Customer Segmentation Marketing


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Customer Segmentation Marketing

  1. 1. Researching For Success Apartment Investment & Management Company (AIMCO) By David Doyle Vice President, Marketing & Segmentation
  2. 2. Researching For Success <ul><li>Understanding your customer group through sound research </li></ul><ul><li>Integrating strong market research into your segmented marketing strategy </li></ul><ul><li>Utilizing consumer insights to better reach your target market </li></ul><ul><li>Applying consumer research and re-testing/validating the consumer insights </li></ul>
  3. 3. Researching For Success <ul><li>Integrating strong market research into your segmented marketing strategy </li></ul>
  4. 4. Researching For Success <ul><li>AIMCO: Apartment Investment and Management Company is the nation’s largest owner and operator of apartment communities, with nearly 1,163 properties that include over 200,000 units. Operating as a real estate investment trust (REIT), AIMCO engages in the acquisition, ownership, management and redevelopment of apartment communities in 46 states, the District of Columbia and Puerto Rico. The company serves nearly 750,000 residents each year. . </li></ul>
  5. 5. Researching For Success <ul><li>Determining the Target Customer Segment </li></ul><ul><li>Recognizing the opportunity on the consumer side of the business, AIMCO conducted in-depth resident and potential resident research in order to identify and segment its target consumer and to determine their need stakes and purchase drivers . </li></ul><ul><li>. </li></ul>
  6. 6. Researching For Success <ul><li>4 burning questions required to understand our customer segmentation potential. </li></ul><ul><li>Is the apartment a commodity business? </li></ul><ul><li>Is the apartment business purely physical features driven? </li></ul><ul><li>Do emotions matter to apartment prospects & residents? </li></ul><ul><li>Do multiple segments exist within the apartment business? </li></ul>
  7. 7. Researching For Success <ul><li>Extensive research spanning almost 5 years included 29 sources of comprehensive analysis: </li></ul><ul><li>Tapestry Segmentation </li></ul><ul><li>On-line Resident Surveys </li></ul><ul><li>Focus Group Testing </li></ul><ul><li>Conjoint Research </li></ul>
  8. 8. Researching For Success <ul><li>1. Tapestry Segmentation - market segmentation system that classifies U.S. neighborhoods into 65 segments based on their socioeconomic and demographic composition. It identifies customer diversity, describes lifestyles and life stages. </li></ul>
  9. 9. Researching For Success <ul><li>1. Tapestry Segmentation </li></ul>
  10. 10. Researching For Success <ul><li>Sample Persona </li></ul><ul><li>Laptops & Lattes – </li></ul><ul><li>59% Renters </li></ul><ul><li>37% hold a college graduate, and 32% have graduate degrees. </li></ul><ul><li>Two thirds hold professional or managerial positions and 97% of the females in this group are employed. </li></ul><ul><li>Being health conscious and physically fit, they buy organic food and take vitamins and work out at the gym regularly. Laptops also like to ski, sail, and travel. </li></ul><ul><li>They hold renters insurance, use stock rating services and own mutual funds. They listen to classical, all news and public radio. They visit museums and participate in environmental groups and are primarily liberal. </li></ul><ul><li>Shopping preferences include Bloomingdale's, Banana Republic, Macy's and Nordstrom's. Reading interests include travel, airline, & fashion magazines. </li></ul>
  11. 11. Researching For Success <ul><li>What we learned: </li></ul><ul><li>Identified top 18 customer segment profiles that live in apartment homes. </li></ul><ul><li>Depth of local market research to determine if sufficient quantity of the top 18 resident profiles live near the community. </li></ul><ul><li>Identify top 3 segments in neighborhood and reposition the community around known customer preferences. </li></ul>
  12. 12. Researching For Success <ul><li>2. On-line Resident Surveys – we surveyed both prospective customers and residents over a broad period of time throughout their residential lifecycle in order to determine their satisfaction drivers. </li></ul>
  13. 13. Researching For Success <ul><li>Sample Surveys Used: </li></ul><ul><li>Prospective customer survey </li></ul><ul><li>Lifestyle survey </li></ul><ul><li>Move-in survey </li></ul><ul><li>120 day survey </li></ul><ul><li>Service request survey </li></ul><ul><li>Net promoter survey </li></ul>
  14. 14. Researching For Success <ul><li>On-line Customer Surveys Scores </li></ul>
  15. 15. Researching For Success <ul><li>What we learned: </li></ul><ul><li>Customers are indifferent to AIMCO and large management companies in general. </li></ul><ul><li>Concerned about their neighbors </li></ul><ul><li>Not emotionally connected to their community </li></ul>
  16. 16. Researching For Success <ul><li>3. Focus Group Testing – ethnography party research involving “in home” gathering of consumers. Small informal sessions in which participants discuss about their life. </li></ul>
  17. 17. Researching For Success <ul><li>Focus Group Testing – “Customer Quotes” </li></ul><ul><li>“ Neighbors give me a sense of community” </li></ul><ul><li>“ Don’t talk down to me, treat me with respect” </li></ul><ul><li>“ My home is a reflection of my personality” </li></ul><ul><li>“ Surprise me with a community update, feels like a hug” </li></ul>
  18. 18. Researching For Success <ul><li>We have 3 distinct customer segments defined by lifestyle and behavior , not demographics. </li></ul><ul><li>Safe Haven </li></ul><ul><li>New Phase </li></ul><ul><li>I’ve Arrived </li></ul>
  19. 19. Researching For Success <ul><li>Safe Haven – </li></ul><ul><li>Want a worry free lifestyle in a secure , and comfortable community. </li></ul><ul><li>An apartment community is like a village , opportunities for individuals and families to grow and thrive. </li></ul><ul><li>Security and respect are of primary importance, family comes first, including extended family. </li></ul><ul><li>A well maintained community, appliances that work, and feeling valued as a resident delivers the personal pride desired. </li></ul><ul><li>Being fiscally constrained , rent increases are difficult to absorb, minimized capital investment should alleviate the need for aggressive rent increases. </li></ul>
  20. 20. Researching For Success <ul><li>New Phase - </li></ul><ul><li>Open space and a welcoming staff will make them feel connected and at home. They value common courtesy and respect in others. </li></ul><ul><li>The community should be a reprieve , peaceful & quiet . They are looking for subtle connections, not organized events. The outdoor spaces are an extension of their living environment. </li></ul><ul><li>An occasional community enhancement or update reinforces a sense of caring . </li></ul><ul><li>High end finishes and amenities are not valued, as this segment is saving to buy a home . Typically willing to pay “fair market” rent, they can absorb rent increases provided their needs are met. </li></ul>
  21. 21. Researching For Success <ul><li>I’ve Arrived - </li></ul><ul><li>Stylish living in the center of action , preferences include contemporary living solutions in the most desirable neighborhoods . </li></ul><ul><li>The community should resemble a resort , yet within close proximity to the social scene right outside their door. </li></ul><ul><li>Casual luxury and “wow” factor services and amenities are important. Fashionable décor and the latest in technology is almost a mandate. </li></ul><ul><li>They desire a fun and active lifestyle , and want to be surrounded by people like themselves. </li></ul><ul><li>They are willing to pay for the experience and even go into debt if necessary. </li></ul>
  22. 22. Researching For Success <ul><li>The 3 customer segments have 5 common emotional needs: </li></ul><ul><li>Service </li></ul><ul><li>Community </li></ul><ul><li>Security </li></ul><ul><li>Respect </li></ul><ul><li>Personalized (Updates) </li></ul><ul><li>The degree of emotional needs varied by segment! </li></ul>
  23. 23. Researching For Success
  24. 24. Researching For Success <ul><li>What we learned: </li></ul><ul><li>We have 3 customer segments with distinct emotional needs </li></ul><ul><li>All concerned about safety </li></ul><ul><li>All concerned about their neighbors </li></ul><ul><li>All concerned about service </li></ul><ul><li>Customer purchase drivers are both rational and emotional . </li></ul>
  25. 25. Researching For Success <ul><li>4. Conjoint Research – trade-off analysis, a way of measuring importance and predicting what people will choose and how much they will spend based upon perceived value. </li></ul>
  26. 26. <ul><ul><li>Safe Haven - </li></ul></ul>Researching For Success
  27. 27. <ul><ul><li>New Phase - </li></ul></ul>Researching For Success
  28. 28. <ul><ul><li>I’ve Arrived - </li></ul></ul>Researching For Success  
  29. 29. <ul><ul><li>Conjoint Research </li></ul></ul><ul><ul><li>Purchase Drivers - What customers are willing to pay more for: </li></ul></ul><ul><ul><li>Washer/dryer in apartment home </li></ul></ul><ul><ul><li>Kitchen – * kitchen experience varied by segment </li></ul></ul><ul><ul><li>Satisfaction/Renewal Drivers: </li></ul></ul><ul><ul><li>Appreciation: Invitation to stay – celebration of anniversary with appreciation gesture. </li></ul></ul><ul><ul><li>Service: 24-Hour service response time </li></ul></ul><ul><ul><li>Convenience: On-line systems, convenience, ability to request services and pay rent on my time </li></ul></ul>Researching For Success
  30. 30. Researching For Success <ul><li>What we learned: </li></ul><ul><li>The finish level and features of the apartment home valued most by each customer segment. </li></ul><ul><li>The level of amenities and service valued most by each customer segment. </li></ul><ul><li>How much more a consumer is willing to pay for the various levels of apartment and community features. </li></ul>
  31. 31. Researching For Success <ul><li>In-depth research answer to the 4 burning questions </li></ul><ul><li>Is the apartment a commodity business? </li></ul><ul><ul><li>An apartment is not just a commodity business; “homes” are an emotional experience to customers, and our industry in general has failed to capture on the emotional connection that a home should offer it’s residents. </li></ul></ul><ul><li>Is the apartment business purely physical features driven? </li></ul><ul><ul><li>Lifestyle is equally as or even more important to the physical features of the community. </li></ul></ul><ul><li>Do emotions matter to apartment prospects & residents? </li></ul><ul><ul><li>Customers are looking for a balance of functional and emotional fulfillment in an apartment home. </li></ul></ul><ul><li>Do multiple segments exist within the apartment business? </li></ul><ul><ul><li>We discovered 3 customer segments that apply to the apartment business as a source of distinction. Not all renters are alike. </li></ul></ul>
  32. 32. Researching For Success <ul><li>2. Utilizing consumer insights to better reach your target market </li></ul>
  33. 33. Researching For Success <ul><li>In-depth research and segmentation identity set the foundation for a more targeted business and marketing plan . </li></ul><ul><li>Collection Names </li></ul><ul><li>Good Neighbor Pledge </li></ul><ul><li>AIMCO Customer Perception </li></ul><ul><li>AIMCO Blueprint </li></ul>
  34. 34. Researching For Success <ul><li>1. Collection Names: Place a consumer facing name to the customer segments. </li></ul><ul><li>Collection names designed to evoke an emotional connection to each segment, should evoke a visual connection with emphasis on location and lifestyle, and de-emphasize perception of “good, better, best”, yet still provide a subtle level of hierarchy. </li></ul>
  35. 35. Researching For Success <ul><li>Collection Names: </li></ul><ul><li>The Village Collection – (Safe Haven) </li></ul><ul><li>Signifies a close knit community with emphasis on familial bonds and neighborhood relationships. Villages are smaller than Townes and focus on family and the immediate neighborhood. The collection name also evokes safety, affordability, and respect. </li></ul><ul><li>The Towne Collection – (New Phase) </li></ul><ul><li>Implies a suburban community, a subtle reprieve from the city. The collection name also evokes a suburban experience generally associated with open green space and parks. </li></ul><ul><li>The Metropolitan Collection – (I’ve Arrived) </li></ul><ul><li>Gives the impression of an urban center location with a robust city vibe and active nightlife. This collection name evokes the lifestyle associated with city living, fashion, and the arts. </li></ul>
  36. 36. Researching For Success <ul><li>2. Good Neighbor Pledge </li></ul><ul><li>Our Good Neighbor Pledge is AIMCO’s commitment to encourage friendly, respectful communities, and responsible neighbors. Upon move-in, every resident signs an agreement pledging to treat their neighbors with courtesy and respect. As part of this mutual commitment, AIMCO also pledges to treat each resident fairly and respectfully, to take action to resolve conflicts, and address situations in which our Good Neighbor guidelines are not followed. </li></ul>
  37. 37. Researching For Success
  38. 38. Researching For Success <ul><li>3. AIMCO Customer Perception: In-depth research concluded the following perceptions about AIMCO; </li></ul><ul><li>AIMCO is good at collecting rent – A large corporation more interested in financial transactions more then resident satisfaction. </li></ul><ul><li>AIMCO is a commodity business, diversified properties, lacks clarity on resident profile. </li></ul><ul><li>Public Company, meets public scrutiny, therefore reliable and trustworthy. </li></ul><ul><li>Potential residents have a more favorable perception of AIMCO then our actual residents. 8.2 vs. 7.1 </li></ul>
  39. 39. Researching For Success Design a New logo to communicate a “softer” side of AIMCO, more connected to the residents.
  40. 40. Researching For Success <ul><li>4 . AIMCO Blueprint: Design a Collateral system to connection to the customer segment emotions. </li></ul><ul><ul><li>Communicate directly to the customer emotions, not just the rational asset. </li></ul></ul><ul><ul><li>The multi-image designs are representative of the diverse communities and residents within Aimco throughout all Collections. </li></ul></ul><ul><ul><li>Designed with the ability to adapt to specific community needs without diluting the Aimco Blueprint Brand. </li></ul></ul><ul><ul><li>Is distinctive and memorable, and sets us apart from our competition. </li></ul></ul><ul><ul><li>Develop a sense of connection to the neighborhood and community. </li></ul></ul>
  41. 41. AIMCO Collections The Village Collection
  42. 42. Researching For Success
  43. 43. AIMCO Collections The Towne Collection
  44. 44. Researching For Success
  45. 45. AIMCO Collections The Metropolitan Collection
  46. 46. Researching For Success
  47. 47. Researching For Success <ul><li>3. Applying consumer research and re-testing/validating the consumer insights </li></ul>
  48. 48. Researching For Success <ul><li>Focus groups were conducted to evaluate the strategic business decisions implemented in order to evaluate consumer emotional connection. </li></ul><ul><li>Collection Names </li></ul><ul><li>Good Neighbor Pledge </li></ul><ul><li>AIMCO Customer Perception </li></ul><ul><li>AIMCO Blueprint </li></ul>
  49. 49. Researching For Success <ul><li>1. Collection Names </li></ul><ul><li>“ Feels like I am a part of an exclusive club…someplace I want to join” </li></ul><ul><li>Metropolitan Collection </li></ul><ul><li>“ Feels like a community, a place where nice neighbors live” </li></ul><ul><li>Towne Collection </li></ul>
  50. 50. Researching For Success <ul><li>2. Good Neighbor Pledge </li></ul><ul><li>“ It’s about the community, accountability…” </li></ul><ul><li>Metropolitan Collection </li></ul><ul><li>“ AIMCO will support me and my neighbors” </li></ul><ul><li>Towne Collection </li></ul>
  51. 51. Researching For Success <ul><li>3. AIMCO Customer Perception </li></ul><ul><li>“ Personalized, not so corporate” </li></ul><ul><li>Metropolitan Collection </li></ul><ul><li>“ More approachable, seems caring…” </li></ul><ul><li>Towne Collection </li></ul><ul><li>“ Looks like AIMCO is watching over me” </li></ul><ul><li>Village Collection </li></ul>
  52. 52. Researching For Success <ul><li>4. AIMCO Blueprint </li></ul><ul><li>“ Quality, reflects well on AIMCO and community” </li></ul><ul><li>Village Collection </li></ul><ul><li>“ All inclusive; has it all” </li></ul><ul><li>Metropolitan Collection </li></ul><ul><li>“ I love the options, so many choices!” </li></ul><ul><li>Towne Collection </li></ul>
  53. 53. Researching For Success <ul><li>FOUR KEY TAKE-AWAYS What were the drivers? </li></ul><ul><li>“ It’s all about the community” - </li></ul><ul><ul><ul><li>Maps, Good Neighbor Pledge </li></ul></ul></ul><ul><li>“ They care about me” - </li></ul><ul><ul><ul><li>Guarantee, Quality Brochure </li></ul></ul></ul><ul><li>“ I have choices/options” – </li></ul><ul><ul><ul><li>Floor plan (can compare easily) </li></ul></ul></ul><ul><li>“ AIMCO is accountable and committed to my satisfaction” – </li></ul><ul><ul><ul><li>G uarantee, Good Neighbor Pledge </li></ul></ul></ul>
  54. 54. Applying Segmentation <ul><li>Before After </li></ul>
  55. 55. Applying Segmentation <ul><li>Before After </li></ul>
  56. 56. Applying Segmentation <ul><li>Before After </li></ul>
  57. 57. Researching For Success <ul><li>Conclusion: In-depth customer research and segment identification led to a more precise business plan with a direct path to purchase based upon emotional connection to residential experience. </li></ul><ul><li>Customer Driven – Customer Service </li></ul><ul><li>Forward Looking & Data Driven – Segment Specific </li></ul><ul><li>Scale Driven – Give the Customer what they want </li></ul><ul><li>People Driven – Emotional Connection to Customers </li></ul><ul><li>Product Driven – Product tailored to Customer Preference </li></ul>