4 different ways to approach your employee benefits segmentation

Let’s do a little experiment.

Employee benefits segmentation

Imagine this: Your CEO has just tasked you with developing a comms campaign to encourage your staff to save more into their pension pot.

And you’re thinking, how are you going to develop your messaging? Where are you going to start?

If you’ve kept up with the latest best practice in the world of communications, then the first word to pop into your head is probably, “Segmentation”.

You know there’s no point sending the exact same message to every member of staff, because they will all have different needs. What will appeal to one employee, won’t appeal to another.

So, you’re thinking that your employee benefits communication strategy will have to divide employees into different groups, and tailor the key messages to suit each group.

When it comes to pensions, the standard way to segment comms is by age.

So, for this fictional campaign, you might talk to older staff members about the need to ramp up their savings, as they approach retirement…

…And talk to younger staff members about how, with compound interest, saving even a few more pounds each month right now will pay dividends several decades on.

But hold on…

Not so fast.

Is it possible that there are much better ways to segment your audience?

The problem with segmenting by age

While there are certainly times when segmentation by age is appropriate, you can’t assume that everyone in the same age bracket takes the exact same attitude to their pension and will respond to the same messages.

Case in point.

Say you send that campaign to people in their 20s, explaining the wonders of compound interest.

It reaches two employees: One 28-year-old who’s married with a child and a mortgage. And one 28-year-old living up the single life.

Isn’t it possible that one will be very keen to learn about how to save for their future – whilst the other will be completely focused on the here-and-now?

(And by the way, I’m deliberately not saying which one is which – because this scenario could play out both ways!)

Both employees are the same age, but they might look at retirement – and pensions – very differently.

Smart segmentation – your new friend

So, if age isn’t always the best way to segment your pensions comms, what are the alternatives?

The key is that for most people, money – and this includes pensions - is an emotional issue. People rarely make financial decisions based on logic alone. Their decision is usually motivated by psychological and personal factors, too.

The more deeply you can tap into these issues, the more effective and engaging your pension comms will likely be.

Here are four “buckets” into which you can divide your employees – with the most effective option first:

1: Segment according to beliefs and emotions

This is the holy grail of segmentation.

Figure out the different attitudes that your employees take towards their finances – also known as their “money personality” - and tailor your messages accordingly.

For example, some employees will worry for the future, and believe strongly in saving, while others will live a YOLO (“You Only Live Once”) lifestyle, spending freely.

Some will hate risk and crave financial security. Others will revel in risk.

Some will track their financial affairs almost obsessively. Others may take a very hands-off approach, and even avoid all matters financial.

These categories get to the heart of what motivates your employees financially, which is why they make the most effective segments.

2: Segment by behaviour

What do your employees actually do when it comes to savings and pensions?

There will be, for example, a big difference in the way you talk about pensions to someone putting away 1% of their salary each month, and someone putting away 15%.

Those who started saving for retirement in their 20s, and those who didn’t start a pension until they were in their 50s, will probably also respond to vastly different messages (even if they are the exact same age…).

Another factor to consider: How do different groups of employees respond to your comms? Try sending those who seem receptive more frequent or detailed messages than those who never open your emails or attend your information sessions.

3: Segment by demographics

Now we’re moving away from your employees’ internal thoughts and personal behaviour, towards the external characteristics which define them - such as:

• Gender

• Salary

• Home ownership

• Dependents

…and, of course, age fits into this group as well.

Not only can each of these factors influence your employees’ attitude to their pension, they are relatively easy to identify – which is why they are so often used in segmentation exercises.

However, sometimes the commonalities these groups share are relatively superficial. Just as two 28-year-olds may have very different attitudes to pensions, so might two women, two home owners, and two sets of parents…

4: Segment according to milestones with your company

There are natural points in your staff’s journey with your company when they will want to hear about their pension.

New joiners need to find out what benefits you offer, and how to take advantage of them. Leavers and retirees need to understand what happens to their company pension once they have moved on.

Take advantage of their openness at these junctures.

However, keep in mind that employees in these circumstances are likely looking for very specific information, and other than their start or end date, may have nothing at all in common.

How do you know what your employees believe in?

So, if the best way to segment your comms is according to your employees’ financial attitudes, values and behaviour, how do you identify these groups?

You could….

• Ask them directly, with a survey.

For example, employees who rate themselves as risk-averse can be sent comms about how to invest their pension funds in the most risk-averse way – or how to avoid poverty in old age by saving more!

• Watch their behaviour with your comms campaigns.

For example, which emails do they open more than once? Which links do they click? What resources do they download?

Any basic marketing automation platform will give you this information and allow you to tag employees according to their interests so you can send them relevant information.

• Watch their behaviour with their pensions.

Who is saving early – and who hasn’t started saving yet? Who is taking a high-risk approach, and who is playing it safe? You or your providers have all this information already… Put it to use!

Learn from the marketing industry

These methods are used extensively by marketers, who also want to segment their audiences.

They understand that the more relevant the marketing messages they send their readers, the more likely they are to sell their products!

As a HR director, you’re not selling a product… But you are, in a sense, marketing to them. You, too, want your comms campaigns to touch your employees’ hearts and minds, if you are going to influence their behaviour.

If that’s an area where you’d like support, click here to find out how we can help you.