of marketing, from account services and project management to design and production.

Mike Beamer

VP Business Development

Mike joined our team to help provide strategic vision and foster our agency’s growth by overseeing new business leads and managing agency marketing and website content. He arrived in Knoxville steeped in energy efficiency and renewables – he previously led client service for an agency division in Boston dedicated to marketing communications strategy and branding for B2B and B2C clients in that space.