In today’s world of big data, real time decision engines, (where the results of an action, like web searches are factored back into the process in real time), artificial intelligence and all other ‘bleeding edge’ innovations, it’s easy to become overwhelmed trying to pair all these new options with your real-world marketing objectives and limitations.
It’s all interesting stuff, no doubt, but it’s not for everybody; especially those in the mid-tier markets. Innovative marketing does not equal cost justified, profit driven, effective marketing. The old adage, “lose money on every item sold, but make up for it in volume”, has found a new relevance.
It’s a valuable exercise to remember the basics and consider them in conjunction with new methods and technologies. So before we sell our marketing souls to the technology gods, let’s look at some of the established approaches for making the most of your marketing dollars using tried and true segmentation and targeting techniques.
The most overlooked strategy for effective targeting is appropriately labeled behavior-based targeting. Simply put, examine the behavior of your customers and act accordingly. If a customer buys an extra-large dog chew bone, then cross-sell them a related product, perhaps an extra-large dog bed, or any assortment of logically related products. This is called event-trigger targeting because it is triggered by a specific event. For existing customers, events can be products purchased, as in the example above, or the absence of specific events, such as no purchases within the last eight weeks, when that customer’s average purchase frequency has been once every four weeks. Other customer events can include a change of address, enrollment in your rewards program, or a customer service interaction, either positive or negative.
Events are not limited to customer actions, other events qualify for event trigger targeting, such as the actions of competing establishments. For example, when a competitor closes a retail location in one of your markets, it should trigger an immediate marketing response that targets your best prospects and customers in the area surrounding that closed location. Other event examples include actions of the marketplace as a whole, such as trending products and services. Trigger events are limitless and extremely effective when responded to in a timely and targeted way.
Traditionally, these behavior-based segments can be of relatively small quantity and any profit realized from communicating with these small groups is eaten up by development and production costs. Today, with full color digital printing of direct mail pieces including personalized messaging and dynamic images, you can profitably leverage unique segments as small as a single offer to a single household.
Another behavior-based targeting strategy is the identifying of prospects that have a higher than average chance of becoming a customer. Often this prospecting approach is facilitated through the use of demographics, psychographics, and other purchased data elements. For example, if your line of business features homeowners insurance, you would target homeowners in lieu of renters. Often this approach pays dividends by simply eliminating prospects that do not have a natural propensity for your products or services. Offers to join a local dating or matchmaking service would not want to target married individuals – let’s hope.
To take this approach to the next level, many mid-market companies are finding that statistical models built around their customers, or better yet, their BEST customers, can be cost effective. A statistical marketing model uses a logic-based approach to define your customers, and once defined, helps in locating prospects that fit that profile. Historically, this targeting technique was limited to national marketers with big budgets or big-ticket items, with today’s data processing resources, this can be part of almost anyone’s marketing arsenal.
Knowledge-based marketing is a concept built around the marketer’s knowledge of their customers and prospective customers and should include internal data about what marketing methods work best and at what cost.
By analyzing their current customer base, marketers can gain real insights into their customer base and cost effectively target prospects that look like their natural customers. This approach, combined with demographic and psychographic targeted offers is significantly better than traditional advertising and branding.
Embracing tried and true marketing tactics and making sure they are optimized, can provide a series of benefits. First, these tactics are usually the most established, meaning that there is a wealth of knowledge and vendors available to assist in design and implementation for these tactics. Secondly, these are usually the least costly to implement. Lastly, they provide a performance baseline against which you can compare new tactics.
Creating a base of tried and true techniques to feed your business, complete with ROI elements, can create the perfect environment for evaluating new marketing technologies – and ultimately embracing new tactics that make sense for your business.