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Rick Cook One to One Marketing: 5 Ways To Approach the 'Demographic of One'

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 By Rick Cook

Marketing Nirvana and One to One Marketing

In marketing pursuits the demographic of one is the ideal destination as it achieves the highest response rate. That is, each marketing message is precisely targeted to the needs, buy criteria or maximum receptivity of a single customer. As a practical matter, one to one marketing strategies seldom reach the 'demographic of one' because of expense and complexity. However Customer Relationship Management software and systemic data analysis can bring us closer to that ideal in an automated and cost effective manner – if you work the process.

The secret is to leverage all the available data from your CRM software system and other sources to define potential customers among multiple related attributes and criteria, in order to position your customers and potential customers into smaller and smaller buckets based on specific and relevant information.

The theory behind the demographic of one is that the more closely you tailor your campaign to your target, the more likely it is to produce the desired response. Consider the following five methods in your pursuit to a demographic of one.

1) Harvest Your Data
By its nature, CRM systems tend to produce a lot of data. This provides a valuable repository to sift and mine for customer variables, segmentation, trends and patterns. Because you have so much data at your fingertips, and because most CRM systems come with strong customer analytical tools, you can extract data from your system in various ways and correlate the customer data with product or service variables in order to understand and project potential fit among customers and products.

2) Look For Patterns
This is, in effect, low level data mining, without the need for data warehouses and expensive business intelligence (BI) programs.

In addition to the obvious customer demographic factors such as age and income, less obvious searches through the data can produce highly useful results. If you are a retailer, for example, you can compare the zip codes of your customers with the locations of your stores. Some businesses are highly location centric. That is, they draw most of their customers from their immediate neighborhoods. Many others draw more uniformly across the geographic area. With this information you can know whether to concentrate your marketing on nearby neighborhoods or to cast your net more broadly.

Time of year is likely to produce interesting results as well. It's obvious that a ski shop will do most of its business in the winter. It's perhaps less obvious that an auto tune up and repair business is likely to experience a winter surge as well.

When searching for sales patterns, it's important to realize that the process tends to be iterative. That is, first you sort your data by criterion A and then re-sort by A and B, and so on. Often the gold will be buried five or six layers deep.

3) Look For Creative Ways To Segment Your Audience
In effect, marketing data analytics is a scientific experiment. In subdividing your audience you are generating hypotheses about what motivates them and then applying the data to validate or disprove your idea.

If it is a large campaign you may want to start by test marketing your approach to a sample set within each category and measuring the response. In any event you want to collect information on the effectiveness of your campaign and compare it to your hypothesis. If the results of a particular market segmentation are disappointing, analyze the situation to find out why before you initiate the next hypothetical approach.

Sometimes you will prove your customer hypothesis completely wrong. A classic example of this happened to Mobil Oil a few years ago. Mobil had developed a campaign for its premium gasoline based on the perfectly reasonable notion that premium gasoline was purchased by more affluent customers. Unfortunately the campaign failed.

After analysis and customer surveys, the company discovered that the buyers of premium gas were anything but affluent. They were for the most part blue collar consumers who were driving older cars that required premium fuel for their high compression engines. With that information, Mobil refocused its campaign.

A careful study of the characteristics of customers in the CRM database can help you prevent these kinds of costly mistakes. For example, comparing the ZIP codes of premium fuel purchases with the known demographics of those zip codes can give you a rough idea of the economic status of the customers. However analysis of results is still indispensable and testing is always advisable with large campaigns.

4) Develop Highly Targeted Messages
The next step is to develop the appropriate messaging and incentives for your micro-demographics. These should consider message (matched as closely as possible to the characteristics of your target) as well as what types of offers and other incentives are most likely to move each particular group to action. Potential economic value of the target group plays into this process as well. A group made up of customers who regularly make large purchases is obviously more valuable – and worth a larger incentive – than irregular purchasers or customers who don't purchase as much.

5) Analyze The Results
Use the reporting and analysis features in your CRM software to track and analyze the results of your campaign over time. This is a critical step in any marketing campaign but it is especially important for highly targeted ones. A highly targeted campaign should produce more positive responses, but it is also likely to produce more near misses. If the campaign isn't producing the expected results, study the results you do get and consider retargeting or redefining your groups.

Remember that the ultimate purpose of the exercise is a series of profitable marketing campaigns which resonate with recipients because they are closely aligned with their interests. Keep in mind that this kind of marketing is also an exercise in balancing the costs of analysis and the number of campaigns against the returns. A true demographic of one is seldom cost effective, however, finding the balance between mass marketing and one to one marketing can deliver significant payback for the marketer. End

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Guest Colleen Petri
  Good article. Treating customers uniquely is the basis of a one-to-one marketing strategy. This is different, and more difficult, than micro-targeting where customers are segmented and assigned to varying marketing campaigns based largely on static attributes and demographic data. One-to-one marketing requires knowing enough about your customer's desires, behaviors and motivations that you can deliver highly relevant, timely and personalized messages or offers—and grow your customer relationship over time. CRM systems are great for tracking historical business transactions for each customer, but that's not enough to really understand and predict what your customer wants. Fortunately, customers are becoming social, and volunteering their interests and motivations in social networks, blogs, tweets and other social channels. By capturing this (normally unstructured) data and appending it to your CRM system contact records, you can glean valuable customer information, and achieve real customer insight, that can fuel successful one-to-one marketing strategies and campaigns.
 

 

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Consider this 5 step approach of using CRM software, data analysis and customer segmentation to deliver marketing messages that appear precisely targeted to the needs and buy criteria of each customer - in order to achieve maximum receptivity and the highest marketing campaign response rates possible.

 

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