Who Makes for a Good Customer Target These Days Anyways?
Naturally, smart marketers want to put their precious marketing resources and budget dollars into the efforts that will help them get to and inspire the purchase interest and loyalty of their “best” customers. It’s just not very effective or efficient in most situations to cast as wide a net as possible and see what you drag in anymore—those days have come and gone.
But that begs the question, who makes for a good target customer these days anyways?
In this day and age of exploding digital and social media where the mainstay of media—“buy advertising and customers will watch, listen, and go shopping for our brand”—no longer applies, the answer to this question is far more complex than it might appear. Marketers have to integrate traditional and digital paid advertising with “owned” properties such as the brand’s website, as well as traditional and social “earned” media such as news articles and tweets.
Now, generally speaking, most marketers know the “best” customers—either current or prospective—are the ones who will generate the highest return in terms of profits for your brand. They are indeed “good targets” for digital and social marketing activities.
There are many pieces to the profitability equation, however. Yes, there are the financial measures of revenue such as lifetime value, current spending in the category in dollars, current share for your brand today, number and types of products or services purchased, and brand switching history/potential. Yet there are also several other characteristics that make one target more valuable than another because they’re easier to get and keep.
A good target is…
…less price sensitive. Unless you’re Wal-mart and want to grab share amongst the folks who put price above all other brand considerations, price insensitivity is another important indication of a buyer’s value to a brand and one particularly relevant these days.
*….struggling with big problems. The bigger the problem your brand can solve, the bigger the market response.
…interested in new products and services from the brand. Introducing new products and services—in good times and in bad—can generate the kind of organic growth companies crave. So why not ensure that new products and services WILL generate bottom line growth by narrowing in on the buyers most interested in considering the latest offerings from a brand or company?
….will advocate for your brand. The greater the level of influence a buyer has among their family, friends, and acquaintances, the more a brand’s marketing ROI will benefit. Customers who do some of the work for a brand because they’re more likely to spread the word off- and on-line about a product they found that really works or a service that solved a serious problem are like money in the bank.
….socially-connected on the web. Because of the speed and number of tools available to customers to spread information about product and services on-line, word-of-mouth activity is even more important to capture in a digital environment. The more active and engaged a customer is with different social media, the more valuable they can be to a brand.
Marketers can use the answers they collect from buyers in their category or industry as filters to separate the “good” from the “OK” and “not-so-good” potential targets for off- and on-line marketing activities. Just figure out which descriptive characteristics—demographics, psychographics, attitudes, lifestyles, needs, behaviors, and more—have the strongest relationship to these profit-related criteria and marketers will have one half of the guidance they need to build a high performance marketing plan.
Let’s talk about the other half—very often the forgotten half—because this information that helps smart marketers identify the high value targets will only get them so far. They also need to know how best to communicate with them.
From an operational standpoint then, a good target ALSO is…
…distinct in terms of needs and wants. The more homogeneous and preemptible a target’s needs and wants, the easier time marketers will have developing compelling positioning and messaging that breaks through in traditional and digital channels.
…relevant to traditional and digital communications decisions. Get a sense of how high-value customers use traditional, digital, and social media throughout the pre- and post-purchase process, and, in particular, how they like to interact with a brand within different communications channels.
…findable in syndicated media databases. The “best” communications channels—either current or prospective—are the ones with a disproportionate number of high-value customers. Ask and answer the same questions used in the database resources media planners regularly access to develop direct links.
As more and more marketers shift their mentality from experimentation with digital and social media to integration of all on-line efforts with the overall marketing plan, they will need to update their image of a “good target” in order to give themselves a leg-up in generating the most return from digital marketing investments.
Bloggers and Influentials: Kevin Clancy Offers Insights Into these Key Targets for Word-of-Mouth Marketing
“Before Americans buy, they talk. And they listen,” explain Berry-AMA book prize winners Ed Keller and Jon Berry in The Influentials. These days, they say, “the buying process is to ask a friend, family member, or other expert close at hand what they think.” To back up their contention of the power of the word-of-mouth marketing channel, we offer up the following quick stats:
- According to a recent NOP World survey, 9 in 10 consumers say that of all the sources of ideas and information about products and services available, they trust recommendations from people they know the most.
- 67% of consumer purchase decisions are primarily influenced by word-of-mouth, found consulting firms McKinsey and Thompson Lightstone.
- As for B2B, 50% of U.S. and U.K. executives say they are likely to buy a product or service based on word of mouth, or so found a study by Keller Fay.
As far as leveraging WOM in their brand’s favor, most marketers know they’ve got to get to the “influentials” and “super-influentials” in their category or industry. These folks tell friends and neighbors what and where to buy. Their friends, family members, and colleagues turn to them for their perspectives and opinions on products and services. In other words, when they talk, people listen. The messenger carries as much—if not more weight than the message.
Now, as our readers know, Copernicus is always on the prowl for conventional marketing wisdoms begging for some grounding in empirical data. And in the area of WOM marketing, one of the biggest CWs going is that “influentials” and “bloggers” are one-and-the-same-person.
Though many studies have established the growing awareness of blogs and increasing blogging activity, none have included direct measures of personal influence. Still, this commonly-held belief has inspired many marketers to push their brands into the blogosphere to reach and impact influentials.
We sat down with Copernicus’ chairman Kevin Clancy to talk about the findings of an in-depth R&D investigation he led to determine whether or not “influentials” and “bloggers” are indeed synonymous terms.
Here’s what he had to say:
Mzine: Where did the idea that “bloggers” and “influentials” are one-and-the-same-person come from, do you think?
Kevin: One measure of personal influence is certainly a willingness and interest in sharing opinions with others. People who are actively commenting or writing their own blogs are giving their perspectives and recommendations on different topics, so it’s not all that far-reaching an assumption to think there could be a relationship between these two groups.
But there’s more to personal influence that just the propensity to share opinions.
We get asked on a fairly frequent basis, hey are the folks who post reviews on products and services influentials? We say we don’t know. Yes, they’re sharing opinions and the content of their reviews may impact the purchase decisions of others. But are the individuals who post reviews on Amazon or Angie’s List or Facebook influentials? Are folks regularly seeking out the opinion of these specific individuals to see what they say? Are folks looking for reviews in general or for the reviewer?
When it comes to reviews posted on Amazon, for example, our experience is generally folks look at them in the aggregate. If most reviews are negative, people may decide not to buy. But that’s different than people seeking out the opinions of a specific reviewer–say a blogger–when considering a purchase in a particular product or service category.
The Word of Mouth Marketing Association defines an influencer as a person who has “a greater than average reach or impact through word of mouth in a relevant marketplace.” That means to be considered “influential” you, for instance, have to have a level of authority and knowledge on a particular topic.
What struck us about previous research on the topic was the lack of direct and comprehensive measures of personal influence. Some measures came at it by asking about likelihood to share opinions. Others talked about the number of connections or friends study participants have. But there was no definitive answer to the question, certainly not one grounded in empirical data.
Mzine: So are influentials and bloggers one-and-the-same?
Kevin: While they aren’t redundant concepts, there’s a strong relationship between the level of blogging engagement and cross-category personal influence.
Copernicus surveyed a national cross-section of 808 men and women, ages 18 and older, about their blogging behaviors and their personal influence patterns across 21 categories, ranging from products and services such as soft drinks and fast food restaurants to social/cultural topics such as sports and politics. We identified five groups that varied in terms of blog usage and three groups that differed in personal influence across the categories.
In our study, we found 53% of those who scored high in cross-category personal influence post comments or write their own blogs in contrast to only 21% of those who scored low in cross-category personal influence. In the simplest terms, these influentials are highly engaged with blogs.
Mzine: What do you think of blogs as a marketing communications tool? What about as a research tool?
Kevin: Whether it’s an effective means to achieve an end in large part depends on who you are trying to reach. In our study, about half of respondents did not read blogs on a regular basis. In other words, if you’re planning on using blogs to reach a market on a mass-scale, there’s a good chance you’re going to miss a lot of potential buyers of your product or service if you just focus on blogs.
Same holds true as far as research goes. You may miss hearing about issues, needs, trends, etc., of the pretty sizable portion of the population that’s not actively engaged on the blogosphere.
As far as reaching and engaging with influentials—a target group whose word of mouth power far exceeds their numbers in the population—however, blogs can be a powerful tool. Interacting with those most likely to influence the personal decisions of others in a medium in which they more actively engage can boost the effectiveness of word-of-mouth marketing efforts.
One big takeaway from our study is that while there’s a tendency for influentials in one product category to be influential in others this correlation is far from perfect. This flies in the face of marketers and researchers who employ a single, general measure to tap into personal influence and expect it to work across different product categories.
Marketers are wise to study and target influentials in their particular product/service category and understand their digital and social behaviors to enhance the performance of efforts aimed at this important group.
Mzine: If you had the ear of every CMO in America for five minutes, what would you say to them about reaching and impacting super-influentials in their category or industry?
Kevin: For a variety of reasons, the first step in the purchase process in a growing number of product and service categories is to ask a friend, colleague, or family member what they think about different brands. This holds true as much for business-to-business and industrial products and services, as for consumer products and services.
The big challenge for marketers is to identify, reach, and impact the one in ten folks who tell the other nine what, when, and where to buy. One estimate we’ve seen is that every influential impacts the purchase consideration of 7 friends and family members. The key here is to not only figure out who these people are in terms of demo- and psychographics, but what their on- and off-line media habits are to most effectively pre-dispose them to share information about your product or service.
I’d also add that every company that has made innovation a priority—and really, who hasn’t—identifying and getting a better understanding of influentials should be a critical component of any marketing strategy for a new product or service. There’s just so much evidence out there that demonstrates influentials spread the word at a much higher rate. Tapping into this group can definitely help improve the overall return on your innovation investment.
To learn more about this topic, listen to Kevin’s recent webcast, “Super Influentials: New Insights For Reaching Them on the Web,” available on-demand. To download, visit our webcast channel.
Tips for Improving Innovation ROI: 4 Tools to Give You a Read on New Product or Marketing Program Performance in 30 Days
With management chomping at the bit to demonstrate that the company is getting a good return on their marketing investments, CMOs need to know whether new products/services and marketing programs are successful in as little as 30 days.
No one can afford to wait the customary six to 18 months to get performance data anymore. With the uncertain economy, tight marketing budgets, bottom-line pressures, and so on, there’s a heightened urgency for marketers to demonstrate results to CEOs and CFOs as early as possible. The sooner there’s some directional data on how the marketplace has received a new product or marketing program the better. Wait six months and marketers may not have enough time to make adjustments to get maximum performance and meet management expectations.
What can marketers do to measure the performance of new products/services and marketing programs quickly and accurately?
We’ll start to tackle an answer to this question with four more questions:
Is the product/service or campaign new and different?
Is it a front-loaded effort?
Is the media weight behind the launch substantial enough to read the results?
Do people care about the product category?
A “yes” answer to all of the above opens up the possibility of putting one or more of the following four tools to work on early performance tracking:
1. Blog hyper-analysis
Use widely-available analysis tools to see if your new product, campaign, or program has inspired online conversation, positive or negative.
What it gives you: Although blog posts are not necessarily linked to sales, they do provide an early indication of whether people are talking about a new product or campaign, which give marketers some indication of whether it has broken through. They’d have an early warning if nothing’s happening, if conversation takes a negative turn, or there’s little mention of a new product or something related to the key brand message contained in a new campaign.
Set-up time: One week
Predictive validity: Fair
Ball-park costs: $30K
2. Souped-up campaign penetration tracking
Instead of looking at 25 different “awareness” metrics, we recommend developing a single measure that we call campaign penetration which incorporates most of the traditional measures into a single metric.
What it gives you: The advantage to using campaign penetration is that instead of having a bunch of numbers that fluctuate seemingly at random from one quarterly tracking study to the next, marketers get one reliable and valid metric that tells them how a campaign is doing at generating “real” awareness for a brand and its key brand message. It also gives them a much better handle on a campaign’s impact on sales.
Set-up time: Two weeks
Predictive validity: Good
Ball-park costs: $50K
3. Novel applications of simulated test marketing
Simulated test marketing (STM), the single best validated tool in all of marketing research, can help gauge the ROI of actual campaigns after they’ve been launched.
What it gives you: Though marketers often use an STM to forecast sales and profits of a new product/service or a new advertising campaign pre-launch, they can also use one cleverly done to improve a forecast 30-days post-launch. A marketer can see the current trajectory of a new product/service or program based on 30-days of actual, real-world results and use this information to recalibrate the model. If a marketer sees a big difference between where the pre-launch and post-launch forecasts have sales and profits headed, they will have an early warning to take action.
Set-up time: Four weeks
Predictive validity: Very good
Ball-park costs: $100K
4. After vs. Before Econometric Modeling
Some marketers undertake econometric analyses of historical investment and sales data to gain insights into which components of marketing plans work best.
What it gives you: Often marketers use this kind of information to guide future marketing planning decisions and to understand the incremental impact each marketing investment had on sales, account activations, usage, etc. There’s an opportunity here, however, to use the same kind of sophisticated statistical analysis to gauge the performance of a new campaign pre- and post-launch.
For example, a consumer packaged goods firm might have been collecting years worth of investment and sales data for the markets in which it’s rolling out the new product. Econometric modeling could then be used to make a forecast of new product performance following the launch. After the campaign begins, it could continue to track the same data. At about the four week mark, the model could be recalibrated based on the actual market performance. Very quickly, the firm could compare forecasted sales performance with actual performance.
Set-up time: Six months
Predictive validity: Excellent
Ball-park costs: $300K
Though these four tools use very different types of data and inputs, they all provide insights that weren’t widely available even a few years ago. Depending on your budget and the amount of historical data you have available to you, using one or a combination of two or more can give you, at the very least, a general sense of whether a new product/service and/or campaign has broken through the clutter.
Remember the primary purpose of employing one or more of these tools in the first few weeks a new product or campaign is in the market is to give a marketer a fighting chance to make improvements, figure out necessary adjustments, or give peace-of-mind that an innovation effort is on its way to delivering the kind of return that makes senior management smile.
For more ideas for improving ROI, check out our new white paper:
At the Top of Our Reading List….
Competitive Intelligence Advantage: How to Minimize Risk, Avoid Surprises, and Grow Your Business in a Changing World
By Seena Sharp (Wiley, October 2009)
Competitive intelligence is a hot topic of discussion among marketers these days. More and more, we’ve been asked for examples of when companies can use competitive intelligence and how to find useful information that can help guide resource allocation and strategic planning in the short- and long-term.
Good thing there’s a terrific book available for marketers looking for a thorough introduction to the topic: Competitive Intelligence Advantage, written by noted competitive intelligence expert and a good friend to Copernicus, Seena Sharp.
“Competitive intelligence gets at the truth,” she writes in the opening pages of the book as she begins to make her case. “It objectively details what is happening, much of which may be unknown to most executives. Unless you conduct an analysis of current conditions, the information that you know is only partially current and may be only partially accurate.”
Read this book and you’ll come away with the understanding and tools you need to get a strong CI program going for your brand or business. Also read Seena’s interview on The Marketing Fray for more thoughts and perspectives on getting value from competitive intelligence research.
Looking for more good books to inspire your thinking as you look ahead to 2011? Check out the seven books written by the principals of Copernicus! The list includes the popular Your Gut Is STILL Not Smarter Than Your Head, chock full of ideas for infusing research into marketing decision making to improve ROI.
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Register for Our Upcoming Webcasts….or Check One Out On-Demand
Each month, we tackle a new and, we hope, relevant topic to marketers looking for information and tools to help them do their jobs better. To date, we’ve covered everything from market segmentation to “white space,” improving innovation ROI to performance tracking.
For a full listing of past and future webcasts, visit our webcast channel.
Upcoming Speeches and Talks at Conferences Near You
We’re on the docket to speaking at several upcoming conferences. Check out the schedule below:
AMA 31st Annual Marketing Research Conference
Topic: Market Segmentation for the Digital Age
Speaker: Eric Paquette
Sunday-Wednesday, September 26-29
Pharmaceutical Marketing Research Group Fall Institute
Topic: Implications of the Digital Revolution in Marketing
Speaker: Eric Paquette
Sunday-Tuesday, October 24-26