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Welcome to the second issue of The Marketing Source e-newsletter! Our
goal is to provide you with real-world marketing tips that you can put
right to work in your organization or business. If you have any ideas
for articles, please send them along.
Targeting Your Audiences, Or Shooting in the Dark?
Most people can come up with some kind of definition for the words "target
audience." But knowing what a target audience is not nearly as important
(or difficult or important) as selectively marketing to a target audience!
Here are four common myths about target markets or audience segmentation
that are big money and time wasters.
Myth 1: "Everyone is our target audience. We want to reach everyone."
Disaster! That's a sure fire way to spread your organization too thin
and risk not really reaching anyone. In short, you really can't have
everyone as a target audience. It doesn't make sense strategically and
you couldn't afford to reach "everyone" anyway.
No organization has a target audience that includes everyone. Coca-Cola?
Nope. You won't find lots of coke advertising aimed at super health conscious
people. Let's try nonprofits. What about United Way? True, anyone could
need United Way services one day, but even then there are groups more
likely than others to use those services. The same goes for donors. United
Way will certainly be pleased to get large or small donations, but is
more likely to focus their efforts on people who have the means and willingness
to donate.
Solution: Figure out where your business or utilization
really comes from. Is it women over age 45? Men under age 30? Women that exercise
in gyms? Parents of kids under age four who drive SUVs? City dwellers
over age 50 who vacation in Palm Springs? Be very specific so you can
target your communications to the groups that will really drive your
business, starting with existing customers, users or clients. And don't
do anything that doesn't target one of your key groups. A television
station may have a great sale on weekend sports packages, but that doesn't
do you much good if they don't attract your target audience.
Myth #2: "New business rules. We need to attract new customers,
members, users all the time."
Okay, we'll agree with that. Attracting new business is important. But
the cost of attracting new business almost always exceeds the cost of
keeping the business you have. What's hard to understand are the organizations
that work hard to attract new customers, members or users, then forget
about them. No communication, no great deals, no nothing. The next time
these organizations communicate with customers is when it's time to renew
or when the customers leave for another company or organization.
Solution: Think about your customers as customers
for life. There are
piles of research about lifetime customer value - the value your customer
or member brings to your business over the long term. If you want to
try your hand at calculating this, The Harvard Business Review journal
makes it easy. Go
to their web site for an interactive Lifetime Customer Value Calculator. A new customer might bring you $2000 per year in business,
but it costs $1000 to attract them. A customer you already have might
bring in $3000 per year, and it might cost only $500 to keep them. You
do the math.
Think of the frequently-cited 80-20 rule: 80% of your business comes
from 20% of your clients or customers. In many organizations, a relatively
small number of customers, clients or users account for much of the organization's
business. Put your time and money toward communicating very well and
very often with those key target audiences.
Myth #3: "All business is good business."
If you find that 5% of your business comes from a difficult or exepensive-to-reach
audience, you shouldn't be spending 50% of your hard-won marketing dollars
to reach them. Unfortunately, we frequently see clients spin their wheels
by trying to reach target audiences who won't add substantially to their
business, don't have potential for growth and tie up too much of the
marketing budget.
Solution: What piece of the business are you willing
to give up? You
can't be all things to all people. You have to know what your organization's
key competencies are and where you want your business to grow. Then find
groups that value what you do and target them. If you aren't willing
to prioritize your target audiences and set some of the non-critical
groups aside for the moment, you risk losing the key target audiences
you already have. Put your budget, time and energy toward groups that
will really drive your organization.
Myth #4: "I know my customers. We collect data on every transaction
and can tell you all about where they live and what they spend. We target
people who are like them."
That's all great. But you don't know your customers, you only know their
basic statistics. We are constantly surprised at how many organizations
really don't understand their customers and target audiences. We see
people conduct expensive ad campaigns to promote a service or product,
then wonder why they didn't get the response they wanted. But these same
organizations spend almost no time trying to understand the mindset,
hope, fears, dreams and motivations of their audiences. And that information
is critical to developing messages, planning product/service enhancements
and communicating with target audiences.
Solution: Dig a little deeper. Conduct a professional research study
if you can, do some "ad-hoc" research if you can't afford that.
You want to learn why people do business with you, what problem you solve
for them and what "drivers" (influencers) they have. For example,
Chili's Restaurants sells mid-level sandwich, salad and burger fare --
not so different from what you can get at other similar restaurants.
One of their audiences, though, is busy families who need something better
than fast food and is relatively inexpensive. The restaurant allows people
to phone in orders, then brings the order out to the car. For a mom with
children in the car or a dad hurrying to get home, this service has more
to do with the decision of where to eat than the food. The service becomes
part of the product. And it all came about because Chili's knows its
customers and figured out how to solve a problem for them.
Studying your target audiences should by an ongoing exercise. Things
are changing all the time, with technology making information and global
marketing more available all the time. Just think - people don't have
to buy your product or use your services. They can find dozens of other
companies doing what you do without ever leaving home. Find a way to
regularly gather feedback from your critical target audiences. Without
it, you're just shooting in the dark.
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