Sell More to More People
HOMEOWNING GEN XERS. TECH SAVVY ECHO BOOMERS. The classic approach to sales is to figure out a target demographic and then tailor a pitch to reel them in. In a study of 10,000 customers of a major North American retailer, Professor of Marketing Shuba Srinivasan (along with fellow researchers, Assistant Professor Nachiketa Sahoo, doctoral student Yicheng Song, and Professor Chrysanthos Dellarocas) found a better way of doing it.
Don’t do that If you’re sending a fancy catalogue to select demographic groups or using RFM (recency, frequency, and monetary value) to choose which buyers to hit with sales emails, stop. Just targeting recent, and regular, big spenders or assuming all college-educated millennials act the same means you’re missing out on lucrative nuance—and a lot of other potential customers, says Srinivasan (top).
Do this Srinivasan says she and her fellow researchers have uncovered a more refined understanding of how people behave on the path to purchase, identifying five types of customer, loosely titled: young brand ambassadors, savvy loyal shoppers, urban online shoppers, holiday shoppers, and inactive offline shoppers. Each type, they say, is far better than demographics at predicting who is going to snap up your product and when. For instance, two people might have the same gender and paycheck, but one might only shop during the holidays. Send these seasonal shoppers a catalogue at Christmas; save your money in the summer. Srinivasan’s advice? “Use analytics to uncover the dynamics of customers, an understanding of how they interact with the brand.”
