How to Group Customers by Geography in Data Driven Marketing - dummies

How to Group Customers by Geography in Data Driven Marketing

By David Semmelroth

Geographic data can be used in a surprising number of ways to enhance data driven marketing campaigns. Some products are just not needed in certain regions. But you can also use geography to customize messages and determine appropriate campaign timing. Geography is also correlated with many demographic traits, which can be both helpful and potentially risky.

Geographic groupings in data driven marketing

There are a variety of ways to group addresses together. The USPS uses zip codes to do just that. But the federal government also groups addresses together in a couple other ways. These groupings are related to government reporting and the census.

One common grouping is the Metropolitan Statistical Area, or MSA for short. An MSA is essentially a population center. They generally contain one or more fairly large cities of at least 50,000 people.

There is also a lower-level grouping called Micropolitan Statistical Areas that’s used for government reporting. These areas are smaller than Metro areas — less than 50K but at least 10K in population. The delineations of both Metro and Micro areas is available on the U.S. Census website.

Census results, economic conditions, and practically everything else that’s tracked by the federal government is reported by MSA. This data is all publicly available. This means that you have at your disposal a fairly detailed demographic profile of each MSA. Because MSAs are closely aligned with TV and radio markets, these profiles are naturally of interest to marketers. The Census Bureau provides an array of data exploration tool.

Census results are actually reported at a much lower-level grouping as well. They actually get reported at the census block level. You can think of this as a city block. It gets a little more subtle in rural areas. But these are quite small groups. There are more than 8 million census blocks in the U.S. This means that these groups typically only contain a few dozen households.

Know where to focus your data driven marketing efforts

Some products have regional appeal. This appeal can be related to a number of factors. Culture is a big one. A lot more grits are sold in the South than in the rest of the country.

That’s not to say that you can’t expand regional products to a wider audience. But the approach you take to marketing those products will definitely be different outside your core market. Expanding your market requires you to overcome an awareness gap.

Everybody in the South knows what grits are. But in the Midwest, you need to answer the question “What’s a grit?” You need to be more informative about what grits are and how they should be served.

Regional appeal of a product can also be related to weather. Parkas aren’t going to sell in south Florida. Geography itself can be a factor as well. Boats are not going to sell as well in the Great Plains as they are on the Gulf Coast, for example. Nor are surfboards going to be popular in the mountains of West Virginia.

Send your customers to the right place with data driven marketing

Customizing your messages is another application of geographic data. It’s one thing to refer in your communication to “a location near you.” It’s quite another to actually tell your customer where that location is. The latter is far more helpful and consequently more effective.

Customizing is absolutely crucial if your business is adding new locations. Getting the word out about a new store is fundamentally about geographic targeting. By looking at your current customer base, you can come up with a profile of your typical customer.

You then look for customers who meet that profile in the vicinity of the new store. In fact, the new location was probably chosen, at least in part, based on a similar analysis.

Geocoding software has gotten quite sophisticated over the years. It’s now quite easy to identify households that live within a given distance of a store location. This ability is apparent on many websites. Pizza delivery chains make good use of it in directing users to the store that serves their area. Many retailers make use of it to dynamically find which store may have a searched-for item in stock.

For businesses that don’t have the option of doing business purely online, it’s important to understand the geographic range of their customer base. Theme parks and restaurants are examples of businesses that require the customer to actually visit their location. To market these businesses effectively, you need to know how far people are willing to travel to do business with you.

Travel destinations typically group their customers according to how far away they live. A distinction is made between customers that are close enough to drive and those that need to fly. Understanding this distinction is important because of the significant cost difference between the two modes of travel.

Customers in fly markets may need to have higher incomes in order to afford the trip. The drive-market customers may be close enough to visit frequently. The marketing messages that are most effective differ between the two groups.

Time your communications using data driven marketing

The lives of families with children revolve around school schedules. Winter break, spring break, prom, summer vacation, back-to-school time, and graduation come and go like clockwork. This calendar dictates the timing of vacations and purchases of everything from prom dresses to school supplies.

Many seasonal events vary by geography. Like school schedules, the arrival of winter varies geographically. And also like school schedules, winter’s arrival drives the demand for a specific set of products. By analyzing the timing of the demand for your products geographically, you can position your messages to be in market when they are most relevant.