As a marketer, you surely own customer data. But is it actionable? In huge, raw files, data can overwhelm you. However, when handled adeptly, data can be a marketer's most reliable weapon for driving to the core of customers' buying intentions—and meeting them there to make the sale. It's the secret sauce for achieving authentic customer-centric marketing.
But it's surprising how many organizations struggle with marketing data tools, including the people in their IT departments, who may not have the time or database management expertise to help.
Here are five ways to build a data-driven marketing culture and turn data into customer-centric results.
1. Mine your own business
Data is sometimes hiding in the inner resources of your organization—perhaps with dealers or resellers of your product or service, your sales force, or locked up in an IT vault. Dig it out so it can be fortified and put to good use.
Establish a unique customer identifier to connect disparate data sources at the customer-record level. Then, you'll have line of sight across the entire customer experience—what's happening in the dealer channel, point of sale, complaints or service calls from the call center, online recommendations, referrals, warranty data, enrollments, renewals, and subsequent purchases.
That insight will enable you to identify and investigate the relationships among those data elements. You can learn valuable information from those measurements, such as how service calls affect renewals, or how many new customers go on to make that elusive second purchase.
2. Pump life into the data
This step is where things get more difficult—but it's necessary. It's critical to wrangle sets of data from scattered subsidiaries, software platforms, and sources into a usable, nimble database via smart data manipulation. The right approach can make your database simple, complete, reliable, and useable.
Your internal data can also be supplemented with external sources. Because customers are multifaceted, internal data will help you build the skeleton; but you will need to develop profiles to flesh out what your customers really look like. Connecting data sources (see item No. 1) will enable you to understand your customers' behavior and their attraction to your brand.
External data sources, such as consumer demographics, business firmographics, regulatory filings, and credit ratings will add depth to your customer profiles. Then, the data you've collected has to be made accessible so you can describe, segment, or select your customers by any of their attributes—behavior, a particular demographic, value measurements, or other metrics. That will help you speak to customers in more relevant ways—treating a high-value customer like, well, a highly valued customer.
A data synthesis tool (we've built a proprietary system for our clients) can help you successfully handle the technical aspects of the database manipulation. Some sophisticated companies use PowerDesigner by Sybase or ERwin by Computer Associates as architecture tools to create database structure and utility.
3. Listen up
Data will talk to you if you're willing to listen to it. You can access incredible insight into a customer's frame of mind and readiness to buy.
For example, you can feed customer interactions into your database, refresh model scores, apply segmentation algorithms, and execute decision trees to deliver well-timed and relevant communication to the customer or prospect.
Those inflows and outflows can be executed via a campaign management system, such as Unica, XMPie, Epiphany, Aprimo, or others. After data is updated and scores and segments are refreshed, listen to what your customers are telling you by building alerts and triggers into your data management system.
Alerts and triggers can be "red flags" or "green flags." When a normally active customer goes silent for an extended period, she may be an attrition risk. That's a red flag. So build an alert that will trigger a communication after a period of inactivity to check in with the customer, re-establish your value proposition, and solidify the relationship.
If a customer makes an additional purchase or refers a friend, that's a green flag. Send a thank-you communication (companies consistently underestimate the value of a simple, genuine thank you) or a promotion to reinforce the behavior.
4. Measure up
Here's where it gets fun. Solid data provides direction about each audience segment, allowing you to measure every aspect of a marketing program. You can discern which communications channels customers prefer and which ones work best. You can set success metrics unique to your business, and you can understand which inputs drive success—an old Six Sigma principle.
For example, a major US health insurer with an attrition problem was losing more than 50% of its personal policy holders annually. An analysis of the policyholder base determined that the value of a personal insurance policy for one month was $139. So, one measure of success for that line of business was retaining that policy for even one additional month. Measurement and reporting was set up to track the increase in retention attributable to marketing for one additional month over the control group. Because the dollar value was established, the impact to the company's bottom line was measurable, and the company could prove the value of the marketing campaign.
5. Continually improve
The beauty of data-driven marketing is that it drives you directly to the customer. From there, every tweak of the creative elements or comparison of communication channels will be guided by what the customer is telling you. Understanding that cause-and-effect relationship is the first step to continual improvement because you have control over the inputs—the offer, the creative, and the audience you select.
Challenge and test yourself. Always use a control group so you have a baseline. Dedicate roughly 10% of the audience to a control group. Test multiple offers—some basic A/B testing. Sometimes, it's a good idea to try a champion-challenger philosophy. The champion (proven) strategy always gets most of the audience, maybe 80%. Dedicate a small portion of the audience to a challenger strategy, which will attempt to beat the reigning champion.
* * *
The results of such data discipline are remarkable. It's the difference between marketing that relies on intuition or guesswork and marketing that is driven by confident, solid knowledge of the customer.
And such data-driven marketing is proven in the numbers at two important levels:
- The first, naturally, is return on investment (ROI). The numbers communicate the return on the spend in specific channels with specific marketing methods. Marketing campaigns can be adjusted on the fly, directed by the data. And you can prove your success, as our organization did with a 2010 data-driven marketing program for Caterpillar, which yielded more than 600% return on marketing expenditure. That program yielded results in part because we could help Caterpillar track likely equipment purchase timing for small construction and landscaping businesses.
- The other half of the results payoff is enhanced and measurable customer engagement. By using data to become more customer-centric in your marketing strategy, you'll be able to measure your progress along the continuum of the customer relationship—from prospect all the way to passionate advocate and "recommender." A 2010 Harvard Business Review article made a great overall case for shifting marketing to more customer-focused orientation, calling it "the only competitive way to serve customers."
Building a data-driven marketing culture—by using data effectively to understand and align with the needs and preferences of customers—is the key to creating a competitive advantage in today's customer-empowered, customer-centric market environment.