Profiling customers to improve your direct mail

Understanding your audience

We focus on helping customers gain more net new customers, so we’re going to take a look at how best to do that, now that you’ve got your strategic goals and related activities established (see previous blog). Using the example in that blog, we can see that the first initiative was looking at existing customers in order to understand them better. This is a key aspect of any intelligent marketing plan, especially when you’re looking to acquire more new customers, how do you know where to start looking?

Let’s start with why it’s a good idea to begin profiling your customers. You already know who they are, right?  Well, you may well do, but in our experience, many brands operate under out-dated information and assumptions about who their customers actually are.

The most common misconceptions around who your customers are tend to be around age and wealth status (in consumer marketing). Brands often assume that because people are spending more money they are wealthier, but this is often not the case. Many segments of people are “aspirational” and buy less often but spend more per transaction, or may simply be buying on credit as opposed to actual income.

Aligning with your audience

Part of your goal when analysing your current customers is to understand what segments of customers are the most profitable, as these are the ones you ideally want to replicate.

To do this successfully you first need to understand why these customers are more profitable than others, and this typically comes down to the fact about how and why you share core beliefs and values.

Below are some examples of what we mean:

Brand Core Values shared with customers
Aldi Cheaper prices, compromise on service & choice
John Lewis Not the cheapest but the best value when it comes to service
Tesco One stop shop that’s great value and convenience
Apple Think differently/creatively, great design and easy to use

These brands are very clear about what they offer to the customer, which is one reason they have been so successful. Consumers can clearly identify with each brand as it suits their beliefs and values.

Trouble comes when a brand loses its way and forgets “Why” it started in the first place. It then becomes a bland, forgettable offering that people can’t connect to emotionally, loyalty falls away and price becomes the differentiator.

Simon Sinek explains this concept beautifully in this video:

We would strongly recommend, if you’ve not gone through this process, that you buy his book “Start with why”, and the follow up workbook “Find your why”.

Going through this process will help you understand why certain people buy from you, why they may purchase more per transaction, and why they may buy more frequently than other customer segments.

The next phase of analysis should be looking at the transaction and demographic data itself. For example, we have access to a wealth of databases that we use to identify demographic information about our client’s customers. Such as what’s the breakdown between those that have mortgages and those that rent? What are the household income bands that are most popular in the customer base, and how does this tie in to average annual spend.

Once you know this, you can then understand where to go and find more of the same people, even if they are spread over a wide geographical area, and even if (especially if!) your brand only appeals to a niche audience.

The Acorn category “Financially Stretched” had the highest spend growth in 2016/17 of 15.5%

Source: Abacus Epsilon: The 2018 Home Shopping Trends Report

Once you know who your customers are, you can establish their buying patterns and habits, and use that information to determine which marketing channels are appropriate, based on where you think more customers like yours exist. You can also use this information to help you when purchasing data lists, or evaluating advertising partners, or even deciding where to put your newest store location.

Case Study: 

We went through this exercise with a women’s fashion retailer and uncovered various insights, including the fact that their audience were:

  • On average ten years older than thought
  • In the B,C demographic, as opposed to A, as initially assumed

This lead to various changes in strategy, including:

  • Using direct mail to attract net new customers as opposed to digital
  • Raising awareness in younger demographics using increased social media presence

Case Study:

While Toys R Us ultimately failed due to its crippling debt, if you travel back 18-20 years you can start to see how they lost their way. The founder of Toys R Us, Charles Lazarus, started the business because he knew parents would come back to buy toys time and again, as children tired of the old ones.

This meant that Toys R Us need to ensure they had a great range of toys, constant access to new toys and provide ways to make it easy to buy them.

Losing focus on these core principles started to happen after Lazarus left in 1994, exemplified by:

  • Large volumes of delivery failures during the 1999 Christmas Period, causing lack of confidence in online performance
  • Poor ranging causing Amazon to break an exclusive deal for toy supply

The situation was also exacerbated by strategic failures:

  • Large investment into foreign markets with old model meant the debt increased
  • Lack of investment into online offering

When you compare this performance to that of Smyth’s Toys – recently voted by consumers as one of the top ten retailers in the UK – you can see that it can’t all be blamed on market trends.

Toys R Us lost it’s way by losing it’s alignment with its customer base.

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2018-12-07T12:24:58+00:00