Why You Shouldn’t Over Segment Your Prospecting Database
Over the last few years, data marketers have gone to extreme lengths to cherry pick what they think is the perfect audience for each communication they send. But is this approach producing a profitable universe—or just a small one?
The problem with such a narrow focus is that if you cut your numbers drastically, you could also be cutting your response rate.
If you are running a campaign that is local or market-specific, you must realize that you already have a universe that isn't enormous. If you then chip away at that group to reach a very specific niche within your limited population, the selection could be too small to turn a profit.
Here are a few questions to ask before drastically targeting within your potential data universe:
*What will the average sale be in your universe?
*How many sales do you realistically need to make at that price to reach profit goals?
*Will you be able to reach your goals at your present sale levels with a very small respondent group?
On many occasions, you can most likely cast a wider net than you might imagine. Obviously, the product and the offer will dictate your audience. But don’t limit your possibilities.
Say you are running a promotion for a new location in a specific market. If you run this campaign in that Zip Code radius you can also run a “help us welcome our new location” general promotion to your entire database. This gives you the opportunity to let your customers know that you are a growing company and also lets you incentivize new sales from a wider group than you might have first assumed.
When it comes to prospect rental lists, again, don’t limit yourself. Do you really need a count on redheaded farmers in two specific Sectional Center Facility (postal distribution center) areas (SCFs) that only plow on Thursdays with a specific make of plow? This example may seem silly, but the theory is one worth examining. By opening yourself up to a similar, larger group you can actually have a more successful overall result.
Targeting goes back to really, truly understanding your audience. You need to first decide what segment you want to reach and then develop an offer—not vice versa. If you box yourself into a minute population, you have to hope that you correctly guessed their interest in your product or service.
By examining your data options first—and then crafting a message to a sufficiently wide segment to make the return on investment profitable you can toss that crystal ball because you’ll already know that you’ve reached the correct audience.
Carol Lustig is CMO of Media1/Headstrong Media.
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