The days of mass-marketing campaigns that attempt to reach the largest possible audience with a single offer are coming to an end. Thanks to the wide availability of market research tools, it’s easier to learn about your customer and adapt your marketing message to target specific groups of buyers.
There are those who say today’s marketing should target an audience size of one, but at Lenovo we’ve had a great deal of success with a segment-based marketing approach. We decide how we can yield a value proposition that precisely appeals to a given demographic or psychographic segment. Instead of trying to market to a single virtual customer, we’re going after niche markets and niche sets of customers who identify with the value propositions we present to them.
Results vary from promotion to promotion and offer to offer, but for the most part we have found an order of magnitude difference in marketing efficiency when promotions are targeted. When we say “targeted,” we’re saying we change the price, we change the product, we change the look and feel. We can change several variables in order to get very precise with an audience. It’s a continuous process and everything is dynamic, but our conversion rates have improved by more than 150% since we started this journey.
Getting to “Really Know” the Customer
Our journey away from mass marketing began six or seven years go. We started with a monolithic process based on a database of about 200,000 customers. We had no real sense of who they were, other than that they bought a system from us, so we used Experian MOSAIC segmentation to basically get a sense of who they are—their likes and dislikes, demographics, and all the other data that would help us define an attractive value proposition.
We took what was basically a list of names and we qualified and refined it to a point where we got to know the names on the list really, really well. We chose half a dozen segments that were aligned with our brand and became much more precise in targeting those segments. We also used our database information to drive lookalike modeling. Our reasoning was that if we know one group of people who like our brand, then other, similar groups will also like us.
It’s worth mentioning that most of the segment information we work with is not at the individual level and there is no personally identifiable information. You don’t have a name, you don’t have a face—it’s a profile. So you’re never crossing over that creepy line, and you’re not really trying to do anything with the information other than making sure you’re selecting the right products and giving a value proposition that’s relevant. In many ways, it actually helps consumers when you show them products that are more relevant to their needs.
Targeted Marketing from the Ground Up
As we learned more about our customers and prospects, we began to think about them in terms of concentric circles. Every brand has a core group of people who identify with the brand, a group that helped build the brand and represents the brand essence. In our case, people who buy our ThinkPads are part of our core group. These are people who are basically enthusiasts and would violently disagree with us if we did something to the brand or the look and feel of the ThinkPad product.
As you move outside the core group of brand fans, there are larger and larger circles of people who know less about the brand. The value proposition and the strength of their relationship with the brand decreases the farther you move from the core.
If you’re building a targeted marketing program from the ground up, focus on what makes your brand special for the people in the core and then build out that persona and the associated set of attributes that attract that persona to your brand. Then take those attributes to people outside the core group who may be interested in them. They may not be existing customers, but they may be interested in your value proposition. Lookalike modeling will help you find more people who might not have considered your brand in the past but who will probably like your brand because they value many of the same attributes as your core group.
Stretching Your Marketing Dollars
The evolution to a more targeted style of marketing style is frequently born of necessity. Marketing is expensive, and there never seems to be enough dollars to do all the things you want to do. Most of the time, you’ve got a fixed amount to spend, and you’ve got to make it count. Greater efficiency means a better return.
You can stretch your marketing dollars by becoming more efficient in terms of conversions. Segmentation, in very blunt terms, is one way of narrowing the field to the point where you can increase your chance of success.
When we initially started narrowing our audience, we said, “Hey, there’s seven billion people in the world, out of which a bunch of people buy online, out of which a bunch of people buy PCs online, out of which a bunch of people really want high-quality, high-performance machines.” After we applied these considerations, our addressable global market was reduced to about 500 million people. Then we did some lookalike modeling and narrowed that to about 60 million people we should target. Instead of marketing to seven billion people, we found we could comfortably market to 60 million. You can get pretty efficient when you are able to narrow down the target audience this way.
Where Lenovo is going as a company, from both an online standpoint and a marketing standpoint in general, is becoming much more focused on segmentation. We are continually striving to really understand our ideal constituents, including those who will appreciate our brand and those we can build a brand around. Our goal is very precise segmentation that will allow us to home in on the value proposition and provide customers with what they want.