The law of brand user profiles: The sharpest nail in the coffin of hyper-targeting
Data shows B2B brands, like B2C, generally serve the same customers, which demonstrates the wisdom of marketing to every buyer in your category.
Hyper-targeting might be the single most destructive idea in B2B marketing.
This one bad idea has cost companies billions of dollars in lost revenue.
According to hyper-targeting apologists, B2B brands grow best by targeting very specific customer segments with very specific creative. For example, hyper-targeters believe it’s wasteful to target all the IT professionals in Europe when instead, you could hyper-target IT directors in the pharmaceutical industry at companies with 10,000 employees in the UK.
Hyper-targeting enthusiasts claim that B2B marketers can use targeting to “choose their customers” and selectively grow segment by segment. B2B gurus wax poetic about the value of ‘ideal customer profiles’ (ICPs) and ‘best fit accounts’. Conventional wisdom says that going after every customer that could possibly buy from you is a stupid, simplistic strategy.
On the surface, the argument for hyper-targeting seems perfectly logical.
But beneath the surface, you’ll find a Titanic-sized iceberg.
The assumptions don’t line up with the evidence on how B2B brands grow.
We’ve spent the past decade making the case against hyper-targeting in B2B, and advocating for broad targeting that reaches all potential buyers of the category. We’ve argued that hyper-targeting isn’t possible in most media channels, since 84% of third-party B2B data is inaccurate. We’ve argued that hyper-targeting drives up your cost and complexity, cancelling out the imaginary efficiencies. We’ve argued that hyper-targeting fails to address future buyers, since almost 50% of B2B buyers change industry, function and seniority over a five-year period.
But even our argument was (ironically) too narrow.
We failed to include the most compelling case against hyper-targeting.
So today, let’s hammer the sharpest nail into the coffin of hyper-targeting.
Introducing the ‘law of brand user profiles’
Let’s reason through inversion.
If the theory of hyper-targeting worked, what would you expect to see in the data?
Well, you’d expect to see different competitors serving different customers. If Oracle grows its ERP business by hyper-targeting the healthcare industry and SAP grows by hyper-targeting the financial services industry, then the composition of SAP and Oracle’s ERP customer bases ought to reflect those very different choices, right?
The problem is that you don’t see that, in any category, in B2B or B2C.
Instead, you see the Ehrenberg-Bass ‘law of brand user profiles’, which states that “the customer profiles of rival brands seldom differ”. In other words, all the brands in a category end up selling to the same customer. Marketers don’t get to choose the composition of their customer base. The only meaningful difference in the customer base is its size, not its composition.
So your ‘ideal customer profile’ is… anyone who buys the category.
B2C marketers can see the law at work in the data below, from the credit card category.
Read the full article in Marketing Week.