1. Choosing Target Customers with Segmentation
Analysis
Your perfect customer is out there right now, looking for exactly the product or
service that you offer. No matter the current state of the economy, they need what
you offer. In fact, they need it now and they have money to buy it. Your only
challenge is: how to locate those ideal customers and connect with them
effectively.
There’s an old saying, “To a person who only has a hammer, everything looks
like a nail.” In that light, consider this: to ask an advertiser how to best connect
with the right prospects, they will advise that you invest your money in an
advertising campaign. This advice makes sense at first glance, and of course it’s
not entirely wrong. The trouble is: this advice misses the mark because it fails to
tell the whole story.
Here’s the rub: on average, 50% or more of even the best-intentioned advertising
campaign reaches the wrong people – those who have no inclination or means to
buy the product or service being advertised. What’s worse, a huge percentage of
the right target audience never hears or sees the advertising message at all.
A sounder piece of advice from our fictitious, well-meaning advertiser would be:
invest in an advertising or marketing campaign that precisely targets those
members of your target audience who possess a combination of these two
factors:
a. are more likely than the average person to become your customer
b. are more likely to spend significantly more money (per order/month/
year) than does the average customer
Identifying and then contacting these ideal prospects – while stepping over those
who do not meet these criteria – is the fine art of market segmentation.
The practice of market segmentation has actually been around for decades in
various forms. However, recent advances in marketing analytics have resulted in
the identification of extremely highly-targeted prospect lists. These advances are
the result of a confluence of three major factors:
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2. 1. The advent of enormous consumer databases on the part of credit bureaus
and other commercial data organizations which – like it or not – possess
copious amounts of extremely detailed data about each and every one of
us
2. The development and refinement of advanced segmentation clustering
systems which effectively break each household into one of a set of 70 or
so distinct clusters based upon a combination of income, psycho-
behavioral, family status, urbanicity (population density around
household) and age-related factors
3. The development of advanced data analysis techniques which can be used
to make sense of all of this information in a way that is reproducible,
verifiable and actionable in the context of advertising and marketing
campaigns
The result? Entrepreneurs and companies who harness the power of advanced
market segmentation can realize a 20%-500% “lift” on the effectiveness of their
marketing efforts. This leads to gaining more customers at a lower cost,
significantly driving up the return on investment (ROI) of your advertising
campaigns. If you want sharply reduce your advertising “waste” and be more
effective in your advertising, you need to give market segmentation a look.
Contact MindEcology today to get started.
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