How to Define a 'Good Target' in the Digital Age

Five Characteristics to Spot in Determining the 'Best' Customers

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Kevin Clancy
Kevin Clancy
Peter Krieg
Peter Krieg
With all eyes on marketing ROI, identifying the "best" current and prospective customers -- the ones who will generate the highest return in terms of profits for your brand -- has taken on a new sense of urgency. The big question these days isn't so much whether to pick a customer target for marketing activities, but which group to pick and how to reach them.

The explosion of digital and social media certainly hasn't made it any easier to answer what were already pretty challenging questions. 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 in a way that gets them the biggest bang for their marketing dollar.

To find the "best" customer targets these days, marketers need to work financial and, importantly, non-financial characteristics including digital and social behaviors into the profitability equation. In addition to revenue measures such as lifetime value, current spending in category in dollars, current brand share, number and types of products or services purchased, and brand switching history/potential, there are also several other characteristics that make one customer more valuable than another because he's easier to get and keep, as well as engage as co-marketers.

To separate the "best" from the rest, marketers need to find customers who are:

Less price sensitive. Unless you're Walmart and want to grab share among 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. Mickey Drexler, CEO of retailer J. Crew, looked for the customers willing to pay more for well-made clothing and increased revenues 107% his first five years in charge.

Struggling with big problems. The bigger the problem your brand can solve, the bigger the market response. In the early days of internet surfing, AOL went after people interested in getting onto the web but couldn't do it without someone holding their hand. More than 30 million people over several continents signed up for AOL's service, and USA Today put it at No. 4 in its ranking of the events that shaped the first 25 years of the web.

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 customers most interested in considering the latest offerings from a brand or company? Apple's pretty much got this one down.

Will advocate for your brand. The greater the level of influence a buyer has among her social networks, 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 to family and friends online and off about a product/service they found that really works are like money in the bank. One restaurant chain we worked with, for example, found that while brand advocates visited the stores the same number of times in an average month as frequent users, they introduced the brand to people in their social networks three times as much.

Socially connected on the web. Because of the speed and number of tools available to customers to spread information about product and services online, 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 he can be to a brand. Ford chose 100 20-something YouTube storytellers who'd developed a fan community of their own and gave them a Fiesta for six months. Each month they shared their experiences on YouTube, Flickr, Facebook and Twitter. Ford received 50,000 requests for information on Fiesta -- almost entirely from new-to-Ford customers -- and sold 10,000 units in the first six days of sales.

Rather than look at each of these things separately, though, we're suggesting marketers can and should bring together all of these "proxies for profitability" with financial data to calculate a single measure of value. Figure out which descriptive characteristics -- demographics, psychographics, attitudes, lifestyles, needs, behaviors -- have the strongest relationship to these proxies, and marketers have one-half of the guidance they need to build a high-performance marketing plan.

Let's now talk about the other half -- very often the forgotten half -- because the information that helps smart marketers identify the high-value targets will only get them so far -- particularly when it comes to integration. They also need to know how to communicate with them.

From an operational standpoint, then, marketers need to look for customers who are:

Distinct in terms of needs and wants. The more homogeneous and anticipated a target group's needs and wants, the easier time marketers will have developing compelling positioning and messaging that breaks through in traditional and digital channels.

Burger King has had a hard time on this front with its professed target : young men 18-24 who are big-time fast-food eaters. Though they share an age range and behavioral pattern, do they all eat fast food so much for the exact same reasons? Do they all feel the same way about BK? Do they all watch the same TV shows? Do they all connect with the brand on Facebook?

Relevant to traditional and digital communications decisions. Get a sense of how high-value customers use traditional, digital and social-media communications throughout the pre- and post-purchase process, and in particular, how they like to interact with a brand within different communication channels. The restaurant chain we mentioned earlier, for instance, did some investigating into what information advocates want and when so that they can talk about the brand with their family and friends.

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 resources media planners regularly access to develop direct links to databases like Simmons, MRI and Carat's CCS.

As marketers increasingly shift their mentality from experimentation with digital and social media to integration of all online efforts with the overall marketing plan, they will give themselves a tremendous leg up in generating the most return from marketing investments -- digital, social and otherwise -- if they recalibrate how they separate the "best," most valuable customers from the rest.

ABOUT THE AUTHORS
Kevin Clancy and Peter Krieg are chairman and president-CEO, respectively, of Copernicus, a research-driven marketing consulting firm. Kevin can be reached at kevin.clancy@copernicusmarketing.com and Peter at peter.krieg@copernicusmarketing.com.
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