How do you measure the effectiveness of your targeting strategy?

I'm amazed how so many marketers are still focusing first on demographic and socioeconomic characteristics for segmentation and targeting rather than psychographic and behavioral characteristics. Factors such as age, gender, ethnicity, income, etc. take a second place to what people think, want, feel, and do when it comes to predicting product preference and usage. In today's digital age (versus the pre-digital age), we can easily allow our market to reach us via search, ad placements, and social media that consider buyer psychology. Although it's often *easier* to target audiences using demographic variables, much of that targeting on digital is actually inaccurate and, more importantly, "easier" doesn't mean more effective.

As a marketer, one of the most critical aspects of your job is to ensure that your targeting strategy is effective. After all, if you're not reaching the right audience, your campaign won't be successful. Remember, targeting is an ongoing process, and it's essential to keep refining your approach to ensure that you're reaching the right people at the right time.

Market segmentation involves dividing a broader market into distinct groups with similar characteristics and preferences. Businesses can use criteria such as demographics, psychographics, geographics, behavioral, and benefit-based factors to define target segments. Demographics consider age, gender, income, etc. Psychographics analyze attitudes, values, and interests. Geographics focus on geographic locations and local preferences. Behavioral segmentation examines past behaviors and responses to marketing. Benefit-based segmentation targets specific needs or desired outcomes. Defining target segments helps businesses understand their customer base and enables effective targeting strategies.

As you define your target segments, bear in mind that they aren't set in stone. In fact, they're more like living entities that evolve over time. Stay alert to shifts in customer behavior, industry trends, and market dynamics. Regularly revisit and refine your segments. It's like tending to a garden; with constant care and adjustment, your segmentation - and thereby your targeting strategy - will flourish. Embrace the evolution, it's part of the journey to successful customer engagement.

In my experience so many organisations lack definition of target segments in a meaningful way. This shortfall becomes an obstacle that constantly trips up effective marketing. Businesses that segment by demographic or by their own product or services are going to struggle to implement marketing that engages and resonates. I recommend using market research to create customer clusters by needs and wants. Done well segmentation will add value and focus to strategy development and tactical implementation.

After identifying target segments, businesses must choose a targeting approach. There are three types: undifferentiated, differentiated, and concentrated. Undifferentiated targets the entire market with the same product and message. Differentiated targets multiple segments with unique products and messages. Concentrated targets one or a few segments with specialized offerings. The best approach depends on goals, resources, competitive advantage, and market conditions.

To measure targeting strategy effectiveness, establish clear, measurable objectives and key performance indicators (KPIs) for each segment and approach. Align objectives with marketing goals, reflecting desired outcomes like increased awareness, lead generation, sales growth, or improved retention. KPIs quantify success and track targeting efforts. Metrics like reach, click-through rate, conversion rate, average order value, or customer lifetime value help gauge performance.

To measure targeting strategy effectiveness, collect and analyze targeting data to assess performance against KPIs. Utilize sources like web analytics, social media analytics, email marketing analytics, CRM systems, surveys, and feedback forms. Gather both quantitative and qualitative data for a comprehensive view. This approach provides insights into how target segments and approaches are performing and helps make informed decisions to optimize targeting strategies.

Using analytical tools to access how your target audience interacts with your marketing strategy is not only great to help tailor your approach for optimal results but also, is a great way of showing your stakeholders that the money invested is being utilized in the right direction. I have often seen that marketing budgets experience a great delay in approval because most times its a challenge to convince the board as to why an action (or activity) is necessary. Hence, the analysis provided by these tools helps paint a picture for the higher management about how the marketing efforts are being/will be monetized.

If you're using an ABM platform such as 6Sense, Rollworks, or DemandBase, there are several ways to track the effectiveness of your strategy and campaigns. Even if you are doing it all without a specialized tool, it is important to ensure you have a way to measure success.

Artificial intelligence has drastically changed ad placement and it's making strong inroads into ad creation. However, most AI algorithms will continue to have the problem of top-of-funnel focus, which can drastically alter full-funnel efficiencies and effectiveness. Marketers who invest in building skills focused on customer journey mapping and full-funnel tracking will find that they'll outperform the algorithms, particularly if those same marketers approach learning about their target audiences from an empathy-driven perspective. Know your buyers and you'll know how to satisfy them.

Evaluation really boils down to what we mean by "effectiveness" (e.g. ROI, velocity, etc), while controlling for the variance in our messaging/content efficacy, so that we truly isolate targeting's effects. You can do this deductively or inductively: With the former, deduction, you've already identified your most profitable - and theoretically scalable - market segments, such that you're evaluating "effectiveness" in reaching + converting them in/from "the wild" over time (I.e. you're looking to translate your ICP into something you can activate against). With induction, you're testing between possible target definitions exposed to roughly the same mix of messaging/content stimuli, in hopes of seeing which one maximizes your ideal outcome.

I am convinced the Blockchain will become a major part of Marketers toolkits and recommend considering it for Targeting & Marketing activation strategies. Currently, brands keep consumer data in siloed servers and have to comply with strict regulations like GDPR. Consumer profiles tend to be incomplete and narrow. However, as more brands and consumers are using the Blockchain, merging the physical and digital world, the blockchain will get enriched with free-access data like never before, providing deep insights into consumer behaviours. Blockchain allows for consumer profiles at granular levels, with data well outside brands' own ecosystem and unseen insights into behaviour. I believe this will power the next evolution of Marketing.

From my experience, I would recommend looking at the corporate or marketing goals first then creating a few KPIs to represent success of your marketing initiatives. When you know what you want to accomplish, you are able to better decide the type of customer you need to target to accomplish those goals. ie. If the company wants to increase and nurture a larger client base, your target market would be based on the customers you anticipate would convert quickly and easily vs. customers who may represent a large purchase, but would have a long sales cycle and be fewer in quantity. Maybe you would like to target both! However, in this case, you would need differentiated targeting and KPIs that align with the corporate objectives.