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Established 2009

5 Reasons to NOT Market to Everybody

What does your best prospect look like? Many business owners answer this question something like this: “Everybody could benefit from our product or service, so I suppose that everybody is my best prospect.”

Thinking this way about one’s prospects represents an all-too-common, often fatal flaw in any marketing plan. It no doubt costs companies large and small untold thousands or millions of dollars in lost revenue each year.

It is easy to understand why many business owners, directors of marketing, and sales professionals alike believe that they should be marketing to everybody with equal intensity – and in the same way. Part of the reason may stem from a naive hope that one’s market is unlimited in size. Part of it may be an inflated perception of the importance of one’s own product or service: “How could EVERYBODY not love and want what I have to offer?” And, part of the reason may stem from a failure to grasp just how much their prospects (whether they be companies or consumers) vary from one to the next when it comes to their buy buttons.

The fallacy of believing that “everybody” is one’s best prospect is not the domain of marketing novices alone. In fact, at MindEcology, we have had conversations with several successful business leaders who hold such a view. We know that they are leaving money on the table.

Here are 5 reasons why marketing to everybody is a bad idea:

1. Wasted marketing and advertising expenditures: No matter whether your annual marketing budget is small or is millions of dollars, it is by definition limited. You therefore want to use it as wisely as possible. Why spend money getting your message in front of people who don’t have any inclination to buy your product or service? By contrast, if you narrow the focus to your best prospects, you are making much wiser use of your precious marketing budget.

Here is a simple math-based example. Let’s say that your total potential market size is 1,000 people, while your profit from the sale of each widget you are selling is $10. Let’s compare a couple of scenarios for a direct mail campaign to your market:

Scenario A: Spray-and-Pray: In this scenario, you decide to reach out to all 1,000 people in your market with a one-size-fits-all message. Your direct mail cost is 20 cents/mailer. Let’s say your conversion rate (i.e., the # of customers who buy / the # of customers who receive a direct mail piece from you) in this scenario is 5%. That would yield $300 in net profits. Here’s the math: ((1,000 x 5% x $10) – (1,000 x $0.20)) = $300. Not bad, but let’s see if we can do better with a more targeted approach.

Scenario B: Hyper-targeted Marketing: In this scenario, you spend your budget on mailing to two hyper-targeted segments of your market consisting of 200 people per segment (or 400 people total). Each segment receives a tailor-made message designed especially to press the buy buttons of that segment. In this case, your conversion rate jumps to 12% since you are going after those people who your research has shown are on average are 2.4 times more likely to buy from you. Here, even though you only mailed to 400 people (vs. all 1,000 in Scenario A), your net profit is $400. ((400 x 12% x $10) – (400 x $0.20)) = $400.

The result? Scenario B shows a 33% increase in net profits ($400 vs. $300) over Scenario A while saving money by mailing to 60% fewer individuals. This is not magic – it’s smart marketing. What’s more important, this approach works for all types of marketing outreach, include PPC/text ads, online banner ads, billboards, TV, radio, and more.

2. Wasted sales resource expenditures: Your sales people may be on a fixed salary, a commission, or some combination of the two. Regardless, every hour they spend NOT making sales is an hour of wasted resources. Even if they are commission-only, by NOT spending their time pursuing your best prospects, your sales people are losing money. The opportunity cost of not making as many sales as possible is high. It’s better to focus your sales people’s time and efforts on leads that are most likely to convert.

3. Wrong message to the wrong prospects: By opting for a marketing approach that fails to take into account your best prospects’ buy buttons, you are wasting opportunities. By contrast, taking a hyper-targeted approach to marketing lets you tailor your messages to each “hot” prospect segment.

4. Lower average revenue per customer: Not all customers will spend the same money with you. At MindEcology, we can help you find top prospect types that have historically been shown to spend more revenue per customer than average. Why not market more intensively to them and skip over those unlikely to spend much – if they even convert at all.

5. Lower chances of reaching those most likely to buy from you: Old-fashioned, spray-and-pray marketing methods yield poor results because they reach everybody equally. They don’t discriminate between the type of prospect. On the other hand, with a hyper-targeted approach, it’s all about improving your marketing ROI by targeting the right people with the right message.

Are we saying you should in all scenarios completely ignore those prospects that do not belong to your top prospect group? Certainly not. But, think twice about spending valuable resources on marketing or selling directly to them. The costs are high and the gains are low. Data-driven, strategic, and hyper-targeted marketing means knowing your best prospects and going directly after them.

About MindEcology: MindEcology’s mission is to help companies become more profitable by helping them focus their marketing and sales resources on going after their best prospects, for better marketing ROI.

do not market to everybody, market to your best prospects