Big Data: Why more data is better for brand loyalty and customer experience

We've recently started talking to a brand which has around 700,000 customers in its database. They have collected lots of behavioural data, by which I mean transactional data - recency, frequency and value (or RFM) - and response data. This response data is all about what happens when the customer is sent a piece of communication, in this case an email. What they do, when they do it, where it leads. Say the database contains 30 fields. That's 21 *million* pieces of information, all tied together to create a big fuzzy room we can in effect walk around, try to make sense of, and manipulate to achieve commercial goals. 21,000,000.

Everyone talks about Big Data as if it were some kind of technological nirvana. The reality is you can gather data from a whole lot of sources and stick it all together more or less by hand, if you need to. In practise, Big Data is shorthand for the notion that if only you could mine, interpret and extrapolate all the data you could get you'd have some kind of joined up living solution to customer engagement, almost a mindmeld between your brand and a collective representation of your customer base in its entirety. Nice.

The reality is that data is an enabler, something you can make use of - not something that should make your decisions for you.

So how does this pragmatic approach work? There are a number of critical steps to take you  from having on the one hand a commercial goal and on the other some customer data. First, make sense of the data. Customer insights start with understanding what kind of data you have. In our CRM terms this information breaks down into three broad groups:

Demographic - who the customer is
- Gender, age, life stage
- Location
- Income
- Status
- Family make-up
- Education etc.

Behavioural - what they do
- What they have bought
- When
- In response to what
- How much do they spend
- How long is their 'customer lifetime'
- What channels do they use
- When do they respond most

You can see already that by combining some of this information you can infer quite a lot about the way you might want to talk to some of your customers. It is obvious that you can start to create segmentation based on demographic and behavioural data. However, this approach to segmentation may help you to be efficient (behavioural) and accurate (demographic) in who you talk to, but it often does not tell you what to talk to them about.

Taking the classic example of customers of a prize-based fantasy football league, segmenting by these two dimensions might lead you an easy segmentation based on whether the customer buys one or twenty teams (behavioural) and jump to conclusions about their financial status (demographic).

3D segmentation adds a new aspect, motivation, to the mix. If you can divine what motivates your customers then you can speak to them using motivation-based segmentation and that may actually provide the cut through that's required in a highly competitive environment.

Motivation - why they do it
- Need state
- Environmental factors

This dimension can change based on changes in the other two dimensions; for example changes in family make-up or life stage may radically alter someone's drivers for engaging with your brand.

In the case of the fantasy football league, by looking not at behaviour or demographics (which didn't appear to correlate) but by motivation, through the simple expedient of a brainstorm with everyone we could find near the meeting room we reached an insight we could test - first by checking the correlation with the behavioural data, second by sending a brief questionnaire to a standard sample. The insight was that customers bought principally because they were either motivated by passion for the game (bought a single team) or by the desire to win the prize pot (bought twenty teams).

By using this simple insight we created two segments serving two types of (relevant) content. These were then split into time-based sets based on where the customer was in the product lifecycle (new joiners, mid-season etc.) so we had six or seven simple segments.

Revenue went up 93% in 90 days. The client was The Sun.

The job of data is not to confuse or confound. The job of data is to allow you to extract simple insights that allow you to run singleminded campaigns that tap into your customers' motivations so that they want to engage with you. As we start to think beyond the age of CRM and focus on rapid growth, it is imperative that Big Data doesn't become an encumbrance. Data should be there to provide insight so you can get on with the engagement - because how you engage with your customers is the only thing that will drive your success.

Customer engagement for bars (or, teaching granny to suck eggs)

In the olden days (pre-1995), when customers knew the name of the person serving them and vice versa, life was good. Then along came the internet. People stopped going out for a drink to socialise, catch up or find a friend. We were told then that the power had to transfer to the brand, or at least the vendor. Marketing became about how you presented your brand and how you attracted people in. All the while customers were losing focus on what was attractive and turning their attention to what met their needs best… and online met their needs pretty perfectly.

So what are the best decisions that need to be made to address this change? First ask yourself: can we compete without going online? If your answer is ‘no’ then you need to assess how best to target your customers and by what means.

Social media, used largely (at least in my own life) to work out where to go for a celebration, catch-up or a noisy bit of fun. In other words, the perfect media platform to reach customers to start / maintain relationships. It’s pretty simple to make work in fact: get to know your customers by observing their behaviour (on your website, in response to your emails and/or tweets) then make sure you use those channels to say things that they want to know or hear.

However, social media isn’t the only option available. Email – today’s postcard – cost pennies to generate and send, even in relative bulk. For this kind of approach of course you need data. You could gather this at the point of sale and add it to a centralised database – which would be as simple as an Excel spreadsheet. By offering some kind of value exchange when you visit the website - perhaps a free drink next time you visit - you will be able to further your data capture which will allow you to create targeted, timely and relevant campaigns to drive sales and support your ongoing relationships.

Where once in the golden days a bartender would know each customer by sight, today, bar owners can know the customer through digital tracking. The internet has enabled a one-step removal of customer engagement and, in turn, this means bartenders can engage with many more customers than before. As you can gain much more information through this channel than if you were to try and speak to each one on a busy evening. Twitter, Facebook and email will become your friends – and your new way to make new friends – because by being your customer’s friend you’ll take them back to the good old days, and this could be the difference between fading away and reinvigorated, transformational growth

The digital conundrum

Today’s question: we’ve arrived in the digital age, everyone’s online, Blue Nile’s cleaning up on diamonds, and the whole world seems to have gone social media mad – so, should we jump on the bandwagon too? For the small family jeweller, or even the large high street family jewellery chain, it’s a question that has taxed business owners and marketers with increasing frequency over the past few years. Indeed, now that the smart phone accounts for nearly as much online traffic as PCs, and the website is almost every retail chain’s largest single store, it’s a question that has gone from one that might have been shelved until now to one that may well be business-critical imminently.

So what are the basic decisions that need to be made, how do we decide what to do, and how should we prioritise? The first is simple: the decision is based on a simple set of questions, all around threat/opportunity. Can we compete without going online? Can we gain any benefits from going online? And to answer this, the process is relatively straightforward. You need to ask yourself how you relate to your customers.

For example, are the majority of your customers one-off purchasers? If so, are they really? In other words, do they buy on several one-off occasions (wedding, birthday, Christening, Bar Mitzvah, anniversary)? And if so again, is there something you can do to keep a relationship going? Of course, retailers already do a lot of good things, from a great in-store experience, knowledgeable and engaging staff, appropriate (via self-selecting customers) range of products ... but how do you follow this up and keep in touch? Digital channels may provide one answer of course, as email – today’s postcard – costs pennies to generate and send, even in relative bulk.

If you have a few hundred customers it’s fine to do this by hand, because you can do this instantly and more or less from memory, but again digital’s power here is the ability to divide customers up into groups (husbands, over-50s, partner’s birthday in October, anniversary in May) and automatically send the right message to the right person at the right time. Simple segmentation like this can mean compelling messages, as opposed to the one-size-fits-all approach most retailers seem to take. In fact, an approach like this uses the power of digital to re-create the personal service-based relationships of old.

For this kind of approach of course you need data. The big retailers have this down pat and collect data at point of sale (age, marital status, reason for visit, products looked at and bought, birthday etc.) and add it to a centralised database (which could be as simple as an Excel spreadsheet or as big as a Single Customer View database integrated with your EPoS system). You can augment this data at the till, or by leveraging your website. To do this you might consider asking customers to visit the site and they’ll get some value exchange, perhaps free engraving next time they buy, or a free trinket (first of a collectable) for their daughter, or the chance to win something. This kind of simple value exchange gives you an opportunity to learn both about the individual and about your customers in general. This in turn gives you data from which you can start to make decisions and of course, the data with which you can create targeted, timely and relevant campaigns to drive sales and support your ongoing (if infrequently manifested) relationship.

One benefit of a relationship supported and bridged online is that you can use it to ask questions about your strategy. For instance, if you’re trying to work out if your customers might buy if you built an e-commerce site, ask them. You may be surprised, they may tell you things you never knew (“we browse in your shop because it’s friendly but we buy from your competitors online because it gets delivered to the recipient gift wrapped.” or even “My family used to come to the shop but we moved away and only get there once a year, we might buy more often if we could do it from home!”), but of course you do have to ask in the right way. Most people like to be asked their opinion though, as the implication that you value their opinion confers a sense of belonging and ownership. Your website is the perfect venue for this, especially as a simple survey can be extremely cheap to produce and promote.

The benefits may not immediately justify spending thousands (or even hundreds of thousands) on a serious e-commerce strategy. But, by creating relationships with your customers, by using cheap and easy channels like email to help bridge the long gaps between visits to your shops, you can easily develop loyalty and brand fealty, at a very low cost.

By the time you have hundreds of thousands of customers, and you start changing the purchase patterns – say frequency, or order value – of swathes of them by a few percent, you could be talking millions in incremental revenue. Even for the independent family jewellers, the difference between a declining, ageing customer base visiting spontaneously and a loyal, engaged customer base who increasingly use the internet to keep in touch, make decisions and use the web to book appointments to view and choose wedding rings, may even be the difference between fading away and reinvigorated growth.

Blockbuster, Jessops, HMV... but who's next? WHSmith, we're coming for you

Guest post by Alice Baker, Account Manager at Westgate Communications 

It was a tragic day and a clear sign of the times when a British institution like Blockbuster finally shut it’s doors. I’ll never forget the day my mum took me into the store to purchase Beauty and the Beast (a classic I might add) on VIDEO for my Birthday; something she had to pre-order because it wasn’t available elsewhere. Clearly, I’m showing my age, but the memory still makes a distinctive point - we needed Blockbuster in our lives. Disney is very important to a five year-old.

Fast forward twenty years and I enter that famous store again, this time for another classic: Reservoir Dogs. “Sorry, we don’t have it” the shop assistant replied. Angered by her indignation, her shrug, and by the fact there were 47 useless copies of Bridget Jones’ Diary strewn around the store, I realised Blockbuster had finally become disillusioned by what its customers wanted. It was also clear that I no longer needed the store; for Disney or Tarantino, it didn’t matter. Streaming became the way forward and quite honestly, I’ve never looked back.

A dissatisfied customer I may be, but the point that it makes is that in the last five years the consumer power of our UK high-streets has now shifted from retailer to customer. Blockbuster no longer had what I needed - availability of films, knowledgeable staff etc. - so I went elsewhere.  Understanding what your customer needs and what your USP is, is essential for maintaining customer loyalty. Adapting your retail channel to suit these needs is also vital because consumers appreciate retailers being considerate to their needs.

So who’s next to go? I’m hedging my bets - or should I say hopes - on WH Smith. Here is a store which epitomises all of the issues above. It’s expensive, it has no USP - does it sell books, sweet or arts and crafts materials? And the staff seem adamant on selling me a giant bar of Dairy Milk every time I purchase a lottery ticket. The staff are generally unfriendly and mostly unhelpful and their website seems to offer the same service too as its far from intuitive; so why oh why has it survived at the forefront of British retailing for so long?

As digital books sales with the likes of Amazon and Kobo continue to rise how much longer can WH look to hold on?

Underwired caps incredible month with RAR finalist place

Underwired, the leading eCRM and Customer Engagement agency, has been shortlisted in the Recommended Agency Register (RAR) Awards.

The awards recognise the agencies that have been highly-rated by their clients and to date, over 14,000 customers have rated the agencies they work with. The awards are a reflection on an agency’s ratings across a number of areas including Creativity, Effectiveness, Value for Money, On Time/On Budget and Client Service.

This news comes on the heels of an incredible year for Underwired, which now counts Marks & Spencer, Mitchells & Butlers, Travelodge, British Land, ASICS worldwide, East Coast Railways and the Financial Times among its clients. Less than a year ago the management team led by Jason Holland and Felix Velarde took the agency independent, and in the past month Underwired has won over £1m of contracts.

Jason Holland, Underwired’s co-founder and creative director, said “This reflects Underwired’s culture of partnership and collaboration, and in particular the rapport the client services team has built with our clients. We do business-critical, highly strategic work, and that demands genuine trust. That’s built on a foundation of value for money and doing stuff right and on time – but it’s also partly a reflection of the passion we have for the work we do with our clients.”

The advent of Customer Engagement Marketing

We went through a recession, and while we weren’t looking, the world of marketing changed. We discovered as an industry that making certain that marketing governance is based on sound principles is critical in a recession. Digital marketing, with its granular tracking and ability to follow a customer from first contact, means you can observe his or her behaviour while they consider their first purchase and beyond. When digital marketing is joined up correctly, you should be able to establish precisely how much value you generate for every pound that you spend. And this accountability, during the recession, meant a degree of comfort that marketing actually was working. In other words, we gave credence to – and then priority to – marketing which has built into it a chain of custody.

The traditional view of brand marketing was centred around the way the business wanted to engage customers. To some extent, in the early days of internet-based marketing, this notion of brands built around customers’ needs was lost, at least temporarily. It became ‘build it and they will come’ – a conceit founded on the novelty of the medium: indeed, when I set up my first digital agency there were around 250 servers on the World Wide Web. Attendance and engagement could be reliably assumed.

The idea of a brand built around what the customer wants has of course changed as a result of the mediation of the internet. The customer is still at the centre of the business’s universe, but this position has evolved. Marketing, once predicated on understanding demographics, motivation and behaviour, can now be said to pivot about which channel the consumer is (or may be) consuming at that precise given point in the customer lifecycle when they are considering a step in their dialogue with the brand.

In simple terms, where once we considered marketing to be about mapping the progression from one medium to the next (TV followed press and PR, followed by Direct Marketing) this new age means we map the customer as she travels from mobile to Facebook, email to website and via SMS to shop.

In turn, this must be mapped against the decision-making cycle: first contact to second, peer review then press review, comparison sites, reminder banner, examination of features, emailed offer then shopping basket. We end up with a two-track series of events, joined at critical touchpoints which define the medium in which we pass on a specific, perfectly-timed message.

This form of marketing planning is necessarily going to be slightly different from segment to segment (a young mum’s media consumption is going to be radically different to that of a Baby Boomer), and from product to product. But the framework is sound, and applies as much to a high-value B2B proposition as to an FMCG brand – in fact we’ve used it for products as diverse as McCain oven chips, ASICS sportswear, Travelodge and the FT. What it delivers is a rational, measurable chain of custody from first contact to value. From this continuous sequence comes your brief for the messaging at each touchpoint, a detailed resource requirements list, indeed a foundation for micro and macro KPIs.

This new post-recession type of marketing is called Customer Engagement Marketing. It takes the power of the brand, dethroned by a combination of recession and digital renaissance, and refocuses it on the customer. In essence, it recognises that the customer is now the centre of everything, and that our job as businesses is not just to design our products around them but to design our marketing around them too.

Evidence-based marketing: myth or reality?

Apparently a Facebook ‘Like’ is worth £7. Isn’t that brilliant? If you have a hundred thousand followers that makes your social media strategy absolutely rocking news. The question is, says Felix Velarde of digital CRM agency Underwired, how many of you really believe it?

We ran a campaign for an FMCG client a while ago, in which we emailed a segment in the customer database using very specific messaging – it was relevant, timely and well-designed. The click-through rate (CTR) of 88% was staggering in anyone’s book. I’d like to say every campaign we run gets that kind of result, but occasionally we crash and burn too. Anyway, wow, what a great result. But what does it mean?

The digital marketing industry seems to be founded on metrics and key performance indicators (KPIs) of variable – if not downright dubious – quality. If you judge any of the industry awards you will know that half the entries benchmark against industry standards which in a lot of cases appear to have been made up on the spot: “Campaign X achieved a CTR of 12.3%, beating the industry standard 8% and therefore deserving of a Gold.”

This is where I have the first of my issues: even if there *is* an industry standard click-through rate, does it really apply to your campaign? Our campaign got an 88% CTR because it was highly targeted to a known audience expecting the email with a fantastic proposition. If it had achieved 12.3% or even 24.6% it would have been a failure. The truth is that no matter what the CTR is, one thing it is not is evidence of anything that isn’t either subjective (“I say, that’s awfully good isn’t it?”) or comparative (“Blimey, did much better than last time!”).

The second of my issues is that all these benchmarks aren’t evidence of sales. And hard revenue really is the only figure that ever matters (and before you ask about brand consideration or sentiment, these are both abstractions of sales – higher brand consideration may imply higher resulting sales, though you’d have to test it to find out if it’s really useful). So what is the *evidence* behind the assertion of success? How do you track from the planning phase through the campaign, to the reality of the effect on sales?

Well, it’s pretty easy in e-commerce. Straight-through processing (which is what the financial industry calls tracking the customer from first contact to order) in digital is quite simple these days. Ad tracking (display, affiliate, PPC and natural SEO) is relatively easily linked to website analytics, thence to email service providers (ESP), back to websites and even passing through couponing and promotion systems. It’s been done plenty of times by the big brands, and even small brands can buy integrated services. So if you’re an online retailer it’s pretty straightforward.

If you’re an FMCG brand you can still do it, although you may need to be a little more sophisticated about it. For example, this might mean matching your customer segments to commercially available purchase data and running regular surveys to track buying patterns in your base and cross-checking them against buying behaviour. If you’re a retailer you can find mechanisms to collect customer data and purchase behaviour at Point of Sale and match this data back to the single customer view.

The trick here is to get real data about whether your campaign actually worked, as opposed to seeing floating KPIs that may or may not indicate the same thing – but which provide no scientific basis for decision-making. How many times have you seen “successful” campaigns stopped? There’s a simple reason: there was no evidence to show they generated a profit. If there had been and they had produced £26 for every £1 spent, nobody in their right mind would stop them. Evidence is critical. Myth or reality? Evidence-based marketing is the only thing you should be *allowed* to do!