Behavior Trumps Demographics

A marketing friend of mine, someone I respect, casually commented the other day that “behavior trumps demographics,” and it prompted me to reflect on how circular life can be.

In the ’80s (yes, I’m dating myself), I built a very nice career in the direct marketing industry on my targeting expertise. In numerous tests we measured a myriad of data points: age, income, and geography, number of kids, car type, presence of pets, and so on.

We thought we were so clever. We were going to build a highly scientific marketing machine. Each piece of mail would be tailored to each individual’s desires through statistical modeling. (Does this sound familiar?)

“Modeling” even the sound of the word was impressive. Only one problem: The theory didn’t pan out. You see, knowing all those data points didn’t really help. In fact, the cost of collecting and analyzing that heap of data actually made several programs inefficient.

All of our testing didn’t improve on what previous direct marketers had learned by trial and error. We humans are complicated, but sometimes we’re not as complicated or as rational as some marketers would have us believe. In fact, the same criteria that direct marketers were using in the ’70s (hell, the ’50s) still apply today.

So before you get led down the online primrose path of targeting, make sure you ask the right questions. To do that, you need to keep in mind what data whether online or offline matters and the reality that behavior is what matters the most… and certain behaviors matter more than others:

  1. Responsiveness: Interesting phenomenon not everyone will buy from a non-retail environment. In fact, no matter what you offer, on average only about 30 percent of people will purchase when contacted by phone or mail. I believe this is also true of the Internet. Yes, a percentage or two will change, but I doubt it will go to 50 percent.

    I wouldn’t bet on Drugstore.com putting Walgreens out of business. So, as a Net marketer, the key criterion you should be looking for is “e-responsiveness.” Has the individual taken some kind of electronic action – registering at a site, for instance, or signing up for a newsletter? Most important of all: Has the individual made an online purchase? Just because someone is online doesn’t mean they will buy from you. Go where the fish are actually biting.

  2. Recency: How recent was their last action? The sooner you can hit them after their last action, the more likely they are to respond to your offer.
  3. Frequency: The more often someone purchases, the more likely they will purchase again.
  4. Money/Monetary Value: The more they spent, the more likely they will spend with you.

    (Let me take a break right here. Recency-Frequency-Money [or monetary value] – RFM – is described nicely in Bob Stone’s classic “Successful Direct Marketing Methods.”)

  5. Timing: Yeah, this one is rocket science. New movers, new parents, newlyweds and their corollaries. If you just got a new car, you are probably not going to buy a replacement until that lease is up. So what’s more important… age and income, or lease expiration date? Hmm. People also have to have the time to act. You can’t sell new parents a mortgage when they’re changing diapers, and trying to is a waste of time and money. Most banner efforts fail because they pop up when people are not interested in getting any type of ad they’re changing a metaphoric diaper and just can’t be bothered right now.
  6. Desire: Contrary to what many would have you believe, people don’t buy what they don’t want; whatever happened to the McDLT, for instance? So make sure people want or need your product. Many Net businesses out there are to put it mildly unproven. Or, to invoke clichi: We don’t yet know if the dog likes the dog food. Ask yourself these questions: Do people really want your product? Are they really willing to pay for it? What offer do they find most appealing?
  7. Test: You just can’t underestimate how important the offer is. And yet, hardly anyone online is seriously testing multiple offers: free shipping, 50 percent off, two for one, etc. The offer with the most monetary value doesn’t always generate the greatest response, but if you are not constantly probing, you’ll never know. We had a client who finally conducted a decent test program with four different offers. One of the test offers did 225 percent better! That is huge. Changing your offer can improve response enormously. Offer-testing is a big idea. Find ways to test. And test often.
  8. Trust: Synergy is real. Brands matter. Yes, the terms are overused and misunderstood. However, consumers are more likely to trust someone they have heard of. So getting your awareness efforts in sync with your response vehicles will improve sales.

Armed with this information, you will dramatically increase your odds of success.

What if you don’t have access to RFM data? Good question. With all the privacy concerns, the online RFM data is hard to find particularly for prospecting purposes. That’s what makes marketing hard.

So deal with it. Find the next best indicators; however, don’t expect age and income to replace the power of RFM. Think outside the box: Target by using CPM (cost per 1,000 impressions), or better yet, by creative. Maybe you need more reach instead of less.

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