Mom and pop beaten with a database?
There is a continuing shift of power from the brand to the customer thanks to the growing popularity of digital interactive technologies, so brands must make ever-better use of customer data to keep up with and respond to the latest consumer trends, according to Felix Velarde, managing director for customer engagement agency Underwired.
Reminiscing about the way it used to be, Velarde recalls how shopping used to work when he was a child: "We used to shop in the same mom-and-pop stores all the time. We'd walk down the street and say hello to the butcher walking in the other direction. He'd always have a smile, and maybe make a cheeky comment about the children. And when we went into his shop he'd suggest which vegetables would go with the meat my mother had chosen, and tell her to greet the greengrocer for him when she was there. There was always a kind word and, for decades, my family shopped in the same shops."
But then the internet arrived and upset the customer experience by turning it on its head, reducing shopper interactions to seven clicks, shopping carts, price comparison engines and basket abandonment.
Two decades later, we have learned a great deal about technology, acquisition, usability, design, optimisation and the "always-on mentality" of today's consumer. Having now emerged from e-commerce's "terrible teens" phase, there are several things we now know for sure. For example:
- Retention only comes after acquisition;
- Loyalty only comes after service;
- Advocacy only comes after loyalty;
- Win-back only comes after failure;
- Make the customer experience similar across all devices;
- Three clicks is best, but if you have a process that takes more than ten clicks then, by the time you've got the customer to seven, they are unlikely to turn back and go to your competitor.
What we've also started to understand is that the customer is on a journey. Over the past ten years or so, marketers have perfected the art of defining that journey by understanding that there is a natural sequence that doesn't feel forced if you ask the customer to take the journey with you. This, in turn, is based on the idea of the 'nudge' - the idea that taking one small step at a time can lead to significant change. When we look at where a customer is, what they like, where they go, and where we want them to be, we can easily develop a map of the customer's journey from the first point of contact to lifetime loyalty, all in small incremental steps.
The art of customer journey planning, which came out of the in-store retail experience and the desire to drive customers past high margin discretionary items on the way to their target staples, has been translated to the online world and perfected over ten years by specialist eCRM agencies such as Underwired and others. And this customer journey, delivered using the cheapest digital channels, has been developed to allow brands to examine each little, incremental step on its own and optimise its performance. By extension, when lots of little increases in performance are added together, huge changes in revenue can be achieved. To illustrate this, by increasing revenue by 3% for a single step, when applied over 24 steps, will double your revenue.
By adding a dimension of customer focus to this rather technical, commercial focus, segmentation has been taken from its shopping experience roots (for instance, when our butcher would know that because ours was a three kid family, we'd be more likely to buy mince than a steak), via direct marketing thinking, properly defined in the early seventies, to the digital age. This digital age has allowed marketers to think in big numbers, to define shopping habits not through inference, but through observing behaviours from Google search to repeat purchase in an e-commerce system. Behaviour, enhanced by adding demographic data, married to motivation (back again to inference) gives us 3D segmentation. And 3D segmentation gives us the tools to develop different customer journeys for different types of customer.
Marketing is now largely scientific. We can develop customer journeys for different customer types and take them from one step to another leading to maximal (or at least optimal) lifetime value.
It's been a revolution, and the children have grown up. Almost twenty years since the first days of the web and the painful birth of a new way of retailing, this discipline of how to engage with customers is finally about to emerge from its teens.
So where does it go from here?
The next generation of retailing takes what has gone on up until now, and builds upon it. In fact the 'Next Big Thing' is really simply an extension of everything we've seen so far: if you look at how segmented customer journey planning has been expressed in practice, the next step in its evolution is quite clear. So far, we have made use of digital channels to do all of this. Using the web to capture attention, to engage people with the brand on the website (or landing pages), to engage and retain them using email, to convert them to customers using e-commerce.
And we've been viewing the customer journey as something that marketers define for customers. But customers are actually on their own journey. They have lives, which are multi-threaded, which involve the web, and mobile, and walking down the street with their children. They live lives ruled by their motivations, the people they listen to, their immediate needs, and their whims. And, critically, they are influenced by all sorts of things that aren't just digital.
In other words, the customer journey plan does work. It does have a crucial role to play. As marketers we must have a framework for holding the hand of the customer while we take them one step further: without it we don't know how to brief it to agencies, we don't know how to measure success and we don't know how to optimise it. But it ignores the fact that customers have their own sequence, and they are unlikely to share it with us, even if they know it themselves.
One of the facets of this, which informs what will happen next, is that in real life, customers aren't only on email. They don't only use digital. Sometimes the critical nudge that will take the customer from point 16 to point 17 isn't online. We may have to reach them offline.
Be channel agnostic The customer journey requires us to think in a channel agnostic, or multi-channel, way. The future of this marketing discipline requires us to map the customer journey without assuming it will be served at every step by an online touch-point. If we do this, the customer journey plan we describe can more closely reflect the customer's own journey and the way she actually lives her life. By defining customer engagement on the basis of what nudges and steps are required first, and then adding in channel selections based on the customer's own journey, second, we can create single-minded, focused, multi-channel strategies and campaigns.
This is the next generation of marketing: Total Customer Engagement. It gives us the tools to leverage 3D segmentation and digital insights to deliver the kind of supreme engagement previously only delivered by the local family shop keeper.