Overcoming 10 Common Objections to Profiling Your Best Customers
Segmentation and target marketing have been around for decades. However, new technologies such as CRM solutions, relational databases and point of sales (POs) systems have given small and mid-size businesses the tools they need to do effective targeting.
One of the outcomes of market segmentation and targeting is that of profiling your best customers. Profiling can take on both quantitative and qualitative forms. An example of quantitative profiling is to divide your customers into groups by demographic or psychographic type, then ranking those types by index score. Meanwhile, qualitative profiling involves creating a detailed description of the habits, motivations, and buying behaviors of your best customers.
Engaging in segmentation, targeting and profiling of your best customers allows you to use that information to locate and reach out directly to those prospects who are most likely to respond to your offers. The result is markedly improved return on investment (ROI) for your marketing and advertising campaigns.
Why don’t more businesses take the time to profile their best customers? Here are 10 common objections that companies raise when faced with profiling their best customers, along with answers those objections:
1. “My customers are unique to any other company or industry niche, so they cannot be profiled”:
A: It is true that every company’s customer list is unique, like a fingerprint or a DNA profile. That is why profiling is so powerful; it converts your unique and specific customer list into a generalizable model that can be used to find more customers just like them.
2. “Too expensive; given the economy, I need to invest in the basics right now”:
A: Customer profiling often pays for itself with just a single marketing project by allowing companies to spend less money on advertising, garner a better response rate, or both. And, the research results are valid for up to a few years in most cases. Meaning: the research can pay for itself again and again.
3. “By only focusing my marketing on my best prospects, I will be missing opportunities to expand my market”:
A: Leveraging your profiling analysis involves placing most of your marketing resources into going after those prospects most likely to respond to your offers. However, you can always set aside a percentage of your resources to continue to market-test new segments as you see fit.
4. “Profiling my best customers is pointless since I already know what my best customers are like”:
A: There is little doubt that you already have a wealth of knowledge on your existing customers. However, unless you can turn this knowledge into a generalizable model that you can apply to prospects who have not bought from you yet, then most or all of the information you have on your existing customers will do you little good when it comes to finding new ones.
5. “My product or service appeals to everybody, so there is no need to profile them”:
A: Unless you are selling fresh water to castaways on a desert isle, it is just not true that everybody in your trade area needs your product equally. Prioritization of your prospects matters, and customer profiling is the best way to prioritize which prospects in your trade area to pursue.
6. “Profiling my best customers makes no sense: what I need is to find new customers, not market to my existing customers”:
A: Building a profile, or model, of your existing customers can certainly help you market more effectively to them. But, where customer profiles really come in handy is in helping you find loads of new prospects who are ready to buy from you – right now.
7. “My customer turnover (or churn) rate is fairly high, so yesterday’s best customers may not be tomorrow’s best customers”:
A: It is true for any business that customers come and go. However, the TYPES of customers who buy from you – your best customer profile – will change only very slowly. We recommend refreshing your profile every 2-5 years, depending upon your business type.
8. “Profiling my best existing customers is akin to looking backward in time; what I need is a forward-thinking solution to my marketing challenges”:
A: As Shakespeare said, “What’s past is prologue.” You stand to benefit from realizing that your historical customer data is gold – or it can be gold if you know how to use it properly. Gaining a detailed understanding of those who have bought from you over the past 2-3 years can yield a wealth of clues about how to find more customers like them in the near future.
9. “I don’t have much data on my existing customers”:
A: If your customers are consumers (householders) and you have records on the full home address (and, preferably, total sales revenue figures) for at least 500 to 1,000 of them, you can leverage hyper-targeting and customer profiling techniques to improve your marketing ROI.
Meanwhile, if you operate in the B2B space, all you need is a list of company names – and in some cases, the job titles of those whom you tend to work with – in order to engage in effective customer profiling. Note that the required database size for B2B profiling is much smaller than it is with B2C profiling, since different techniques are applied.
10. “I am not sure how to get data out of my database(s)”:
A: This is a common concern, since most business owners do not have a high comfort level concerning their data or how to access it. Fortunately, getting data out of your CRM database, point of sales (POS) system, or accounting software is not as difficult as you may think. Experts can guide you through the process, and exporting your data may take as little as a few minutes.