"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Chris O’Hara, vice president of global data strategy and agency lead at Krux.
Although it’s starting to become a well-worn aphorism, “data is the new oil” resonates more than ever. Like oil, data is an abundant resource, but it doesn’t become useful until it is refined for use and turned into fuel.
Without the proper refinement, big data may be worthless. The stock of big data unicorn Palantir, for example, sunk on news that it lost key client relationships due to a lack of perceived value. The company collected abundant data from CPG companies but was unable to apply it to practical use cases, according to a recent article.
Marketers are starting to turn away from using abundant, yet commoditized, third-party data sources in exchanges and move toward creating peer-to-peer data relationships and leveraging second-party data for targeting. This speaks to the refinement of targeting data: Better quality in the raw materials always yields more potent fuel for performance. Not all data is the same, and not every technology platform can spin data straw into gold.
This is a beautiful thing. Technology is enabling marketers to mine their own data and own it. Yet many marketers are still just scraping the surface of what they can do, and using data primarily for the targeting of addressable media.
Some, however, are starting to deliver customer experiences that go beyond targeting display advertising by using data to shape the way consumers interact with their brands beyond media.
The case for personalization – customer experience management, or CX – is palpable. When the Watermark Group studied [PDF] the cumulative stock performance of Forrester Research-rated “leaders” or “laggards” in customer experience, the results were staggering. During a period in which the S&P 500 grew by 72%, those focused on personalized experiences outperformed the market by 35%, and the laggards underperformed by 45% on average. That’s a delta of nearly 80% in stock price performance between the winners and losers.
Moreover, 89% of customers who have a, unsatisfactory experience will leave a brand, according to a recent study; the cost of reacquiring a churned customer can run up to seven times the amount it took to win a new customer.
The stakes could not be higher for marketers and publishers looking to drive bottom-line performance. For many companies, whether they are marketing print or online subscriptions, promoting their content or selling products off the shelf, it’s hard to justify the heavy costs associated with licensing platforms to gather the right data and use that data to drive relevant customer experiences to their CFOs. Yet, when looking at big company priorities on multiple surveys, the desire to “create more relevant customer experiences” is right up there with “earn more revenue” and “increase profits.” Why?
The simple answer is that customer experience has an enormous impact on both revenue and profitability. Giving new customers the right experience provides a higher probability of winning them, and giving existing customers relevant experiences reduces churn – and creates opportunities to sell them more products, more often. When both top-line revenue and profitability can be driven through a single initiative, most CFOs start to invest and will continue to invest as results confirm the initial thesis.
Take the “heavy user” of a quick-service restaurant who dines several times a week and consistently transacts an over-average per-visit receipt. QSRs understand the impact these valued customers have on the bottom line. These users provide a strong baseline of predicable revenue, are usually the first to try new product offerings and respond to market-facing initiatives, such as discounting and couponing, which can strategically increase short-term receipts. Smart marketers should not be content to sit back and let this valuable segment remain stagnant or find new offerings with a competitive restaurant. They must show these users that they are valued, ensure they retain or increase store visits and keep them away from the hamburger next door.
That can be as simple as offering a coupon for a regular’s favorite order. Or it can be as complex as developing a mobile application that enables the customer to order his food in advance and pick it as soon as it’s ready.
Since the restaurant collects point-of-sale data and has authenticated user registration data from the mobile app, it can now personalize the customer’s order screen with his most popular orders to shorten the mobile ordering experience. Perhaps the app can offer special discounts to frequent diners for trying – and rating – new menu items. When on the road, the app can recommend other locations and direct him right to the drive-in window through popular map APIs. The possibilities are endless when you start to imagine how data can drive your next customer interaction.
Marketers and publishers are quickly embracing their first-party data and aligning it with powerful applications that drive customer experience, increase profits, reduce customer churn and boost lifetime value.
It’s a great time to be a data-driven marketer.