Is a focused marketing initiative necessary?

This is an analytical approach to studying a company’s market, breaking it up into segments and focusing marketing efforts on the most potentially profitable ones.

Gather demographic data
The first step is to collect as much customer demographic information as possible. As mentioned, your customer base may have slowly shifted over the years and you’re still reaching out to people who, for whatever reason, have become a smaller proportion of buyers. Examples of straightforward demographic variables that you can gather for analysis include:

Age bracket,
Gender,
Income level,
Education, and
Location (home and work).

For instance, if you cater to people who live near your business, the reason for a shift in your customer base could be as simple as a turnover in neighborhood demographics. Such a shift could account for a slow loss of business because you’ve failed to reposition or modify your product or service to better connect with the new demographic.

Look at the big picture
Next, review the purchasing patterns of different demographic groups in your existing customer base. Who are your most and least profitable customers? Monitor buying patterns over time, including which segments are growing and shrinking.

Also evaluate demographic trends in the broader market to determine whether any shifts you’re seeing in customer base are consistent with broader demographic trends. The answer will hold important implications for your marketing strategy.

For example, if you’re operating in a demographic area that’s bucking trends in the wider market, you’ll probably want to shift your marketing focus as the trends catch up with your locale. Or, if you’re looking to aggressively grow your business, you may need to expand your marketing efforts to a broader audience than your current customer base.

Consider cluster analysis
When conducting a targeted marketing campaign, many companies choose to group similar people into “clusters” to more effectively market products or services to them. Commonly referred to as “cluster analysis,” this approach is helpful when basic demographic criteria might not be strong indicators of whether someone is likely to be interested in the product or service being offered.

Once you’ve identified the market segments that you want to target, figure out how to best connect with them. Personalize your market segmentation strategy to each cluster’s preferred mode of communication. This is sometimes referred to as using “emotional intelligence when communicating with customers.”

Finally, keep in mind that you also need to supplement your demographic research with competitive intelligence. If competitors are miles ahead of you in reaching a demographic that you intend to target, you’ll need to factor that into your strategy. Indeed, you might decide not to try to expand into that segment if the effort would require a huge investment with a low likelihood of success.

Use the data wisely
To be clear, this has been just a general overview of targeted marketing campaigns. There are many different approaches you could apply and a variety of metrics to potentially track. Your Rudler, PSC advisor can help you review your financials to determine how to budget for an optimal targeted marketing campaign, as well as how to best use the data gathered. Contact us at 859-331-1717.

Is a focused marketing initiative necessary?

If your company has been around for a while, you might assume that you are familiar with who your customers are. However, as they say “ life comes at you fast”! Demographics, consumer preferences and customer desires can all change suddenly.

RUDLER, PSC CPAs and Business Advisors