Why are demographics so important for small businesses? A short introduction for total beginners

You’re chomping at the bit to get started. Somewhere out there in the digital ether your audience awaits – and you can’t wait to pull back the curtain and showcase your offering. But curb your enthusiasm because launching your brand without understanding your demographic is tantamount to business suicide.

Why are demographics so important for small businesses? You need to understand your target customers’ wants and needs – then demonstrate how you’re perfectly positioned to fill that gap.

how to segment audience data

What does demographic mean?

Demographic is a fancy way of describing the characteristics of a group of people – usually within a specified geographical area. The more data a small business can obtain about its target audience the more tailored and accurate its messaging will be – resulting in a higher volume (and better quality of) leads.

Why are demographics so important for small businesses? It’s not just about understanding the broader needs of your audience. It’s about breaking that group down into smaller niche groups to further improve targeting.

Demographic data will help your SME…

  • Separate your target customers into groups according to product, service, budget and other multiple factors
  • Create finely tuned campaigns that call out the needs of specified groups – reducing CPA and boosting ROI
  • Help identify shifting trends in its chosen sector – enabling it to adapt its digital marketing strategy and stay one step ahead of its rivals

demographic definition

Where can SMEs get demographic data from?

Although the question ‘why are demographics so important for small businesses?’ is an important one, it ignores a frustrating obstacle to progress experienced by most new businesses. Where do businesses get demographic data from? 

True, you can buy lists online for an eye-watering fee. But do you really want to do that? The database you purchased will have been circulated to other businesses in your sector too – which means the names on that list will have been marketed to death. 

The chances of getting a positive response from bought lists are, in short, pretty dismal. 

Instead, why not take advantage of data readily available through platforms you’re already using. For example, Facebook collects the following information from its users (when willingly volunteered).

  • Relationship status
  • Size of household
  • Brand preferences
  • Interests/hobbies
  • Number of kids
  • Kids’ ages
  • Check-ins 
  • Salary
  • Gender
  • Age

The same is true of other social media platforms like LinkedIn, Twitter, and Google – so tap into this readily available data and start segmenting your demographics into targetable lists for your campaigns.

How does demographic segmentation work?

So, why are demographics so important for small businesses? As suggested earlier, the ability to segment a target audience into manageable lists means SMEs can refine messaging to satisfy the requirements of niche groups.

Consumer demographic is usually broken down into the following five categories:

  1. Occupation
  2. Education
  3. Location
  4. Gender
  5. Age

Understanding as many categories as possible should be your aim. Let’s be honest, knowing someone’s age won’t give you deep insight into a prospect’s buying habits.

But if you knew 35% of 25-34 year olds in Cumbria were male, earned an average salary of £29,500, and worked in blue collar jobs the overall picture would be clearer.

If you want to go deeper you’ll need to start thinking about…

  • Behavioural segmentation. What are your customers’ buying habits and how do they interact with brands? This process might help an SME like yours to understand how prospects purchase products like yours from competitors.
  • Firmographic segmentation. Targeting businesses according to sector, revenue, size, or location is common practice too and might suit an insurance broker specialising in high risk industries.
  • Geographic segmentation. Breaking down a large area by postcode, into rural/suburban areas, or proximity to another location can reap dividends. For example, would a coffee stand sell more cups near a train station or on a busy trading estate?

getting started with Google Analytics 4

One more time: why are demographics so important for small businesses?

Demographics will help your business understand the size of your audience and the likelihood of them buying your product or service. From this will evolve your marketing plan which will involve building your brand: a complex process incorporating everything from logos, colour schemes, and fonts to tone of voice, on-page messaging, and SEO keyword research.

Demographic research never ends, either. Economic, political, and technological shifts (ChatGPT, anyone?) have a knock-on effect on consumer behaviour – and so it’s essential to track trends in the early stages, so you’re ready instead of caught off guard.

Is demographic research giving you the Sunday Scaries?

Then leave the hard work to us. Call one of our digital marketing experts and let’s hook up over a virtual cuppa to discuss your brand plans and get things moving in the right direction.

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