Marketing

Does Your Data Answer the Right Questions?

Whether through direct mail or email, in-store signage, or highway billboards, the most effective marketing is tailored to your target audience. Recently, HubSpot compiled a list of questions to help you target your messaging with laser focus. Let’s look at seven of them.

1. Am I targeting the right audience?

Target audiences can shift and change. Your target audience might be different from what it once was. One national motorcycle brand, for example, recently discovered that its fastest-growing customer segment was now younger and more highly educated than its older, more traditionally blue-collar customer base in the past. This allowed the company to reframe its messaging to reflect the changing face of its riders.

2. What defines this audience?

This is where audience profiling comes in. What are their ages? Household income? Level of education? What do they look like demographically? Behaviorally? Psychographically?

3. What matters to them?

What life stage are your customers in? Are they new college graduates? New parents? Are older adults starting to think seriously about retirement? Insight from third-party data such as magazine subscriptions, nonprofit donation history, and credit card purchase history can be beneficial here.

4. What motivates them?

Once you create profiles of your target audiences, you can better understand what motivates them to buy. For example, new college graduates face pressure to excel at their jobs. This translates into messaging that reflects confidence, status, and success.

5. Where and when can we reach them?

How is your target audience interacting with you? What channels do they use most? Are you more likely to get them to pay attention if you follow up your direct mailer with an email or a retargeting ad on Facebook?

6. What are their perceptions of your brand?

Is your brand already well-known in the marketplace? Is it an up-and-comer? How can you use this to refine your messaging? Think about AARP. The organization knew that its target audience was working longer, more active, and living longer, healthier lives than in the past. It needed to reinvent its brand to attract new members, and the “You Don’t Know ‘AARP'” campaign was born.

7. What does their purchase journey look like?

Different messaging resonates differently to varying stages of a customer journey. Direct mail may draw people into the sales funnel, and a retargeted ad may re-engage them if they don’t purchase immediately. A follow-up email or printed collateral may seal the deal.

These are just some questions to create a powerful marketing campaign. How many are you asking?

Do You Know Who Your Best Customers Really Are?

You have a tight marketing budget and want to focus that budget on your best customers. How do you decide which customers are worth the most significant investment? You might think that the answer is obvious—the ones who spend the most money with you. But which metric do you use to determine that?

Studies consistently show that the most profitable customers continue to engage with you over time. This is because, once you acquire those customers, not only does it cost less to keep them than to acquire new ones, but if you treat them right, they’ll spend more money with you than one-time customers will—according to RJMetrics, 300% more!

That’s why, when determining your “best” customers, you need to consider how much a customer is likely to spend over the lifetime of that relationship. This is called “lifetime customer value” (LCV).

Lifetime customer value is a powerful metric. To show why, let’s look at the example of subscription services, such as streaming music. For instance, it might cost a streaming service $5 to acquire a new customer, and that customer might spend only $9.95 monthly. However, if that customer maintains that subscription for one year, that $5 investment turns into $119 in revenue. If that customer keeps the subscription for two years, that $5 investment turns into $239 in revenue.

The same principle applies to retail sales and B2B services. It might cost you $150 to acquire a customer who buys a single $150 software (SaaS) license, but if you retain that customer for five years, that $150 acquisition cost nets you $750.

How do you calculate LCV? One of the simplest calculations is as follows:

average customer order x average # of purchases per year x average retention time (years)

This calculation doesn’t consider other factors, such as how much it costs to retain those customers, but it does provide a starting point. To find this value for each customer, you can create your own spreadsheet or download a free calculator from companies like HubSpot.

Whatever method you use, give LCV analysis a try. This robust information helps you focus your efforts on the customers in a new way—finding those with the highest profitability over time. What’s not to love about that?