Sounds like my next title...
Marketers Flunk the Big Data Test →
This is a great article on making data actionable in marketing. This is the toughest part of Customer Intelligence. Creating reports is so much easier.
On average, marketers depend on data for just 11% of all customer-related decisions.
This is a disturbingly low number, but one that does not surprise me.
But in today's volatile business environment, judgment built from past experience is increasingly unreliable. With consumer behaviors in flux, once-valid assumptions (e.g., "older consumers don't use Facebook or send text messages") can quickly become outdated.
In my industry what worked 10 years ago has no bearing on what works today. Even what worked before the recession does not translate. What your customers are doing today is more relevant than what they used to do.
When we tested marketers' statistical aptitude with five questions ranging from basic to intermediate, almost half (44%) got four or more questions wrong and a mere 6% got all five right. So it didn't surprise us that just 5% of marketers own a statistics text book.
Marketing analysts don't even have statistics backgrounds. Analysts who have SQL background and can get data are usually the ones that shine, however they usually don't make the best analyst. Analysts are supposed to analyze data, not pull data.
...dashboards often capture response-based metrics such as clicks and open rates that aren't tied to more important measures such as customer loyalty or lifetime value — and yet, marketers are rewarded for improving the response metrics.
Defining the right metrics are so important. Marketers have to look at the long-term value of guests and resist the temptation to micromanage individual campaigns.
Why Email Marketing is King →
A retailer I've worked with which has 900 stores and is very active with email campaigns recently did a great study. It took a group of 105,000 customers in its loyalty club database, divided them into three groups of 35,000, and marketed to the three groups differently, as shown in the chart below (click to see a larger version). Thanks to the loyalty program, it was able to see all subsequent purchases by these customers.
Direct mail has a higher response rate than email. But note that direct mail costs about 100 times as much. Meanwhile, the data collected by the retailer allowed it to calculate its off-email multiplier (a simple matter of dividing the percentage of online sales by the percentage of in-store sales generated by email-only marketing). It is 3.76. In other words, for every email shopping cart sale, this retailer gets 3.76 other, typically non-tracked sales due to the email.
There are a couple of things I have a problem with that logic.
- The logic takes every single transaction from either mail or email used with a loyalty card as 100% because of the way they were marketed. My guess, there's plenty of transactions that happened regardless of the marketing
- The direct mail and email made nearly $135,000 more than just the email alone. This well covers the 100 X multiplier of the direct mail and made more profit. So why is email and direct mail together not king?
Now don't get me wrong, I like email, but it is a tough channel these days with many businesses flooding the inbox of the customers. Savvy customers have a separate inbox for businesses because they don't trust they won't get spammed.
Just don't discount direct mail in this day and age. These days your message has a lot less competition in that channel.
Three Myths about What Customers Want →
Most marketers think that the best way to hold onto customers is through "engagement" — interacting as much as possible with them and building relationships. It turns out that that's rarely true.
Myth #1: Most consumers want to have relationships with your brand.
Actually, they don't. Only 23% of the consumers in our study said they have a relationship with a brand. In the typical consumer's view of the world, relationships are reserved for friends, family and colleagues.
The debate about whether social media and brands can really co-exist. Do customers really want a message from a brand right after viewing new baby pictures of their niece? These may be separated out in the future, a la foursquare.
Myth #2: Interactions build relationships.
No, they don't. Shared values build relationships. A shared value is a belief that both the brand and consumer have about a brand's higher purpose or broad philosophy. For example, Pedigree Dog Food's shared value is a belief that every dog deserves a loving home. Southwest Airlines' shared value revolves around the democratization of air travel.
Customers can turn on a dime. Southwest has such a loyal following because they made traveling something for the rest of us. Brands like Apple bring people in to what they can do with their devices and how it can enhance ones life.
Myth #3: The more interaction the better.
Wrong. There's no correlation between interactions with a customer and the likelihood that he or she will be "sticky" (go through with an intended purchase, purchase again, and recommend). Yet, most marketers behave as if there is a continuous linear relationship between the number of interactions and share of wallet.
This I have seen time and time again. It amazes me how many emails I get from large brands on a daily, sometimes more than a daily basis. I start to ignore these emails, as they tend to start offering the same thing over and over. Even for large retail brands, there are only a few items that they can target to my specific wants and needs, so many communications will see my interest wane. Make communications worth opening, it is much better to send an email that the customer will always open than an email they may just delete because they don't have time or they have become immune to too many communications.
Pin Down Your Customer Intelligence Objectives →
The problem with customer intelligence is that while everyone wants more of it — and better versions of it — there are many different avenues to take in pursuing it. No organization can pursue all of them at once ... so the challenge is to narrow down the options fast. You need to reflect on your business situation and goals and consider only the initiatives that will offer the highest impact.
The common mistake of customer intelligence is companies want to do everything all at once. Rarely is there enough resources or technology to make this strategy a reality. Start from the basics, which I believe is the data warehouse, and then attack the items which will provide the highest return on the time and investment. Focus on becoming great in each area before attacking the next.
Too Much Data? →
When data is missing, we overestimate its value. Our mind assumes that since we are expending resource locating information, it must be useful.
We're fascinated with filling information gaps and that obsession can lead us astray. Especially today, when reducing uncertainty has become all too easy.
An interesting study on how our minds work utilizing data. I see this everyday. People are more fascinated with the information they don't know, rather than looking at what is known and making a solid decision based on the facts at hand. So many times a report is issued and there are thirty questions, most of the time the questions are deflecting making a decision. The lack of some piece of data is reason enough to put off the decision and look for further validation.
I believe there is a combination of data and experience hat goes into making a qualified decision. Validation of whether a decision was right or needs to be tweaked happens after the fact. There is never going to be enough perfect data to make a right decision 100% of the time, so trust your experience and the data you have.
CES Thoughts
In reading all the articles and great new products at the Consumer Electronics Show this week in Las Vegas, something struck me as interesting. These companies have very extensive organizations and huge resources in R&D, yet nothing seems to be truly innovative. Why is that?
I used to work in a technology company for the gaming industry, technology was even in their name. Seems a majority of these companies are engineering and sales focused, this particular company sure was. Now I am not saying that as a slight to engineers, it is just that engineers tend to be, well, engineers.
Engineers build cool stuff. They believe most people think like them, but the truth is most people don't think like an engineer. Consumers want technology that is intuitive and they want to be guided through user interfaces and hardware. Engineers want complex and open.
The products that I saw at CES were all in response to competition. It seems like a "we need that too" mentality that puts these companies in a catch-up position. Why is everyone after Apple? Why is Apple so successful?
Apple is so successful because they put themselves into the shoes of the consumer. Steve Jobs is obsessed with UI and customer interactivity. How ill a consumer use this device, what buttons will they hit, how would a normal everyday Joe think when presented with a particular screen. Engineers don't do that. Engineers are obsessed with creating something technologically amazing. The problem is most of the time it makes it very hard for the consumer to use it. Apple takes that great thought and says, how can we make this easy for 98% of the people and use cases. Sure, the 2% think it is terrible, but the 2% doesn't pay the bills.