How The C-Suite Can Leverage Big Data to Create More Customer-Centric Businesses
Almost everywhere we go and in almost everything we do, we leave a trail of data. Every single one of our daily transactions that involves electronics in any form (and many that don’t) registers in a data set somewhere.
To a savvy business person, this data, this Big Data, can be a gold mine. Never in the history of the world has there been more stored information about what people do and what people want than there is right now. If knowledge is power, then we are truly in a golden age. According to IBM, the well of data grows by 2.5 quintillion bytes every day. The escalation has been incredible, with 90% of all the data in the world having been generated in the last two years. You added to it when you clicked to read this article. And now there’s even more. And more… and so on.
In tandem with this data explosion, there has been a recent renaissance in customer-focused business development. Together, this represents an amazing confluence of moving parts—all creating a maelstrom that even the most savvy CEO, CFO, CMO, and CDO can find dizzying.
Big Data has become a big buzz word. It promises the keys to the marketing kingdom. But what good is a having a key if you can’t find it? What good is finding a key if you don’t know what door you should be opening? For too many companies, Big Data is mostly Big Confusion, so let’s simplify.
Success in Big Data marketing
Every Big Data success story will have one thing in common: focus. To avoid being overwhelmed by quantity, you must be able to determine where quality lies for you. What is your goal? What is actionable information? It is all in there, but the odds are drastically against you if you wander in without a target. Here are some examples of companies that have targeted – and achieved – Big Data success.
Targeted ads are nothing new. Since the advent of advertising, all types of media have sold marketers on the demographics of their particular products. In all previous incarnations, though, ads have been targeted broadly. Need to reach males age 18-35? Advertise on Comedy Central. Looking to connect with senior citizens? Reader’s Digest was there for you. Today, it is possible to target not just broad demographic categories (age, geography, income level), but individual, specific customers—and specific and minute actions.
For example, Facebook’s revenue surged Q4 of last year due to insights they were gaining using Big Data. According to WSJ’s CIO Insight, “Facebook has been experimenting with technology that can record everything that users do on the site—including how much time their cursor hovers over a particular spot on a page.”
During election season, politicians have become adept at determining which issues are most important to particular voters, and using social media and online advertising to speak to them “directly.” According to a 2013 story in Wired, “Social data drove the 2008 presidential elections and big data drove the 2012 election. In 2016 it will be the marriage of the two that will determine the next President of the United States.”
Developing customer profiles
Tracking and collecting consumer information allows your company to hone in on very specific customer details. The more you know about your core audiences, the more effective you will be in your marketing to them. The more detail you are able to gather about who your customers are, the better you’ll understand how and why they make the choices they do and how you might best influence those decisions.
Customer profiling has been an essential staple of effective business since the first shopkeeper stepped behind a counter. If a product comes in that a regular customer would likely be interested in, a good retailer makes certain that the customers knows about it the next time they come in. If the recommendations are sound, customer confidence and loyalty follows. Today the same service can be achieved on a broader scale with a technological assist.
The New York Times and many other outlets picked up on the story of how Big Data allowed Target to figure out that a woman was pregnant before her family even knew. Much of the public response to this was negative, including many evocations of Orwell’s Big Brother. Any information is only as good as the intentions of the user.
Avis tracked the behavior of car renters and developed a 360-degree consumer profile (customer lifetime value model). By better understanding what customers wanted, how vehicles were used and who was likely to rent again, Avis was able to adjust its services and more effectively target its messaging.
An important side note here: you have to be willing to take action on the data you collect. What good does it do your company if the data tells you that your product is out of date, your event isn’t delivering the content to drive attendees, or your service has too few users to be viable? Be prepared to make changes to your product or offering to meet market demand.
Depending on whose numbers you believe, somewhere between 55 and 80 percent of online shopping transactions that are initiated are not completed. Commonly referred to as shopping cart abandonment, the missed potential sales represented by these numbers has become an obvious and natural target for marketers.
One key to effective retargeting is understanding why sales are not being finalized.
Using a targeted email campaign to re-engage cart abandoners, woodworking supply company Woodcraft improved conversion rates by more than 600 percent.
Identifying new customers
As with advertising, the new opportunities here are largely based in the evolving science of demographics. Big data demographics put less emphasis on broad categories, and more on behaviors, actions and interests. Today, my job as a marketer is not to know what “people like you” want. I have to know what you, specifically, want.
One way that companies are using Big Data to grow their customer base is through the discovery of “micromarkets.” By identifying groups that share key characteristics with established customers, marketers tailor their strategy and pitches more specifically.
A great example is referenced in the comments section of the HBR article on Selling into Micromarkets. “One of the big pieces of the puzzle is linking [your] current customer lists with large (Millions of records) lists of businesses to see how your customers are profiled in these external marketing lists.
Developing new products or services
Big Data can provide feedback on how customers interact with your company and your offerings. It can also offer insight into what they want that they aren’t getting, and what they turn to your competitors for. Listen to what their behaviors are telling you, and develop products or improve designs to give them what they want.
When Big Data analysis showed pharmaceutical company Express Scripts that a certain segment of their customer base had problems remembering to take their pills, they created beeping medicine caps and other automated reminder tools. Using a predictive profile modeled on hundreds of factors, Express Scripts can intervene with patients who are likely to skip doses, even before they do.
How much is too much?
Big Data isn’t just about the information, it’s about how your company uses it; about the tools, abilities and processes required to ferret the necessary information out of the Big Data ocean, analyze it, communicate it and convert it into actions that advance your goals.
Having more information isn’t the key to better marketing. You don’t need all of the world’s data to succeed. You need the right data, the capacity to process it and develop insights from it, and the ability and resources to act on those insights.
In a recent Marketing Week article, Natalie Henty, head of customer relations for the Wickes retail chain in the U.K., advises marketers not to be intimidated or distracted by the volume of available information. “You must be focused on what you want to get out of big data or you can spend too much time analyzing it,” she says. “Rather than trying to make use of every single piece of information it is possible to gather, you must get actionable insight.”
Don’t let the vastness of the options intimidate your company into inactivity. Using Big Data to connect with your customers isn’t rocket science. A smart, methodical approach can get you where you want to be. Here’s how to get started:
Step 1: Focus your objectives
What are you trying to do? Do you want to identify new customers? Increase loyalty among existing customers? Develop new products? Improve customer satisfaction? Increase sales? Target your advertising more effectively?
Create a list of all your goals and then prioritize the top three so you have a starting point. Don’t try to do everything at once. Start small and if possible, set yourself up for some easy wins that will help build confidence and demonstrate value. Once the ball is rolling, it will be much easier to expand your efforts. For now, simplicity is key.
Step 2: Target your information
So now you have a goal or three. What information do you need in order to make the best possible decisions? What do you already know? What do you wish you knew? Don’t worry yet about the feasibility of collecting information. This is a wish list. Does your goal require direct customer feedback? Information on customer behavior? Customer attitudes toward your company? Or toward your product? Or your competitors? Would details of a customer’s previous transactions be helpful? How about on their transactions with your competitors? Could web or social media activity tell you anything?
Step 3: Find your data
Now that you know what information you’d like to have, the obvious question is, who has it? And how will you get it? Is the information you need internal or external? Does it need to be newly collected, or is someone already gathering it? Don’t re-invent the wheel unless you have to. Creative companies are finding ways to purchase and/or share vast quantities of data. Who else would want to know what you want to know? Could the desired information be found in more than on place? If the data you need requires infrastructure your company doesn’t have, set that goal aside for now and plan to circle back to it later on. What we need now is low-hanging fruit. Go back to your original list and choose an alternate goal.
Step 4: Analyze
The effectiveness of your analysis will determine your success with Big Data. Generally speaking, effective data analysts are able to combine information from disparate sources. X is just X. Y is just Y. But X+Y is something new. Keep an open mind and don’t go into your analysis looking to support preconceived notions. Earlier this year, in a Wall Street Journal blog post, Jonathan Craig, executive vice president and chief marketing officer for Charles Schwab Corporation, shared that “One of the biggest changes for us … is that in the past we would often start with a hypothesis and then look at the data to refute or validate. With Big Data, we are able to start in a more agnostic fashion and let the data drive us to the insights. This can lead to unexpected and powerful insights.” Look at your data, experiment, combine it in new ways, and listen to what it is telling you. There are a handful of amazing new big data marketing startups that can help you get started and make headway fairly quickly, and here’s a great infographic to check out.
Step 5: Plan, and Turn That Plan Into Action
If your analysis was successful, you’ve probably learned something. Based on the relationships you’ve observed between various data, are there predictive models you could form? How will you share those insights with the people inside or outside your organization who can use them? How will your insight be turned into action? Are there obstructions to implementation? Do you have the required organizational support? If not, how will you get it?
Step 6: Build
Now that you have a feel for how Big Data can work for you, it is time to start thinking about the infrastructure needed to take things to the next level. Are you collecting all of the information about your customers that you want? Are there tools that could help make your information more actionable? What is the best way to protect the data you are collecting? Are the necessary people on board? Who should be in charge of data analysis? What can be done internally? What would you prefer (or what is necessary) to outsource? Does your current agency have the tools and processes in place to take advantage of powerful insights provided by Big Data? If not, who should you be partnering with?
Used well, Big Data can position your company to anticipate customer wants and needs, allow you to deliver one-to-one advertising, and give you access to future customers, before they even know they want your product or service. Used poorly, Big Data can become a big distraction. Companies that get lost in the data deluge, or who emphasize accumulation over insight, will find themselves falling further and further behind. These companies will be unable to access and act on the right data, will become increasingly disconnected from their customers.
In the end, Big Data’s value isn’t really in the data itself, but rather in the insights that can be gained through careful analysis. Used effectively Big Data can provide big advantages in competitive industries, and can go a long way in helping brands stay relevant to consumers, and deliver products, services and experiences that put the customer at the center of the conversation.