Three Dimensions to Improve Marketing Effectiveness

Energizing voters to cast their ballots for a presidential candidate is similar to motivating consumers to purchase your product. The Democratic and Republican National Conventions are doing their best to rally and unify their parties and launch their prospective candidates into the final leg of the race for president. As these big-budget presidential marketing campaigns kick into high gear, online marketers can learn important segmentation lessons that cut across party lines.

Three Major Segmentation Dimensions

While U.S. presidential elections are basically about getting the vote out for your candidate, the reality is that electoral voting, like your customer base, is more complex. Recent political polls and primary election results highlight three critical segmentation dimensions that online marketers should consider:

  • Demographic traits. This year’s hotly contested political races have highlighted certain demographic dimensions, many of which can be applied to analyzing your customer base:

    • Geographic location. Because elections are based on state and county, where people live is an important consideration. Marketers should assess whether customers behave differently based on their location.

    • Gender. Sen. Hillary Clinton mobilized the women’s vote, particularly among older population segments. Consider whether women use and purchase your products differently than men.
    • Age. Sen. Barrack Obama motivated younger, first-time voters to register and vote. This has brought new voters onto registration rolls, the electoral equivalent of new customers. Does age have an impact on your product’s purchase or use? If so, how can you ascertain this information? What can you use as a proxy for age if prospects are reluctant to share this information?
    • Ethnic background. Obama also rallied African-American support. In this election, other ethnic groups will be important, most notably Hispanics. As a marketer, do your products resonate with different ethnic segments?
    • Net worth. This is often a critical factor in a weak economic market.
  • Psychographic characteristics. These attributes relate to how voters think and feel about specific issues, such as the economy, the Iraq war, universal healthcare, and immigration. These factors are particularly important because people’s feelings on critical issues can override demographic dimensions in influencing their ultimate vote. In terms of product purchase, the importance of personal preferences may override financial indicators. For online marketers, psychographics translate to the following characteristics:
    • Interests/hobbies. In political campaigns, voters often decide based on one or more issues they hold dear. Customers make similar tradeoffs. As an online marketer, understand what your target market is passionate about. For example, consumers may spend more on their hobby in lieu of a more expensive vacation.

    • Aspirational. Voters, like consumers, may make their selection based on how they want to be perceived. When assessing your customer base, think about whether your products fall into this category. For example, for a major, one-time purchase like an engagement ring, customers may choose to associate with a top brand like Tiffany’s.
    • Self-assessment. Voters and consumers make decisions to feel good about themselves. Obama’s “change we can believe in” campaign focuses on hope.
  • Behavioral actions. Regardless of what voters say, how do you ensure they actually go to their polling location and pull the lever for your candidate? As an online marketer, among the types of behavior you can use as predictors are:
    • On-site actions. This includes a variety of activities, such as pages visited and items placed in shopping carts. While these actions show interest, they may be difficult for marketers to act on because prospects may want to remain anonymous.

    • Hand-raisers. This can take several forms, including e-mail registrations, RSS feeds, forward to a friend, customer service contacts, and catalog requests. It can also include social media engagement, contest participants, and reviewers.
    • Purchases. Purchasing is most important attribute, regardless of which channel is used, because customers have voted for your product.
    • Advocacy. Political campaigns always look for evangelists. For marketers, this translates to participation in social media, word-of-mouth referrals, and ratings and reviews.

After segmenting your customer base, tailor your marketing to make it more effective at attracting prospects, generating sales, and retaining customers. Customizing your content and product offering to meet your segment’s needs should increase sales.

Three Metrics to Monitor

To evaluate your segmentation’s success, look at a combination of measures. The goal of a successful segmentation strategy is creating groups that enable more effective marketing efforts that lead to improved profitability, so evaluate the following:

  • Customers. Look at the number of submarkets you’ve created and the relative size of each. The issue is your ability to cost-effectively develop targeted marketing communications that convey how your offering meets the needs of each group. Among the factors to bear in mind are:

    • Have you created easily defined, addressable segments?

    • Does tailoring your marketing to this group have the potential to yield increased profit?
  • Revenues. Monitor revenues by segment, in total, and per customer marketed. Further, examine your various marketing programs, such as search and e-mail, by segment to ensure you’re maximizing sales.
  • Expenses. Track marketing costs by segment, in total, and per customer marketed to monitor your change in costs. Given that each target requires tailored programs, costs should increase, but it’s critical they result in incremental revenues.

Once you’ve calculated these trends, analyze the results in relationship to each other. Lifetime value is a good way to assess your progress. If the incremental cost of customizing your marketing to a given segment exceeds the incremental lifetime value of those customers, it isn’t cost-effective.

As with political campaigns, segmentation is a good way to effectively market to smaller groups within your customer base, and it becomes more important as the online market matures. It’s not a one-size-fits-all solution. You must figure out what works best for your customers and your offering.

Want more campaign information? Check out our ClickZ News Campaign ’08 section for the latest news and analysis.

Join us for ClickZ Presents: Online Marketing Summit, September 25 at the Sheraton San Diego.

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