Choosing a strategy for customer acquisition is a process that every marketing campaign undergoes. In this post I’ll examine a few of those strategies and important factors to keep in mind while implementing them. I’ll also examine an emerging market segment and industry trend and tell you a little about what I’m doing to target that segment. However, I’d like to start by examining a University of Virginia case study on the rise of Under Armour and how their segmentation strategies drove their market share and profits upward.
In Under Armour’s Willful Digital Moves we can see how having a balanced marketing plan that utilizes aggregated and segmented market strategies can build a consumer base. During the early stages of Under Armour’s existence they segmented their marketing by demographic, targeting men who participated in football with innovative and modern apparel designed to wick away moisture during athletic events. The company rose in the ranks behind their rough-and-tumble persona and in 2013 found themselves third in the U.S. Sportwear market, posting 2.3 billion in sales.
This market grab was orchestrated on the back of males, and sales indicated as much. Heavily skewed marketing created a gender gap in the Under Armour customer base, totaling just 22% women. To combat this, the marketing team shifted the focus of their segmentation to women. Capitalizing on a failed campaign by then market #2, Adidas, Under Armour released the “I Will What I Want” campaign – a $15 million multi-channel campaign using segmentation techniques to target women through demographic and psychographic properties. Focusing on the drive and passion of ballerina Misty Copeland, who rejected the assertion that her body was “wrong for ballet” and followed her dreams to a career in American theater, Under Armour capitalized on women “who had the physical and mental strength to tune out the external pressures and turn inward and chart their own course.”
These two examples are just small pieces of Under Armour’s ascent in the market. The company has utilized aggregation strategies to cover large swaths of the market with relevant material, a high-funnel strategy meant for reach and brand awareness. And while utilizing celebrity endorsers for their products creates buzz in the targeted arenas that the celebrities represent, the low-funnel segmentation strategies are what made Under Armour into a global giant.
Variation in strategy is key. A comfortable combination of market aggregation and market segmentation is what builds your sales funnel. By developing a process to drive consumers further into the funnel, you are building your sales base through tighter and tighter segmentation. It is important to remember, however, that over segmenting a market can lead to cannibalization if your products are occupying a similar space. In Under Armour’s case, over segmentation could have led to product lines competing against each other for impression share. When this happens, you drive the cost of your own marketing upwards, in turn increasing your cost per lead and cost per conversion. Like most things in life, moderation is key.
When considering a segmentation strategy, it is important to remember that preferences generally align with a normal distribution curve. People unwittingly correlate the rising distribution curve with profit, and it’s easy to conflate. As the bell curve increases, so does the opportunity for sales – right? The truth is, because it is easy for companies to market to the broader segment, more companies do it. This is known as the majority fallacy. Despite the large number of consumers in the pool, you will almost always find that the number of advertisers follows the same normal distribution curve that consumers do. The closer to the center of the bell curve you get, the more expensive your advertising will become. Targeting the outliers, on the other hand, can lead to larger profits.
Pushing to the outside of the bell curve has proven profitable, but how do you target something that you can’t see? Throughout 2019 and into 2020 I turned my focus towards an emerging and underserved market segment – the anonymous shopper. More and more often consumers are going out of their way to remain anonymous during their shopping experience, but despite their stealthy ways they remain susceptible to well-designed media with the right offer.
Remarketing campaigns are a traditional means of communicating with people who have been on your website, but a lot of people use retargeting in their marketing stack. There are two unique channels that I’ve capitalized on this year to serve the anonymous shopping segment.
An text messaging system that allows consumers to text message directly with the sales staff while masking their phone number so that they remain anonymous has driven people through the sales funnel quickly, costing significantly less per acquisition and conversion. Likewise, a dynamic direct-mail retargeting campaign for anonymous shoppers has increased sales and profits by providing high-funnel consumers with incentives to purchase. A newly developed programmatic software allows me to determine the home address for roughly 75% of the anonymous shoppers on my site, and by using advanced motion tracking to determine if they are a serious shopper or just browsing, I can qualify them to receive a postcard in the mail with a picture of the vehicle they were most interested in and a discount offer specifically for them to come in and buy – valid for only seven days, of course, to create urgency.
It is important to consider marketing segments while planning for campaigns. Utilize the data that you have to help determine the needs of the client and focus your segmentation strategy accordingly to drive the business. Customer acquisition can happen in many ways but understanding the many options available and requirements of your client will set you up for success as you move into 2020.