Customer data, more than ever before, can be digitally tracked and marketers can now find out what people do online, what they buy with their cards, or potentially even who they talk to on the phone, according to Felix Velarde, UK managing director for eCRM agency Underwired, who here examines whether this a blessing or a curse for marketers.
Even if you can afford to gather this kind of data, is it possible to make any useful sense of it? And how should marketers use it: to influence whole company strategy, or to hone individual tactical campaigns?
Tesco famously has 'segments of one' - which is great, of course - but it had to buy a data company (Dunnhumby) to make sense of the vast amount data it was collecting and aggregating. Most marketers don't have that luxury, however, but this doesn't mean we can or should ignore our customer data - even if it looks like it might become unwieldy.
Some brands haven't yet realised that the power in a brand/customer relationship has shifted from the marketer to the marketee. Clearly social media and the ability to share every thought, spoken or unspoken, with friends and peers and even the whole wide world means that the brand perception is out in the wild. It's been let loose. No longer is the way your brand is represented in your control. It's in the expressions of passion, ire, indifference and ephemerality of the digital ecosystem: Facebook, Pinterest, Snapchat, Twitter, Vine, even email. It's transmitted by mobile, stored on the web, and available to the world.
This revolution has already happened. If you can take advantage of it successfully, you can catch up with the "wild thing" your brand has become, and even gain competitive advantage while your peers wrestle with boards who just don't get that they're no longer in control.
That is, perhaps, a scary thought. So what do you need to do in order to turn this situation around? Part of the problem is the notion that we - as marketers - can regain control. We can't. But what we can do is map how consumers behave, and how their attitudes will shape how they behave in the future. By going down this route rather than trying to reign the brand in, you can extend the brand into the customer's territory and give them more control by enabling free interpretation of the brand's essence. And that takes not only courage, but also data.
Customer insight is the product of data, and the three key dimensions of segmentation are:
- Demographic - who the customer is;
- Behavioural - what they do and what they have done;
- Motivation - why they do it.
Demography is slow moving, so we use it as a kind of snapshot to describe people. It means we can target them accurately. Behaviour is retrospective, but we can observe behaviours and trends and make extrapolations based on probability and this gives us propensity models. This means we can target them efficiently. The final dimension is about motivations, attitudes and 'need states'.
For example, sports brand ASICS uses this in its MyASICS loyalty programme: by understanding why a runner runs, we can talk to them in terms that resonate� the desire to be fitter, or to win, or to raise money for a cause. By talking to its customers about those things that address their motivation, ASICS creates extreme loyalty, increasing sales. Worldwide. And MyASICS is served by a website, and emails, and mobile - all of which feed back data to better hone the programme.
These days the various digital channels are so well established that the mechanisms that allow you to track a customer in their journey in one can easily be joined with the mechanism in all the others. It means we can effectively create a joined-up process to track a customer across all digital channels as they weave about their daily lives. This ability extends even to the real world - we work with clients who have incorporated data from electronic point of sale (EPoS) systems into their customer view, so we can attribute till sales to pay per click (PPC) campaigns and journeys via every imaginable digital touch-point.
And it's not as difficult as you might thing; you don't need to buy a Dunnhumby or a whole data team to do it. The concept of rapid prototyping has been very successfully applied to creating online customer labs and pilot programmes. For example, brands such as BUPA have used it very effectively to build online communities at very low cost before making decisions about major investments.
So perhaps now is the time to forget about the 'Single Customer View' and its vast capital expenditure, but instead to bring together several separate systems based only on those components you actually need to do the job of proving your return on investment (ROI), and use it to monitor customer behaviour in response to the insights you generate from simple data analysis.
"In my experience, six or seven segments gets the job done - segments of one are for when you're already at the outer extremes of wringing profit from data, not when you're mid-shift toward putting your customers at the centre of the brand universe," concluded Velarde.