Take Targeting to Individual Level

About three months ago, I went through the process of leasing a car. Being a former sales person (ads, not cars), I was on guard for sales tactics. I was most bothered by this one: “Trust me, this is the car for you.” First off, I didn’t trust the guy. Also, I had just met this man 10 minutes ago – how did he know me well enough to know this was the car for me? Was it because I was a seemingly affluent young male, and he was selling a popular sports car? Well, he was wrong. I bought a totally different type of automobile.

In today’s world of the highly educated consumer who has instant access to information about goods and services, traditional marketing and consumer-targeting tactics are inadequate. It is no longer enough for marketers to target consumers based on broad demographic categories like gender, geography, age or income. Nor is it quite enough to target based solely on content. With social, economic and political structures all in flux, you really can’t tell who is reading The Wall Street Journal, Wired Magazine, Cosmopolitan or Sports Illustrated these days. The world is far more sophisticated and so are the demands consumers place on merchandisers. If you want to connect to consumers, you need to present them with personalized messages that are relevant to them.

A powerful consumer-targeting concept coming out of the push to personalize the interactive marketplace is called propensity to buy.

Traditional marketing strategies analyze data basaed on the merchant’s propensity-to-sell – which products sell to which segments of consumers or markets.

Propensity-to-buy strategies analyze individual consumer behavior and present each consumer with the product, price, promotion or message to which he or she is most likely to connect. I want to be treated as an individual and be shown the few items that appeal to me, rather than the 10,000 the merchant has to sell. When a product matches my needs or improves my lifestyle, price becomes less of an issue. Companies that identify the products an individual wants or needs will reap enormous economic benefits. This will become the new mantra of targeting in the interactive world for years to come.

Obviously, an approach centered on consumers is not new. As Leo Burnett said, “If you can’t turn yourself into your customer, you probably shouldn’t be in the ad writing business at all.”

The main difference these days is that marketers actually have the tools to achieve this goal on a level never before imagined. Automated marketing and reporting tools enable individual, real-time analysis of a consumer’s propensity to buy. Collaborative filtering and intelligent agents to customer relationship management systems enable an automated, one-to-one relationship between retailers and their customers.

The technology can be expensive, but the payoff is enormous. As interactive channels for reaching the consumer emerge – such as the Internet, personal digital assistants, interactive TV, cellular phones and “customer-aware” kiosks – your company will need to find a way to maximize each interaction, or fall behind in customer service and sales.

These e-marketing capabilities are not just for new marketing channels. Traditional customer interaction points – such as point-of-sale systems, call centers and direct mail – provide avenues companies can use to improve their knowledge of individual consumers. A targeted campaign can deliver some customers, but a person consistently hit with personalized messages at all interaction points may just become a zealot for your products, your services and your company. Just look at what companies such as Amazon.com and CDnow have done.

The Internet economy has become a forum for developing tools to individually serve the consumer. One example of a personalized online application is the intelligent catalog, which can prioritize itself, bubbling up products that a customer will prefer based on that consumer’s purchasing history.

Another example is product recommendation systems. These take online navigation patterns, purchase history and stated preference information, and select the one product the customer will most likely buy. In the online advertising industry, neural networks and other technologies are used today to analyze click-through patterns to ensure that the right ad gets in front of the right user at the right time.

Understanding a consumer’s propensity to buy has drawbacks. It requires large amounts of customer data and the scalable systems to analyze that data, and deliver personalized recommendations in real time.

Not many companies today have these systems in place, nor the expertise to develop or operate them. Companies must build trust with their customers, providing full disclosure on data usage and privacy policies. Finally, combining customer service with customer relationship management is difficult. Don’t expect to get it right the first time.

By understanding the customer and approaching interactions from his perspective, today’s online merchants provide a higher level of service and reinvent consumer targeting. Dot-com companies, which combine almost infinite inventory with personalized service, have already begun to erode the retail firepower of the faceless superstores. Their success is no secret. It’s just a matter of perspective.

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