With GDPR coming into force in the next few weeks, individuals will have much more control over the way businesses use their personal data. Great news for users, but it does mean there's less information available. This new level of autonomy has limited how much analysis can be done to support customer retention and acquisition. This is because obtaining and analysing personal information is now more expensive than before. However, geodemographic segmentation could be the alternative marketers are looking for.
Why is Geodemographic segmentation a good alternative to personal information (PII)?
In the post-GDPR climate, geodemographic segmentation is actually a cheaper alternative to personal data. Classed as ‘linkable’ information, geodemographic data is less expensive than personal information, and also has fewer constraints on how and where it can be obtained.
Geodemographic data shows the attributes of small areas based on the people who live there. In essence, it’s information based on a person’s location via their postcode. Furthermore, instead of targeting just individuals, it enables businesses to set their focus wider - covering entire areas.
Of course, it’s not possible to generalise within a certain postcode, as it’s unlikely that all, or even some of the residents will share the same characteristics. But, it’s fairly reasonable to expect that people on the same street will live in similar houses and have similar incomes.
Geodemographics also gives a good indication of how these people differ from people in other areas. It also implies which offers they are likely to respond to. These insights will provide an uplift on response compared to random targeting.
How can geodemographics be used?
Filling in the gaps
Geodemographics can help fill in the gaps for businesses that only collect the most basic types of customer data. It can give them a better idea of who their customers are - and what they want.
This refers to flyer drops or targeting people within the driving/walking distance of a business. Geodemographics allows businesses to target large numbers of people while adapting the offers to meet customer interests. For example, choosing an area with a high proportion of homeowners to sell home insurance or a location with lots of families to offer family holidays.
Geodemographics can be useful when assessing whether it is viable to open retail outlets/restaurants/bars in a particular location or area.
For businesses who are concerned about balancing data compliance and competitive advantage, geodemographics can offer some valuable insights. Geodemographic data may be less precise than PII, but it’s still a viable option for many marketers in a post-GDPR climate.