When Growth Planning for a client, we use a process which carries the mnemonic AUDIO. You can find out more about it here. The second stage of the process involves “Understanding” the target audience.
Our first task is to define who we wish to target.
A big mistake many people make is to assume all customers are equal. This is never the case. The best customers will buy more, stay longer and refer you to others. Whereas, by contrast, there are often a group of customers who cost the business more than they deliver. Before we start searching for new customers, we need to be sure we’re targeting the former. Whilst from a retention perspective, we may well be better losing the latter.
Once we’ve defined who our best customers are, we then need to understand as much about them as possible. This will help us focus our acquisition and retention efforts more effectively and efficiently in the future. We tend to use three methodologies to do this.
Data – Actual Behaviour
The first thing we look at is behavioural data. The most common types include clickstream data and transactional data. This is a very accurate form of information and insight as it’s been provided by the audience directly in the process of viewing or buying your products or services. This type of data provides us with critical insights such as:
· What path the target audience takes before making a purchase
· What products they consider and / or buy
· How often they purchase from you
· How many products they hold
· What supplementary products they are interested in or buy
· How much they spend etc
Research – Stated Behaviour
The second form of insight we consider is research feedback.
There are two forms – quantitative (usually high volumes of responses on a more superficial level) and quantitative (depth research amongst a smaller sample of your target audience). Both have their merits and can provide a really good insight into the thought processes of your audience. Quant research is usually more robust but often lacks the deeper insight that Qual delivers. It’s useful at telling you things like:
· Why a customer chooses a particular product
· What other competitor products they considered before making the purchase
· What they think about your brand / service / web site
· What they like or dislike about your marketing communications
· What features or benefits they rate highest etc
However, you need to remember there can be a difference between stated intent and actual behaviour. So, all research should always be facilitated well and interpreted carefully.
Profiling – Derived Insight
Profiling is another way to learn more about your customers. It involves matching your own customer data with other external data sets. The most well-known of these are the socio-demographic profiling tools: Acorn and Mosaic. These paint broad pictures of your customers based on the postcodes areas in which they live. Other tools make matches between your data and those that have previously completed lifestyle surveys and then extrapolate the findings. These profiles will tell you:
· The newspapers your customers consume
· The web sites they visit
· Their socio-demographic profile
· Their household income
· How often they go on holiday
· What cars they drive etc
Profiled data is less accurate than transactional data as it’s aggregated or derived information rather than information that has come directly from your customers.
Each source of insight will add a little more detail to your understanding of your best customers. And in turn it’ll allow you to target your communications and messaging better both to them and 'me-too' prospects. That means more high-quality sales in the future for less investment.
And that’s why this stage of our AUDIO process is so important.
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