Where are your customers and why you need to know!
Once upon a time retailing was easy. If you had a store in a great location then customers would come – people shopped where they lived. Unfortunately, this strategy has not been entirely effective for some considerable time. We all know the rest of story, out of town shopping centres and the increasing impact of online have all taken their toll on the high street. So in today’s highly competitive world, just as online retailers have to drive traffic to their sites, physical stores have to drive footfall.
But whilst there are many mechanisms to push customers your way digitally that you can track and measure, it’s not quite so easy offline. Online, prospective customers can be located thanks to our search habits and trends monitored by Google and so we can understand and predict to a large degree the demand for brands, products and services. This means acquiring a prospective customer via this route is largely pre-qualified as they have a genuine interest. In the physical world there are mechanisms that allow us to be targeted beyond a broadcast approach, but can offline marketing be just as refined as online, in order to try and locate a relatively qualified prospective customer?
A fixed point on the map
One key thing you can’t change is where your store is located. Therefore, it needs to become the starting point for any offline acquisition or retention strategy. For example unless you have the pulling power of a large shopping centre, an incredibly special shopping experience, or are a unique destination or in a tourist spot, then customers are not going to travel considerable distances to shop, particularly when they can purchase online. As such, one of the first questions we ask any store based retailer is where do you think your customers live? Generally speaking they have a pretty good idea and usually the answer is ‘within about 5 miles’. It makes complete sense that customers living within a relative proximity to store will shop there, but this perception is usually anecdotal rather than based on fact. However, being very precise about where they are located can in fact give you a huge advantage in the battle to acquire footfall.
Why do I need to know where my customers live?
All stores will have a core of loyal customers who visit regularly. This number might be small and you might not be able to quantify them or know exactly who they are but they will exist. Your in-store teams might know some of them by name or be able to recognise familiar faces. These will be people who love the service and products you offer and they are highly valuable for three key reasons.
- They deliver you regular and predictable revenue – therefore you need to hang onto them
- They can help you identify where to find similar customers – if you could double, treble, quadruple that core of loyal regular spender’s think of the difference it could make to your bottom line over the course of a year
- They can help you understand how to make all your existing customers increase their shopping and spend more
Understanding where they live provides a wealth of information that can help you determine all of the above which in turn will provide you with the framework for a footfall strategy, enabling offline marketing that can be highly targeted to prospective customers who are more qualified. But how do you work out where they are and who they are?
Life would be boring if we were all the same
Differences of opinion and attitudes are what makes life interesting but from a marketing perspective it can cause a headache, which is why many brands opt for broadcast marketing offline. Being able to identify the right audience in amongst life’s rich tapestry can seem impossible, plus you will never be able to cater to individual needs and wants. However, the postcode of a customer’s address can open up a wealth of information on them with the help of geodemographic profiling tools such as Acorn or Mosaic.
Geodemographic profiling helps us to classify individuals into distinct groups whose lifestyles are similar, enabling you to identify whose needs are the best fit for your products and services. These groupings provide a fairly accurate and detailed description of UK consumers and the areas in which they live, working on the following principles:
- People who live in the same area are more likely to be similar than two people chosen at random from different locations
- The characteristics of the people living in a particular location lead the classification of that area
- An area is attributed with the same classification if it contains similar types of people – even if the locations are miles apart
So with this nifty classification system you can start to see where potential customers most likely live and within a certain proximity to your store – it can be highly targeted but at some scale. If you already have a database then this process can become even more precise as you can use geodemographic profiling to glean an additional layer of qualitative information that in combination with quantitative analysis that can be derived from transaction data, creating a fully rounded and robust picture of the types of individuals within the database.
Leveraging this insight for acquisition
Once you know where the right type of customers for your business live then you can start to marketing to them in the right place and with the additional insight of geodemographic classification use the most compelling messages. If you have an existing database you can also begin to understand what types of individuals make up the database – do they respond better to certain types of media, are they online or not engaged with the digital world, young or old? You can also match this information to transaction data to see which products, services or brands they are most interested in.
This really clear picture allows you to pinpoint which postcode sectors close to store are the best in terms of customer penetration, understand the proportion of the postcode sector you have engaged with and crucially identify other postcode sectors with a similar geodemographic make-up where you could acquire new ones. This will result in a list of postcode sectors that are prime targets for recruitment and enable you to make some decisions on the best media approach. Are there local magazines delivered to these areas, newspapers, out of home media sites or should you opt for a door drop?
If you don’t have a database, the same fundamental principle applies. You can use geodemographic profiling of your local area to determine the classification types you believe would be most interested in your products and services and target according to postcode in the same way.
Customer with the right qualifications
As outlined above the ability to be able to identify where new customers could be located allows you to start to refine prospects in a way that delivers some pre-qualification of their likelihood to engage with your brand. It follows suit that if you have certain types of individuals already shopping with you then people living within the same areas most likely share many of their attitudes and characteristics. This matching of geodemographic classification to marketing activity also provides some level of reassurance that your offline activity is reaching those people most likely to become new customers and maximises any marketing investment. In our experience this approach delivers more than double the response rates of offline acquisition campaigns delivered without geodemographic profiling. So whilst we can’t refine to something as specific as a search term, we can be highly targeted based on lifestyle, which in the context of a physical store experience is a pretty good qualification measure.
Putting it into action
We’ve worked with numerous store-based retailers to employ this approach with great success. This activity can also form the basis of developing robust customer personas for your business to provide further insight for developing marketing strategy for retention purposes. Take a look at some of our case studies here for Wetherells or Tylers to see the results.
If you’d like to have a chat about leveraging geodemographic profiling to your existing database or analysing your stores location please get in touch, give us a call or drop us a line.