Why is audience profiling important?

Discover the reasons why audience profiling is so important to your marketing campaigns and the benefits profiling can bring you.

What is audience profiling? 

Simply put, audience profiling helps you to understand who your ideal target audience is. In this context your ideal audience is often the prospects who have the highest likelihood to respond in the desired way to your marketing communications and thus, promise the greatest return on investment for your marketing efforts. 

But let’s start from the beginning. Marketers nowadays are facing an increasingly challenging environment. Trying to cut through the noise of an extremely loud market on the one hand and facing ever-increasing customer expectations on the other. Traditional approaches like one-to-many communications don’t result in the desired outcomes anymore. Marketers need to find ways to communicate in a personalised manner with their audience, using the right channel at the right time.

The key to this is a thorough understanding of the audience you would like to target, and audience profiling is one of various methods you can use to gain this understanding. 

The four principles of audience profiling

Creating an audience profile typically involves several marketing disciplines including segmentation, messaging, engagement and measurement.

Segmentation: Segmentation is the starting point for building an audience profile. Potential customers are divided into groups, based on several segmentation criteria. These segments build the foundation for the next steps. 

Messaging: Based on your segmentation, different messages for each group can be derived. In this stage, questions like what the current perception of a specific segment is and how it can be shifted need to be answered. 

Engagement: From platforms to devices and channels - engaging your audience requires an understanding of where they can be reached and where your message will have the highest impact.  

Measurement: Continuous measurement is key in improving the previous two aspects. Only if you can quantify the impact of previous efforts, you can amend and optimise your marketing campaigns to be more successful in the future. 

Let’s look at the individual steps in more detail now. 

Segmentation 

As is so often the case, defining your goals is key when you embark on an audience segmentation project. The first question to answer is therefore, whether the audience profile should be created for:

• Targeting an existing product to new prospects or
• Identifying cross-sell opportunities within the existing customer base or
• Introducing a recently launched product. 

Each of these situations requires a different approach. In this article, we will focus on the first use case and show an example of identifying an ideal audience for an existing product, why audience profiling is important and how you can benefit from it. 

Identifying ideal prospects for an existing product

A common way to approach the creation of an audience profile for an existing product is to develop so-called buyer personas. Buyer personas are fictitious persons who represent a specific target audience segment. A buyer persona consists of a detailed description and mini biography of a typical customer. Due to the diversity of prospects, one persona often doesn’t suffice to represent the entire spectrum of an organisation’s prospects and several personas are developed.

However, often the personas used are based on the individual perception and assumptions from employees within an organisation or don’t represent the full picture of prospects. This makes it difficult to use them in practice. For personas to be useful they need to be truly data-driven to be beneficial for marketing use. So how can we do this? 

How to create a customer profile: 

A profile is used to describe people based on characteristics. These characteristics can be traits or behaviours that are typically divided into three main categories:  

• Socio-demographic characteristics: age, gender, marital status, income, household size, educational background, place of residence, occupation
• Psychographic characteristics: values, interests, attitudes, lifestyle, motivations
• Behavioural characteristics: transaction history, average spend, purchase frequency, date of last purchase, email response rate, collected loyalty credits, channel use

Once we have decided which characteristics we would like to analyse, we can start to create a profile. Our analysis group are the customers who have already bought the product we would like to market. In the next step, we need to compare the quantity to be analysed with a base group. The base group can for example be the entire UK population. 

For the following example, we have used our data analysis software Apteco FastStats. The characteristics we want to analyse are added as variables to the model. In our case we are looking at the occupation, income, gender and town. The profile shows the penetration and significance of these variables for the analysis group. The penetration of a distinct characteristic is shown by the histogram and the significance by the colour. In our case, red means that the significance is high.

Identifying look-a-likes: 

Now we know what the characteristics of our existing customers are and what they have in common. We can use this knowledge to identify people with similar characteristics in the wider market. The data needed for this can usually be acquired from third party providers. Prospects who are the most similar to our existing customers are identified with a scoring system. The score rates how similar someone from the base group is in comparison to the analysis group. The higher the score the more similar. The prospects with the highest scores are our so-called look-a-likes. 

Using this approach, we do not only get a thorough understanding of our current customers but also identify the most promising prospects in the market. Moreover, this is not only applicable within a B2C context. If you are a B2B marketer then this method can also be applied using different profiling criteria such as legal form, number of employees, annual revenue etc. As mentioned before, it makes sense to develop several audience profiles to reflect the diversity of your customers and prospects.  

Messaging: 

Once we have identified the different profiles, we can start to create our messaging. This requires a good understanding of the audiences’ pain points, the needs that the product is fulfilling or problems it is solving. Different content variants need to be created for the different profiles. As we will probably never 100% know which messaging works best in advance, a recommended practice is to employ A/B testing. This means that the same audience segment receives two different content variants. After the campaign has been sent the results can be analysed to reveal which messaging worked better with this segment. This process can be repeated several times. 

Engagement:

As part of creating customer profiles, we can go beyond demographic measures and also analyse which channels our customers prefer when interacting with us. Once you know where you have to be for which audience it is also important to consider content format and types. There are many different options your content can be presented in such as videos, blogs, guides, e-books or podcasts. Again, this requires testing over time to identify what works best.  

Measurement:

The previous two paragraphs already indicated the importance of measurement. Only by continuously measuring response rates across different segments, messages and channels, will you be able to gain the insights needed to identify what works well and what needs further improvement. 

Why is audience profiling important? 

Now that we have an overview of what audience profiling is, what the different steps are and how we can apply these in practice, let’s look a bit closer again at the benefits of audience profiling and why it is important to use. 

• ROI maximisation: Carefully selecting the audience and channels ensure that time and money are well spent. For example, it doesn’t make sense to spend your budget on Facebook Ads if your audience is mainly on YouTube and Instagram or doesn’t use social media at all. Audience profiling helps you to identify prospects and the ways to reach them that promise the highest likelihood of a conversion or other desired marketing outcome. Thus, you maximise your return on investment. 
• Personalisation: Personalisation and customer experience are no longer a plus but a must. In times of ultimate transparency, high competition and constant availability of goods and services, customer experience is a key differentiator for organisations and personalisation one of its main drivers. Only a very thorough understanding of your target audience will provide you with the means to personalise your marketing accordingly. Personalisation can have multiple facets, ranging from the right timing to convey your message, to the actual message and the channel and format your message is delivered in. 
• Reliability: Data-based audience profiling removes guesswork from your marketing activities. It is a reliable method to gain the insights needed to invest your marketing in the most profitable way. 
• First-party data: When creating profiles of our current customer base we can benefit from using first-party data we have collected from our customers. In the light of GDPR and reduced cookie data availability, the effective use of first-party data in GDPR compliant ways becomes increasingly important. 
• 3D customer insights: Audience profiling allows you to move away from simple demographic measures and include all sorts of relevant measures including behavioural aspects.

When performed on a manual basis, audience profiling can be quite time consuming. Also having a full view of the required customer data, including transactions, responses and demographics can be quite challenging. If you would like to find out how technology can support you in this and many other marketing use cases, click here learn here more about Apteco and our products.