First of all, we wish you and yours a very happy and joyous holiday season. We are thankful for all of you and appreciate the support, interest and collaboration that we’ve experienced in 2015.
For this month, we wrap up 2015 by focusing on another evolving best practice in marketing: the use of customer data and the derived analytics that help guide customer marketing success.
As you may have seen in our email communications in October and November, we’ve highlighted key “best practices” in customer marketing, including how customer experience is becoming the new loyalty and bridging the gap with relationship marketing. Now, we focus on the idea of “Data Value Exchange” and how it influences the success of customer marketing initiatives.
Here are a few factors that will provide context to fully understaynd our perspective:
- As we’ve highlighted consistently over the last year, the world of customer marketing is evolving incredibly fast with new “silver bullets” being created and new labels being slapped on evolved marketing strategies.
- From our point of view (as well as the direct impact on our business), loyalty and the expansion of the customer experience are being prioritized as one of the key marketing and business strategies over the next generation.
- According to Forrester, and we agree, it’s now the Age Of The Customer, which means that brands, marketers and business owners have to build real customer relationships that sustain the business trajectory, deliver on key KPIs and protect the brand. Mass promotion and discounting in general ultimately negate growth.
- As part of reacting to this new customer dynamic, the dependency on data and information is great and fundamental. There must be a distinct plan with discipline and direction.
Marketers are finally beginning to understand the power and Data Value Exchange (big and small), and that with data comes opportunity and responsibility. Earlier this year, Microsoft published a white paper called The Consumer Data Value Exchange in which it outlined the roles and responsibilities of data capture. The compelling elements from the paper include the types of data that should be gathered, how marketers need to treat data, what consumers expect from this and how value exchange really is about respecting and using the data. It’s a good read to help understand the world of data capture.
Additionally, we’ve been reading about the fundamental shift that marketers are starting to make to prioritize gathering 1st party data to build the foundation of consumer insights and organizing a strong customer marketing franchise. However, what’s missing from this idea and the Microsoft paper is how data ties back into real actionable customer marketing.
In our loyalty and customer marketing work, data is paramount in delivering improved customer experiences and relevant communications. Proper capture and use has expanded into distinct strategies from progressive profiling to fully architected customer journeys. This is where the Data Value Exchange (DVE) comes into play.
DVE is the data value exchange that brands and customers make in order to use customer personal data. For brands, the exchange is based on what they are giving back to the customer for use of their data. This exchange is not simply monetary as it includes a promise of privacy, relevancy and personalization. This is what is often misplaced by marketers when they define their DVE strategy. The assumption that is made is that to increase data acquisition, you must incent customers through a traditional loyalty program or promotional campaign. Today, it is just not the case.
Further, the Microsoft paper explores how a key component of driving data collection is the hope of identifying customers early in the marketing lifecycle so that tying back the 1st party data (transactional, behavioral, demographics) becomes more accurate and timely. It is this point where we see marketing leaders initially reach out to us to consider a loyalty strategy, but this is just the beginning.
Data capture should be viewed across all marketing touch points and can be both implicit and explicit. As part of a broader customer marketing strategy, customer data is gathered and exchanged for more targeted communications, offers and even improved experiences (such as efficient improved checkout process for e-commerce, greater leniency on returns or personalized welcome gifts when you check into your favorite hotel).
Data Value Exchange requires a balance to maintain its importance and strength in driving customer marketing. Balance means ensuring that the consumers’ return equals their investment, so being transparent with use of data is important for marketers and brands. If you know your customer’s name, use it. If you know that they always pick the window seat when they make their plane reservations, be one step ahead and pre-select it for them. These are just simple and transparent deliveries of Data Value Exchange that reinforces why the customer should trust your brand.
By expanding our view of Data Value Exchange toward the ultimate goal of improving customer knowledge, it’s important to recognize that a strong, comprehensive data capture strategy leads to a strong customer insights foundation. A marketer’s ability to wade into the world of Big Data is fundamentally dependent upon its DVE strategy. Segmentation, predictive modeling, and LTV measurements depend on solid and accurate customer data. With a good, balanced DVE, a marketing analytics team has the world at their fingertips; and, ultimately, the harvest of these insights in today’s marketing landscape is what drives engagement, improved experience, loyalty and brand advocacy.
So, where do you head now with this information? We recommend evaluating the following best practices with data value exchange:
Have a plan – What is your ultimate goal of gathering customer information? Know the inputs, evaluate your data capture architecture, establish a plan to fill in the gaps and check the data value exchangebalance. Do you win? Does your customer win?
Be transparent – Create a mixture of explicit and implicit points that demonstrate overt use to gain your customer’s trust.
Test and learn – The challenge of collecting and using data is never over. It is an ongoing process that should get better, more valuable and efficient. Establish a learning plan that keeps yielding 1st party data points.
Conduct an audit – Establish the right type of analysis plan to ensure that you are always maintaining the DVE balance. Once the balance shifts to you (the marketer), it becomes difficult to get back to balance and trust.
As 2015 closes, we are very excited about 2016. It holds much promise and not a shortage of challenges, but ultimately it will represent a better opportunity for customers to get the most out of their relationships with brands.
Dive into DVE to see if that's what’s holding your customers back from starting a deeper relationship with you.