I have heard companies complain about the cost of target marketing and the question has come up more than once as to whether it is really necessary. Those holding the checkbooks would most likely say the answer is dependent on the cost; but that is a bad way to decide how to market. Sure everyone has a budget, but if you are looking at your budget strictly from cost you are only considering the front end, and you are most likely losing money, even if you don’t know it.
Let’s break this down in a simple way; let’s say your product or service is for homeowners, and that it does not apply to those that do not own a home. You can do an email campaign, or a direct mail campaign, or any other type of direct marketing fairly inexpensively if you do not target, so in many business owners minds, this is cheaper. But I am here to tell you, it’s not cheaper; sure you may have made a profit meaning you brought in more than you spent, but I say you lost money. Here’s why; according to the U.S. Census 65% of the adult population in the U.S. own a home, and that’s your customer right? The problem is by not targeting you are adverting not just to those that own homes but to the 35% that do not own homes as well. What does that mean? It that no matter what you’re sales end up being, whatever you spent, 35% of it was wasted.
Had you target marketed your front end cost would have been higher, however instead of reaching only a portion of your market you would have reached one hundred percent of your market, meaning your sales would most likely increase and your back end profit would outweigh your front end sales. Now there are products that do not need target marketing because they apply to the population in general, but that is exception rather than the rule. Most products or services have a specific target or targets which will naturally increase the level of sales. Don’t take my word for it; research target marketing and see what you find.