Direct mail campaigns require a well-defined consumer or business target. Marketers rely on many data points to hone their lists. Perhaps most basic is the target audience size. It makes sense to get this right. Higher numbers are tempting since they can mean more opportunity. However they bring a higher campaign cost.
To illustrate, let’s just say that a mass marketer wants to reach every “middle class” household (EDDM anyone?). How is the size of this vast social group measured? One metric would be income. The calculation includes households with 67% to 200% of the national median income in 2016. According to the Pew Research Center, the resulting income of those households was $78,442. Middle class households as defined by this income range include 52% of American adults.
This is a broad stroke number. The range moves up or down depending on the number of persons in a household as well as geography. (Geography plays a large role with predictable effects. The median middle class income in Tampa, Florida is $51,115, while in San Francisco it is $96,667.) Flip incomes between those two cities and one household struggles while the other luxuriates. There are also sub-classes within the middle class distinguished by education and profession. That’s why mailing list databases offer segments and selects.
Does the census always make sense? Another approach utilizes self-identification, whether a person “feels” like a member of the middle class. The number will rise and fall with the times. Northwestern Mutual’s 2017 Planning & Progress Study found that 70 percent of Americans consider themselves middle class. In comparison to the more traditional income driven data, this suggests a much larger audience.
The Role Of Confidence & Sentiment In Determining Target Audience Size
These are two related measures of how consumers and businesses feel about their economic health and security. They are based on recent events, present conditions, and expectations for the near future.
Consumer confidence and sentiment are tracked by two principal yardsticks, the Consumer Confidence Index (CCI), prepared by the Conference Board, and the Consumer Sentiment Index, prepared by the University of Michigan (MCSI). Each is survey based. Findings are released each month. Each is a lagging indicator in that it records people’s responses to things that have already happened. Evaluate trends that occur over at least several months. This is a good way to take the temperature of the marketplace.
In a huge, complex economy such as the U.S., consumer spending can account for about 65% of total spending. Shifts up or down generally affect business confidence and sentiment as well. Business confidence is measured and reported by two organizations. They are the Organisation for Economic Co-operation and Development (OECD), and the Purchasing Managers Index (PMI) released by the Institute for Supply Management. These are leading indicators, used by businesses to plan for future market conditions based on recent and current data. Each is survey based and updated monthly. They assess the state of production orders, inventory and any changes in general business conditions. Though smaller in sheer size, business spending is important to track. Businesses respond to perceived trends in future market conditions more pragmatically than consumers. This is consequential, since it impacts supply chains involving businesses of any size. Pricing, wages and employment are affected, often initiating a chain reaction.
- Consumer and business spending are intertwined, reacting to changes in confidence and sentiment.
- Target audience size can vary as a result. (As an example, is the middle class 52% or 70% of the U.S. population?)
- In any market, the winners know how to adjust to up or down trends in confidence and sentiment.
- Reach out to the right prospects with relevant offers that fit the current criteria driving their spending choices.
- When times are tight, consumers emphasize practicality and price.
- When they feel secure they tend to indulge in upgrades and delayed purchases.
- When businesses are pressured they demand higher quality at an even better price.
- When their confidence is high? See above (the orders will hopefully be larger.)
Target Audience Size Can Seem Like Rubber A Band
This example illustrates how the “size” of the U.S. middle class audience can be elastic. Businesses that serve consumers are at their mercy. Depending on the market climate, the scope of a campaign can expand or contract. As a result, the cost of an omni-channel direct marketing campaign can increase or decrease dramatically. Variables include customer data processing, buying mailing lists, creating content, printing, and postage. That’s why it is so important to get the target audience size right.
Pro-active marketers work with list experts to fine tune mailing list data. The task is to identify prospects that are most able to appreciate – and afford – the offer. To target the right consumers, they can select for income, geography, household size, age, or home ownership. Selections can also include charitable giving, political affiliation, and more. Details of each suggest propensity given the prevailing economic climate.
Direct marketers must also master awareness of how businesses are being affected by fluctuations in consumer spending. It may be necessary to adjust for company size, revenue, geography and any other selects that are an indicator of strength. Reach out to decision makers. Contact them by name. Reach them at home so you can have a more intimate conversation. Get out in front of growth when business investment is flowing. Seize the opportunity to offer positive responses to downturns in consumer spending in the form of innovation and efficiency solutions.
Which data should direct marketers use for determining target audience size? Sentiment, or census, or a mix of both? If we’re talking about a big ticket (more credit dependent) item, such as a home or car, use hard numbers. They will be a better indicator of whether a consumer is a solid (credit worthy) prospect. For less costly offers, like publications, small appliances, insurance or consumer electronics, targeting the self-identified audience may yield good results.
In any case, direct marketers must always keep their ears to the rail. It is important to develop a feel for the correlation between lagging and leading indicators. They must learn to weigh both hard numbers and indicators of sentiment that affect spending behavior and bring audience size into focus.