In today’s world of information overload, it is imperative that companies find ways to communicate with their customers in a personalized manner. Consumers are quick to tune out mass marketing and advertising. They desire relevancy. By implementing personalized or segmented marketing strategies, companies can break through the clutter and deliver the right message to the right audience -- leading to increased engagement and customer loyalty.
Segmentation allows marketers to divide the market into subsets, or segments, that behave in similar ways and have similar needs. Segments include individuals with similar demographics -- including age, race, location, and economics -- as well as similar values, behaviors, motivations, and attitudes. Companies often track this customer information through online interactions and internal databases. Once they've collected sufficient data, they are able to group individuals into distinct segments, with a clear picture of a typical customer in each segment. This information allows companies to develop customized marketing messages and strategies that are relevant for each segment.
In 2006, the Chief Marketing Officer Council conducted The Power of Personalization study to get an in-depth look at how companies felt about personalized marketing strategies -- and if and how they were implementing those strategies. The study found marketing executives actively exploring personalization strategies, and the majority (56 percent) said that they believed personalized communication outperforms traditional mass marketing. Despite this belief, however, the survey found personalized marketing technologies were not fully integrated into most companies’ marketing campaigns. While few companies had fully integrated segmentation into their marketing strategy, those with personalized strategies had seen far greater success over traditional mass marketing.
There are a number of ways companies are implementing personalized marketing. One simple way -- and an example that most of us have come across -- involves personalized Web experiences. For example, when you log on at the site of a Web retailer, such as Amazon.com, you are greeted by name and given recommendations based on your past purchases or viewing behavior. It seems simple, but it makes the online experience more relevant -- and it drives increased sales.
Another segmentation strategy companies are exploring is segmentation based on loyalty. Companies using Net Promoter, for example, can segment customers as:
- Passives, and
This is an important strategy as it allows companies not only to find their most loyal customers, but also to activate them to drive positive word of mouth. Companies may also choose to deliver different messages and/or different experiences based on this segmentation.
Given the importance of word of mouth in buying decisions, some companies have taken this concept one step further to better understand and identify not only the Promoters, but the influential Promoters (or NetWorked Promoters). Just because someone is willing to recommend your product or service doesn’t mean that they will actually provide the recommendation -- let alone that others will consider the recommendation credible. Through further psychographic profiling, companies can identify whether individuals are credible, connected, and charismatic enough to influence the buying decisions of others.
One media and entertainment company, in particular, has had success with this strategy. When individuals register for the network’s online community they are asked to answer basic demographic questions; subsequent visits collect additional information including Net Promoter scores and psychographic profiling. With this data, the company has been able to locate and segment its most loyal and influential customers and maximize its marketing efforts with focused campaigns. The company not only delivers personalization to these influencers, but arms them with the message to deliver to others in a relevant and personalized manner. By targeting influential loyalty segments, the company dramatically increases reach, generates positive word of mouth, and increases revenues in a cost-effective way.
In today’s world of word-of-mouth marketing, loyalty and influence rule. With Net Promoter and a continuous customer engagement model through online communities, companies can take personalization and segmentation to the next level. With each interaction, companies have the opportunity to learn more about their customers and communicate to them in ways that are targeted to their interests, wants, and needs. Done right, customers feel the messages are personal and relevant, which will increase customer loyalty, word of mouth -- and, ultimately, revenues.
About the author
Deborah Eastman is the chief marketing officer of Satmetrix, where she is responsible for all aspects of global marketing including corporate, product, and field marketing.
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