How to use Demographics in Marketing
“If you aren’t using demographic data and GIS applications to target your Ideal customers, you are missing out on a huge opportunity to increase your bottom line.”
It’s no secret that marketing departments of major corporations utilize demographics and Geographic Information Systems (GIS) to create and serve advertisements to highly targeted potential customers. But can small and medium-sized businesses that don’t have marketing departments (or any departments at all) take advantage of this technology to increase business?
Good news: they can, and it doesn’t have to break the bank.
In fact, if you aren’t using demographic data and GIS applications to target your Ideal customers, you are missing out on a huge opportunity to increase your bottom line. This technology can save you thousands in valuable marketing dollars and significantly increase your Return on Investment (ROI).
What is an Ideal Customer?
If you’ve ever run a FaceBook, LinkedIn, Instagram or similar social media ad, you’ve probably used demographics to target your audience. But for all the money you spent, what kind of conversion rate did you experience? How many of the people who clicked on your ad actually became customers?
Targeted advertising using demographics doesn’t start by selecting characteristics and interests. It starts by knowing who to target. Without knowing who your Ideal Customer is, your marketing efforts will inefficient at best.
Some business owners I work with tell me they know exactly who their Ideal Customer is:
It’s “Brazilian Jiu Jitsu dudes”
or
“Yoga Moms.”
No.
Nebulous stereotypes don’t count and won’t help.
What you need is a detailed, quantifiable definition of your Ideal Customer. It should look something like this:
Female
Married
35-49 years old
At least one child under the age of 15 in their household
$80,000 - $120,000 Average Annual Household Income
Took Yoga classes in the past 12 months
Live within 10 driving minutes of your business
OR
Male
Single
25-35 years old
Exercise at home 2 or more times per week
Spent at least $2,000 on exercise equipment last year
Used a meal replacement to diet during the past 6 months
Watch Mixed Martial Arts (MMA) on TV
While these two examples are fitness-related, demographic measurements are available for nearly 10,000 individual variables and can be applied to every type of business.
How do you determine your Ideal Customer?
“Alexa, remind me what type of sugar my customers like to add to their coffee when they wake up on Saturday mornings…”
That would be cool, but we're not (quite) there yet.
Perhaps the simplest way to determine your Ideal Customer is to begin by defining your existing customers. But how can you gather information about them without seeming really creepy?
First, the demographic information you need for marketing purposes does not and should not be tied to individual customers’ names. That’s called stalking. It’s a felony. Don’t do it.
Second, it’s likely you already have some of the information anyway. If you don’t, here are a few non-invasive methods to obtain it:
Ask. Be honest and ask your current customers to fill out a brief survey that will help you improve your business’s marketing efforts. Make the surveys anonymous and explain how the information you gather will be used. Most customers who actually like your product or service will be happy to help. Offer some sort of discount or coupon as a way to thank them for their participation.
Registration. For many businesses, some sort of registration form is filled in by new customers. Simply having the customer’s address is enough to generally determine many of the data points needed to define your Ideal Customer.
Email. Many businesses collect email addresses in order to deliver newsletters, or coupons, or notify customers of sales. If you have an email address, you can ask (see #1.)
POS. If your customers pay with a credit card, chances are your Point of Sale (POS) system collects (at least) zip codes from each transaction. While zip codes will obviously not yield as accurate results as physical addresses, they are still useful for generally determining things like how far your Ideal Customers are willing to drive to get to your business.
Simple Observation. Pay attention to (and even speak with) each one of your customers and you will learn a great deal about them.
Create a Profile
Once you have the data, you can create a simple document that defines your customers’ demographic measurements for all of your relevant data points. The minimums, maximums and average of the results are generally used to create your Ideal Customer Profile, though much more sophisticated methods are possible.
Map your Ideal Customers
Now that you have a detailed profile of your Ideal Customer, you can dial-in your social media and other marketing. See, science is fun.
You can also enter their profile data into a GIS application and plot it on a map. Knowing generally where the highest concentrations of your Ideal Customers reside allows you to accurately target those areas, using mailings, social media, and more. This accuracy will result in a more efficient marketing campaign and will generate more conversions to new customers.
$$$
---
If you’d like to learn more about how you can use demographics to establish or improve your marketing strategy, let’s talk.