Technology is moving at the speed of light. We can know more about our customers and prospects now than ever before. But how do we know when we’ve crossed the line from caring to creepy?
By 2020 we will have created a total of 35 zettabytes of data, according to the Computer Sciences Corporation. In Stephen Hawking’s phraseology, that’s 35 followed by 21 zeroes. Let’s face it: Our privacy isn’t what it used to be. Mortgage information is public record. Google Earth is watching. Cameras loom in parking lots, at stoplights and even in our own home security systems. In our data-on-demand world, more is always better, right? That’s true only if you have a strategy for what comes next after data collection. Creating great content is only the beginning, according to Forbes contributor Greg Petro. Context marketing must provide the right content to the right prospect at just the right moment. Marketers have more access to data than ever before, but the key is to understand what comes next. Our customers must receive value in return for giving up something personal. Otherwise, the relationship falters and suspicion arises around the use of data. As marketers and as stewards of consumer data, we need to ask four key questions if we want to be relevant and build trust in our marketing outreach.
1. Did I Ask Permission?
We’ve all seen those hard-to-read financial service and insurance disclosures that are mailed annually in legalese and ultra-fine print disclosing how our data is or isn’t used. These statements are telling us what happens with our data. What about asking? Have you asked your customers whether they would like to hear from you, how often they would like to hear from you, what channel they prefer (email, phone or direct mail) and what content interests them the most? We all feel obligated to sign up in our retail brick-and mortar experience for that loyalty card, but we are told to provide our email address rather than asked how we would like to be contacted.
2. Why Do I Need More Customer Data? What Do I Look For?
Accumulating information is appealing. After all, mining data is like looking for the gold amongst the rocks. But there’s just too much to sift. So let’s think about data in tiers. This will help prioritize the effort, time, and cost to collect and analyze.
Tier 1 Data
Let’s say you have a base of customers who have been diligently tracked in your marketing and financial system. You know what they bought, how long ago they bought it, and what their customer journey looks like. This is the most valuable information. This is Tier 1, what they have done with you. No competitor has this information – only you have it. The data is proprietary and shows your customers’ “votes” (what they like and don’t like through their purchase patterns) and how profitable they are to you.
Tier 2 Data
However, you want to enrich the what from Tier 1 with why. This involves looking outside of your organization to Tier 2 data. This data represents behavior outside of your company. For example, which websites are my customers visiting? Where do my customers live, work and play? Tier 2 data is dynamic, or ever-changing. It helps us infer why customers do what they do. Customers have families, travel, browse online, and visit locations for food, clothing and entertainment. Collecting this data is a bit more challenging, but it’s worth mining for the understanding of individual motivations. It helps reveal why our customers seek a product or service and whether that need is relevant to our offering.
Tier 3 Data
Tier 3 data is about the who. These are the demographics and psychographics around customers, their families, and friends. This information helps us with relevancy. In other words, if I know my customer is a mom with teens, I’ll be better able to personalize my message. In summary: Tier 1 tells me hard facts about purchase information – the what. Tier 2 is the why. Before we craft messaging for Tier 3, we have to consider behavior from Tier 1 and why that behavior occurred from Tier 2. Now we are ready to personalize.
3. Is There A Value Add To My Customer & My Business?
In addition to “big data,” “machine learning” and “marketing automation,” you have probably also heard the “beacon marketing” buzzword. This has created significant attention among marketers, and would fit into Tier 2 data. While beacon marketing may be the latest shiny object, Forrester’s Thomas Husson points out that beacon marketing (a.k.a. location-based marketing) has a great deal of disruptive potential to bridge the digital and physical worlds. But marketing leaders must resist the hype and think strategically and responsibly about how – and whether – to implement programs around this data. Regardless of the type of data collected, customer and company alike must benefit. Applying this to beacon marketing, we must consider:
- Cost of installing the technology.
- What benefit is provided to the customer? What’s your quid pro quo?
- Do you have a strategy? Who will receive an offer based on proximity and at what point in time?
- What are the legal terms and conditions for customers to opt in and provide their location data?
While these are immediate considerations, it remains to be seen whether the strategy can pay for itself. A long-term view based on ROI must consider loyalty and advocacy over an extended period of time across existing and future customers.
4. How Will I Store & Use Data?
Last, but certainly very important, is the topic of data storage. Exponential growth of collectible detail has resulted in expanding needs for data storage. Rapid access to high volumes of data must also be considered. Amazon Web Services, Google Cloud and Microsoft Azure allow rapid deployment of inexpensive storage. The ability to integrate, store and consume data at any point in time is key. Why? Getting the right communication in front of consumers with the right context will support their next decision. Marketers must determine which real-time data is worth storing, how to make efficient use of it, and how to maintain customer value and privacy along the way.
What’s Next?
Use a crawl/walk/run approach to data collection, usage, and storage. Get started by taking inventory of customer data within your organization. Analyze and isolate the information that brings the most value to your customer and organization. Store this data. Next, review outside data sources, paying attention to depth of detail and ROI. After the review, estimate the cost to ramp up to the next level of data management, storage and strategic value. Critically assess how much external data is necessary, what infrastructure is required to house it, and how your organization and customers will derive value. This approach takes time, but the result will be increased customer and company satisfaction from a carefully planned approach to the latest information.