Segmenting the membership – why it's done and how it works

Segmenting the membership is an exceptionally powerful way of driving action in pension communications – and what’s more, I have proof that it works.

In the digital age we live in, people are familiar with the concept of ‘data scraping’ and having appropriate messages targeted at them when they browse the internet or interact with social media.

Messages such as “people who looked at this item went on to buy…” on online shopping sites, or “do you know…?” on social media are familiar to most of us.

This is probably why segmented communication is much more effective – we’re so exposed to it in daily life, it’s what we’ve come to expect.

At its most basic level, splitting an audience by any defining factor – gender or age, for example – is segmentation, but it’s usually possible to be more specific and it is at a more micro level that segmentation becomes really effective.

Segmented communication is much more effective – we’re so exposed to it in daily life, it’s what we’ve come to expect

It sounds like an obvious statement, but all those with a similar demographic profile are not necessarily the same.

Anyone with children (or siblings for that matter) can probably relate stories of how those in the same demographic can have very different ideas and views on a whole range of topics. This is no less true for those who are saving for retirement.

Some pension scheme members approaching age 50, for example, will have clear ideas of when they want to retire, how much they have saved, and how much more they need to save by the time they are 55. 

Others may be planning to work for another 20 years and so have much less urgency about retirement planning.

In the same way, it would be wrong to assume that all members aged under 30 will not engage with pensions at all.

Digital communication

While I agree that an appropriate level of message segmentation is a challenge for all of those entrusted with engaging members with their pensions savings, helpful information is out there.

Digital communication allows us to dice and slice the data – and the more we get people to engage with it, the more we can measure reaction and make good use of segmentation in the communications we issue.

In a recent campaign conducted for a large US provider, the audience was segmented into 24 categories, including by gender and age and using different targeted messages, according to known behaviour.

Members were targeted to take appropriate action: 32 per cent were targeted to join, 34 per cent to save more, 23 per cent to look at their investment allocation and 11 per cent to consolidate accounts.

Messages were targeted by known information where possible, with some assumed. The results were significant where behaviour was known and appropriate action targeted.

For example, there was a 63 per cent increase in average savings and a 72 per cent year-on-year increase in new joiners.

In another campaign conducted for an in-house UK defined contribution pension plan targeting members who were not maximising the contribution-matching offered, a targeted campaign over five years increased maximum matching from 33 per cent to almost 50 per cent of the membership.

Over time, more data will become available as a basis for segmenting member messaging, allowing us to be even more targeted and improve results.

Operating in the online space gives another advantage, as it allows people to ‘do’ something in response to any segmented messaging – it goes without saying that the best results follow the ease of taking action.

However, if we want to drive members to take that action, we have to first get their attention, and I would argue that appropriate segmentation is a significant step in the right direction.

Karen Partridge is head of client services (UK and Australia) at AHC