Decision processes vary by individual, thus strengthening the notion that there is no "general public" and that mass advertising is really a game of marketing roulette whereby companies randomly throw out marketing messages and hope they hit a target. Businesses need to learn what physical needs and emotions and lifestyle factors drive their customers' decision processes when making product choices and assigning brand loyalties. Demographics do not give us these answers. When you truly understand why customers make the choices they do, you can market effectively and efficiently.
Following are some critical steps for getting to know your best customers and communicating relevantly.
Step 1: Identify your most valuable customers
Clearly, capturing the lifetime value of every customer that calls on your business is neither realistic nor appropriate. You must focus your valuable resources on the customers that represent the greatest return based upon their history with you. Typically the customers most likely to do business with you again are:
- Those who have most recently purchased from you
- Those who most frequently interact with your brand
- Those who spend the most per transaction
To fully identify who is worthy of your resources, you will need to record and track customer transactions. The nature of your business and number of customers will determine the best method for you. Your customer management system can be as simple as index cards (for businesses with a few customers) or as complex as the leading CRM (customer relationship management) software for businesses with hundreds or thousands of customers. It depends on the number of customers you need to manage and how you plan to use the system, e.g., monitor activity vs. send out customized correspondence on an automated schedule.
Step 2: Build customer profiles
After determining who your best customers are, you will need to identify dominant traits beyond product selection among customers, and sort individuals into groups with similar traits and purchasing behavior. Your groups might represent dominant product usages, emotions or attitudes among multiple customers. You will then need to develop comprehensive profiles for these groups so that you can send "personalized" messages to several customers simultaneously and still maintain a high level of relevancy.
More on customer profiles
Understanding where customers fall into these categories will help you prioritize your marketing efforts and fine tune your messages.
Demographics: This covers age, gender, marital status, race, income, education.
Geodemographics: These are the influences that are unique to customers' geographical areas. Although all your customers may live in the U.S., those from the South vs. the West vs. the East have different traditions, values, and ways of doing things, all of which influence purchase processes and brand choices.
Consumer orientation: This refers to a customer's personal psychology, attitudes, behaviors, and decision–making patterns that have evolved from his or her social environment, upbringing, insecurities, and confidences. The VALSTM network (www.sric–bi.com) defines consumer orientations according to various values such as control or freedom; tradition or novelty; information or stimulation; hands–on activities or intellectual abstraction; and a consumer's level of resources and personal innovation.
Generational influences: Are your customers baby boomers, elderly seniors, Generation Xers, or teenagers? Every generation has a unique set of circumstances and attitudes that affects decision–making and brand expectations.
Category cycle: What is the usage pattern of your most valued customers? Are they new and frequent users, such as first–time moms, or seasoned less frequent users, such as grandparents?
Market adaptation: Where do your customers fall in terms of readiness for your product category? Marketing veteran, Regis McKenna, identifies consumers as either Innovators who are willing to experiment with new products first; Early Adapters, who are willing to try new products with some risk; Late Adapters, who wait to purchase something after it is proven; and Laggards, who only purchase when there is an absolute need or extreme pressure. Identify where your customers are and find ways to move them up the channel of product readiness.
Step 3: Segment and segment again
Don't stop after you have sorted your customers into broad categories. Keep drilling down to specific attitudes and behaviors linked to purchasing behavior. Doing this will enable you to further personalize your messages and strengthen customer relationships. For example, if you operate a pet supply business, you can easily classify your customers according to physical traits such as dog owner, cat owner, reptile owner, bird owner, or fish owner. You can further segment these categories according to purchase–related emotions. For example, dog owners can be segmented according to customers that believe:
- Dogs are children in fur coats
- Dogs are hunting aids and companions
- Dogs are sports companions
Each of the above groups represents dog owners with very different purchasing behavior. Someone who sees dogs as hunting companions might keep his dog in an outdoor kennel and provide just the basic comforts and necessities. Someone who sees her dog as a child in a fur coat would be a great candidate for purchasing dog clothes, perfume, fancy bedding materials, even nail polish. Both are dog owners yet their emotional needs and purchasing behaviors are drastically different, and so should be the marketing approaches taken by a store owner.
When you truly get to know your customers, inside and out, you can develop highly efficient marketing programs that deliver highly relevant messages to each individual customer. You will also be better equipped to generate qualified leads as your best prospects will have characteristics and profiles similar to your best customers.
About the author: Jeanette Maw McMurtry is the author of "Big Business Marketing for Small Business Budgets" (McGraw–Hill 2003) upon which the above article is based, and Principal of The McMurtry Group which consults both large and small businesses on how to affordably capture customers' lifetime value. For more information about The McMurtry Group, or to review or purchase the book, visit www.mcmurtrygroup.com or email info@mcmurtrygroup.com.
Excerpt from Big Business Marketing for Small Business Budgets. McGraw–Hill. © 2003.
The information contained in this article is only an overview of the subject matter made for general guidance to the reader, and is subject in all cases to limitations and disclaimers set forth in Staples' Legal Terms and Conditions.
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