Demographic vs. Behavioral Segmentation

August 12, 2019

Corey Talking to a Camera About Demographic vs. Behavioral Segmentation
Featuring Corey Pierson, CEO and Cofounder of Custora

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TRANSCRIPT
The saying that we like to repeat over and over again is that actions speak louder than demographics.

What you do is a lot more meaningful than what you look like. It feels good to say that. It's true. 

The old-school way of doing acquisition marketing is, "Hey, I'm looking for people in this age group, they live in the city or they don't live in the city, and they got this income level," which is bullshit data. I don't know if you've ever looked yourself up, it'll be like, "Hey, here's Corey Pierson and he earns $563,000 a year." I'm like, "I wish that that were true." I don't know where they get this data sometimes. 

But you're doing your best — obviously that data is more good than bad, otherwise, we would have long stopped using it, but you're doing your best with this directional data. It's your own intuition about who your ideal customer is — I think my ideal customer is a guy in his 30s, that lives in New York City, at this income bracket, and therefore I'm going after him. I'm being a bit strong in the way that I'm talking about that. It makes sense to some extent, but you can do much better.

Without fail, every customer we've worked with, every brand we've worked with, has been a little surprised when they've opened up the curtain and realized the mix of different demographics that exists within the top 10% of their customer base. 

Often it's the case that that profile they had in mind is a good chunk of it, but there's another chunk. It doesn't live in this city. It's a different age group. They can be wildly different than the marketers would have even realized.

First things first, when you start with behavioral data, you're just starting with the thing that matters the most, which is: I'm starting knowing that these people are connecting with my brand. Now, let me learn more about them.

It's actually much more powerful. This is empirical, not just theoretical, to say "Actually I'm going to find the crop of customers that are spending a lot in these categories." Then go find more people like that to acquire into the brand. The demographic stuff, another way to word it is like, it's a proxy, based on your intuition of what you think matters. You can skip all that crap and just go straight to the core. These are my best shoppers. Go find more like them, please. I mean that's the benefit of the behavioral lookalikes.

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