- Posted by FMID Marketing
- On August 7, 2017
This sounds counter intuitive, but follow the math to follow the money.
I often use an expression to trust your instincts and intuition ONLY in the absence of data, and this is a good example.
Let’s say that you are a company that manufactures or sells a slow-release nitrogen. You could, of course, spend millions of dollars blanketing TV, radio, direct mail, online, farm shows, etc. You could attempt to put your brand and message in front of the ~2 million farmers farming over 300 million acres in the U.S. Given that broad market, you would need to limit your frequency or number of touches/impressions to these 2 million farmers or would run up an extremely large bill for your marketing.
Now perhaps you dissected the target market a bit. Perhaps you have field trials showing that your slow- release nitrogen is 30% more effective than other brands/products when applied against certain crops and geographies. You can choose to limit geographies and number of farmers, and still get the large majority of acreage (e.g. think 80/20 rule). See illustration below:
Now let’s take this a bit further, as your field trials indicate certain geographies and crops showing maximum efficacy. Assume that your product is most effective in Corn, Alfalfa, Sunflowers, Oats, Dry Beans and Rice in specific geographies and farms with irrigation. In fact, in these instances your product shows 3x effectiveness over competitors and a 50% return on investment when applied early in the growing season.
Now use this data to further narrow and segment your target for your marketing campaign to focus on these specific crops (above) and farms with irrigation, and by selecting geographies that your field trials show a higher Return on Investment (ROI) for the farmers.
So instead of spreading your $1 million marketing budget for this product across 2 million farmers equating to $.50 per farmer you are now able to be precise in your marketing to those who are most likely to be interested in your product. So that same $1million goes much farther when focused on 75,000 farmers or $13.33 per farmer. With this targeting you also have the advantage of personalizing the message:
“If you are growing Sunflowers in Corson County South Dakota you may be interested in learning about our XYZ slow-release nitrogen where local studies have shown a 3x performance improvement over other nitrogen products. Click here for details.”
Geeky data note… there are over 40,000 acres of Sunflowers in Corson County.
Now we have narrowed our target market to 75,000 farmers that are most likely to be interested in our product. With the same budget, we can spend $13.33 per farmer over the course of the campaign and could have 25 touches/impressions instead of 1 or 2 touches/impressions, which makes it much more likely you will get response from your “most likely customer.” This will lead to a higher Return on Investment and reduce your marketing spend.