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Too often, marketers fall one step short of finding the best answer to their most important question, "Who do I mail?" The answer—and the route to the best ROI—is to segment with techniques that rely on behavioral data.
Every marketer must design some kind of market segmentation strategy, because the product that is for everyone is rare—almost as rare as the marketer that has an unlimited budget.
Segmentation helps answer the biggest questions: Who do I focus my spending on, and who do I ignore? And depending on the type of segmentation approach, other questions can be answered, too: What messages will resonate? When should the marketing spend occur? What products should be merchandised?
There are a few types of segmentation that break down the entire universe into marketable segments—and that help answer the questions above—including geo/demographic, psychographics and lifestyle, attitudes, and needs-based.
One or more of these segmentation approaches is generally critical for developing branding and advertising. But for direct marketers, these types of segmentation can pose a problem.
That probably seems counterintuitive, since more data is usually better, right?
That depends.
It depends on whether the market segmentation is replacing proven database segmentation techniques—such as RFMP and deciles—that rely on behavioral data or the market segmentation is being used to supplement behavioral data.
Once marketers have executed market segmentation, they too often want to turn it into a company-wide religion. Not only do they want to use it (appropriately) to drive product, branding and advertising initiatives, they also want to override database models and segmentation that are the proven predictors of future behavior.
The biggest difficulty lies in identifying attitudinal, needs or psychographic segments in the database. Many marketers will just infer a household's segment based on geo/demographic data.
But if a marketer takes that approach, it's no better than executing direct marketing using demographics—a completely elementary approach compared to using transactional data.
There is a noteworthy exception, though. If marketers can commit the resources to bring together the database and the market segmentation study, they will have a complete view of prospects and customers, a.k.a. "marketing gold."
The result of spending the time and money to bring the two pieces together is direct marketing that speaks specifically to individuals' attitudinal motivations as well as their demographic and behavioral profiles.
Every marketer must design some kind of market segmentation strategy, because the product that is for everyone is rare—almost as rare as the marketer that has an unlimited budget.
Segmentation helps answer the biggest questions: Who do I focus my spending on, and who do I ignore? And depending on the type of segmentation approach, other questions can be answered, too: What messages will resonate? When should the marketing spend occur? What products should be merchandised?
There are a few types of segmentation that break down the entire universe into marketable segments—and that help answer the questions above—including geo/demographic, psychographics and lifestyle, attitudes, and needs-based.
One or more of these segmentation approaches is generally critical for developing branding and advertising. But for direct marketers, these types of segmentation can pose a problem.
That probably seems counterintuitive, since more data is usually better, right?
That depends.
It depends on whether the market segmentation is replacing proven database segmentation techniques—such as RFMP and deciles—that rely on behavioral data or the market segmentation is being used to supplement behavioral data.
Once marketers have executed market segmentation, they too often want to turn it into a company-wide religion. Not only do they want to use it (appropriately) to drive product, branding and advertising initiatives, they also want to override database models and segmentation that are the proven predictors of future behavior.
The biggest difficulty lies in identifying attitudinal, needs or psychographic segments in the database. Many marketers will just infer a household's segment based on geo/demographic data.
But if a marketer takes that approach, it's no better than executing direct marketing using demographics—a completely elementary approach compared to using transactional data.
There is a noteworthy exception, though. If marketers can commit the resources to bring together the database and the market segmentation study, they will have a complete view of prospects and customers, a.k.a. "marketing gold."
The result of spending the time and money to bring the two pieces together is direct marketing that speaks specifically to individuals' attitudinal motivations as well as their demographic and behavioral profiles.
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The Business of Database Marketing
