How to Identify Your Target Audience with Data Driven Marketing

Even if you were so inclined, you probably can’t afford to mail everyone in your database. You want to focus your data driven marketing efforts on those who are likely to buy. Your database has a good deal to say on this subject. Some customers have requested that you not send them marketing messages. They can do that in a number of ways.

In some cases, you’re legally obligated to honor these requests, which are generally referred to as opt-outs.

Your data driven marketing customer base

You may have a pretty good sense of who is buying your product. Does your product appeal to a specific group of people? If you’re marketing wedding gowns, you probably don’t want to be communicating with young married couples. Your database can help you identify the niche groups that might be interested in your product.

There are a couple of ways of getting at these niche groups of potential buyers. One is to look for patterns that might distinguish past purchasers. Do they come from a narrow age range? Is there an income threshold that allows them to afford your product? Do they buy at the same time every year?

When exploring your data for common traits among your customers, don’t prejudge what’s important. Look at all the data you have available. Something might surprise you. Those surprises are valuable insights. Another way to understand your customers better is to just ask them. Customer surveys are a great way to learn about who is buying and why. They also may give you some insight on why people aren’t buying.

Your company may do surveys that serve a wide array of purposes beyond your specific database marketing needs. Advertising, pricing, and product development all benefit from survey research.

Get involved in the development of customer surveys. Push for questions that match up with the kind of customer data you have. Connect as much survey data back to your database as you can. Knowing that your best customers tend to sleep late may help in figuring out when to run TV commercials. But it won’t help you if that information is not in your database.

Suppose, for example, that you have household income data in your database. That income data comes in the form of income ranges: $20–$30K, $30–$40K, and so on. If you get survey research back that contains different ranges — say $20–$35K, $35–$50K, and so on — you can’t effectively line up the survey results with the data you have on hand.

How to size your audience using data driven marketing

By focusing your attention one whether customers share key traits, you also gain some flexibility in the number of people you contact. If your budget is limited, for example, you may want to tighten some of your audience selection criteria to produce fewer contacts.

For example, including customers with household incomes above $50K may produce too many names for you to mail. Increasing this threshold will naturally reduce the number of names in your mail file.

Your set of selection criteria can become quite complex. You may want to consider such criteria as the following:

  • Age

  • Income

  • Family size

  • Home value

  • Geography

You can also use a host of other information in selecting your audience. You choose some threshold or range for each of these variables, which qualifies a customer to be included in your mailing.

It’s often very helpful to understand how each of these variables affects the size of your mail file. An easy way to do this is to produce a report that shows how much the target audience shrinks as each individual variable is considered. This is known as a waterfall report.

Selection rule Excluded Contacts % Excluded Included Contacts
Greater metro region zip codes n/a 400,000
Household income over $50K 200,000 50 200,000
Age at least 25 years 40,000 20 160,000
Children present in household 70,000 44 90,000
Final target audience size 90,000

Waterfall reports help you understand which of your selection criteria exclude the most customers. They also help you see which criteria are really not excluding anyone and might be candidates for more restrictive thresholds.

There will be times when your selection criteria produce an audience smaller than you would have liked. You may have a budget that assumes 100,000 contacts, but you only find 50,000 customers who fit the profile you’re looking for. You may be tempted to expand the audience by loosening some of your thresholds.

If you set your thresholds based on a solid understanding of your customers, then loosening the thresholds will reduce your response rates. Mailing to a larger audience may not significantly increase the overall effectiveness of your campaign. Consider other ways to use the extra budget money. You may find that first-class postage, a higher quality mail piece, or even spending your money on a different campaign better serves your goals.

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