Five Ways to Win with Data-Driven Marketing

Data-driven marketing has come to the forefront for companies that want to better engage their customers and prospects. With data-driven marketing, firms are able to gather, integrate, and assess data from a variety of internal and external sources to help enhance value.

Marketing automation starts with data.  In fact, in the digital age, almost all marketing initiatives start with data.  Companies who are data-driven have a distinct advantage over their competitors.  When a company is data-driven, they focus on their strengths, enhance their weaknesses and they don't obsess over their competition.  They have the data to understand how they can improve.

1. Determine what really makes customers tick. According to the DMA, data-driven marketing is about discerning what customers want and need and engineering the company to provide it: “The more firms can use data to develop a 360-degree, multi-channel view of what customers think and want, the more the customer will truly be king.” Through the use of both internal and external data, companies are learning how to “crown” their customers — truly understand what makes them tick, and then develop campaigns that engage them in the most effective manner possible.

This all comes with data analytics.  Understanding what drives your customers behaviors is step one to developing campaigns and offers.  Without an understanding of what your customers want, there is not an efficient way to determine what they would like from you.

2. Set baselines for campaign effectiveness. Data-driven marketing has effectively replaced the traditional “hit-or-miss” test component of the typical direct marketing campaign.

Baselines are a very important piece to understand when analyzing campaigns.  This is the beginning of the journey to understand the effectiveness of any changes that are made.  If an organization cannot answer what a particular program is bringing them, they should test the campaigns without the program and determine what, if any, the effectiveness of the program is bringing.  

3. Block out the “noise” and focus on what’s relevant. When assessing data over multi-year periods — and across different marketing channels — it’s not unusual for things to be extremely “busy” at the outset. There’s a lot of static and responses are all over the place. However, by using proven data-driven marketing techniques, you can start to pull out the relevant information, analyze it over time, pick up on traffic patterns, and drill down to specific marketing touch points (i.e., number of website hits that come in when a specific direct-response show airs).

This is a lot harder than it sounds.  Marketers are the kings of taking a piece of data and selling their story with it, even though it is just noise or a small sample of customers.  This is where the "art and science" approach is necessary.  Being able to combine data mining techniques with the business acumen is key to focusing on the relevance of the data.

4. Determine exactly how customers are responding.

Again, this is important to understand multi-channel marketing.  The ability to reach your customers on the right channel at the right time is only possible through data.  

5. Reach extremely targeted customer bases.

The promise of 1-to-1 marketing is arriving.  Be careful to shoot for this level of personalization, because it is very expensive and the pearl is not worth the dive for the majority of your database. However, being able to target your best customers in a very personal nature could help grow the business exponentially.  This takes extreme focus.  

The James Hotel Combines Beauty and Elite Customer Experience for its Loyalty Guests

Mark Johnson from Loyalty360.com writes:

The James is redefining luxury boutique hotels in New York, Chicago and soon in West Hollywood for its loyal guests. The hotel focuses on providing beautiful designs and outstanding customer service.

Lisa Zandee, Senior Vice President of Brand Management, told Loyalty360 that The James is a leader in creating design and guest centric services. “Both are extremely important,” she explained. “It’s about form and function. It has to work and look good.”

An interesting interview with the Senior Vice President of Brand for the boutique chain.  Many of the points Zandee brings up are very true to run a successful hospitality operation, especially in the high-end boutique industry.  Customer service and differentiated experiences are the key for these types of properties to thrive.  Being a small hotel allows for personalized service which is the definition of a boutique experience.  

Where I think problems will start to occur is the lack of respect for data in driving decisions.  Zandee dismisses data as something that clouds the teams judgement when developing initiatives.  I think this will come back to haunt this team.  Again, there is an art and science to marketing in the digital age and The James is disregarding the science portion.  Creating a loyal database is key to surviving in the hospitality industry and solely relying on social media and your loyalty rewards program is leaving profit on the table.  

Most CRM programs make the most money from customers who aren't giving you the loyalty you are looking for, so to minimize this group can lead to reservations coming through less profitable and less loyal channels.  Increasing the base of the business coming from known customers increases profits while enabling control of the customer experience.  Delivering great customer experiences in the digital age relies on data as an important component.    

Two Major Marketing Automation Myths

By Mat Sweezey:

Marketing Automation is Only for Marketing -- FALSE

Really I care about the second myth.  In my last position, we used our marketing automation tool for so much more than marketing.  Marketing automation tools can create business workflows and email tasks to operations folks.  We also used it in terms of creating better customer service, to alert of a customer service issue and email the best solution to the problem.  Marketing automation tools from a high level take data and triggers and provide an output.  There are numerous opportunities to enhance workflows with your automation tool.

Southwest Airlines Making an Impact in Marketing Automation

I love Southwest Airlines.  They have been the ,most profitable airlines by creating a business model which serves both their customers and their shareholders.  Southwest has managed to delight their customers and they are one of the few airlines that actually turn a profit, plus they haven't gone to the nickel and dime your customer model that has been popular in the industry.

The one area they have been weak in is database marketing/marketing automation.  The emails my wife and I get from them are very generic.  These emails have never been tailored.  This is the same in direct.  I have a Southwest Visa card and I still get an application direct mail to this day.  They also send some of these applications multiple times per week.  I tend to forgive because I am not a fan of the nickel and dime approach most other airlines employ.

Out of the blue I got an email that was actually targeted, well I hope it was targeted and not everyone received.  They sent me a tier upgrade promotion if I flew 3 roundtrips in a 2 month period.  To give a little background, I was flying much more a year and a half ago and I was an A-list, but recently I haven't needed to fly as much and I lost that status.  What I hope they are doing is looking to see that I have the propensity to become an A-List and they are betting that I will take them up on this offer. 

I happen to be taking a couple of flights in that time period, but I was going to be one roundtrip short.  Now this is where the psychology of tier benefits are interesting.  In my experience, a company doesn't necessarily get a customer to do something drastically different in their behavior to get to the next tier level.  This is true in my case.  If I hadn't been taking those 2 other trips, I would not have flown 3 roundtrips to make it to A the rest of the year.  But since I was taking those trips and I was going to be close, I decided to take 1 more trip up north and see my stepdaughters.  I would not of otherwise taken this trip.  So the promotion made them some incremental revenue and has kept my loyalty with Southwest.

This could be a less targeted approach and I just happen to think it is because of my propensity.  They send me an email last week reminding me of the promotion ending, however they did not reference I was 1 roundtrip away, so they aren't exactly where they need to be yet.  But, if Southwest can put together a strong direct program with their superior business model, then other airlines will have even more to worry about.  Here is to hoping they are moving in that direction.

Keeping Up With Today’s Loyalty Demands

Originally posted on IBM’s Smarter Commerce blog:

Loyalty marketing is more and more prominent in today’s retail landscape. It is becoming common knowledge that customer acquisition costs are increasingly rising, and data-driven customer retention is a key area filled with untapped growth potential. But loyalty marketing is evolving and is more intricate than just offering discounts to existing customers. As many marketers realize, there are three common problems that they run into when trying to implement an effective loyalty program:

1. They often feel stuck offering dollars-off discounts and are losing their margins without sustainably changing their customer behavior.

2. Personalization is not going further than using much more than a first and last name, and is not connecting to the customer and building customer relationships.

3. Their loyalty members are not actively participating and being engaged, and consequently not influencing long term results.

It is a buyers market as they would say in the real-estate business.  Customers have the ability to buy from a multitude of companies with fairly frictionless transactions.  Years ago, a customer would be limited to their location to buy many of the items they can now purchase online, which makes loyalty marketing a much harder task today.  If the customer does not like an experience they have with your company, the friction to switch providers is much easier than in the past.

This has led to a race to the bottom with most companies.  Instead of competing on differentiation, companies rely on sales and discounting to compete in this new world.  Relying on discounts is not differentiated at all.  Any competitor can match a price or beat the price if they are willing to decrease their margins for the business.  As I wrote in Busy is Not a Strategy, many of your competitors will look at metrics like volume as their key metric which will force them to decrease margins and hurt your business.  

Increasing Self-Identification

Loyalty incentivizes customers to provide more information about themselves and engage across channels, which leads to a richer understanding of your customers and how they interact with your brand. You may be surprised how many of them are open to providing information about themselves in order to receive more relevant communications and offers.

Spending most of my time in the casino industry has shown me that consumers willingly give away information in return for a richer experience.  In the case of the casinos this comes in the form of comps, but in other industries this does not have to be a giveaway.  This could be access to sales, in the case of grocery stores.  Find out what your version of the comp is to increase customer self-identification.  It may start off as a giveaway, but don't let it drive the future customer experiences with that customer.  

Taking Personalization to the Next Level

In addition to increasing customer self-identification, you should track and analyze metrics such as order frequency, average order value, and from which channels customers are purchasing. Modern loyalty programs gather this customer data and provide a centralized hub which is used to personalize meaningful incentives and rewards for higher customer redemption and satisfaction, and also to send personalized messages. These messages can be targeted towards specific actions and customer segments, and are used to maintain relevance and build upon customer-brand relationships by making customers feel like you are paying attention to what they want.

If you aren't tracking the purchases of your customers then you aren't going to be successful in loyalty marketing.  Creating meaningful customer experiences relies on gaining insight to the behavior of the customer.  By getting the customer to opt-in, it allows the business to create the true value from the loyalty program as I wrote here.  Targeted content will create meaningful customer experiences and this rich data is at the core.  

Cohesive Omni-Channel Capabilities

With today’s consumer having the ability to interact with your brand across all channels, it is essential to have cohesive communication, connectivity of data, and customer access to your program and rewards at all touch points. Different consumers like to interact with brands through different channels – whether in-store, social media, or email – and your program should be available in their preferred channel.

Providing the same experience for the customer, no matter what channel they are using, is the key to creating meaningful customer experiences.  This is the hard part of the new customer experience paradigm.  Keeping the content and messaging across channels in an online and offline world can be complex, but is very rewarding.  Customers don't care that different divisions in the company have different responsibilities and the online team doesn't communicate effectively with the operations team.  Customers expect their experience to be seamless across channels and it is imperative that businesses adjust to create this seamless customer experience. 

How to Make Big Data Work for You

This article is the problem with Big Data.  Everyone wants to jump so many steps on their way to true 1-to-1 marketing using data as the cornerstone.  Great marketing is always an evolution.  One step forward using data brings results and different behavior is gleaned from that data.  Then that data is taken and different questions are asked of the data based on the results using the previous data set.  This is how marketing problems are solved using data.

Marketers can't take a dataset that is fairly large, one they are already struggling to make the most of anyway, and then be given a much larger dataset and told to "go make magic".  Marketing with data is a disciplined venture.  As a marketer, make sure you are making the most out of the data you already have before worrying about what keystrokes the customer is making or the "Internet of Things".  

Always make sure the next step in the data is one that will bring you value today.  Have a long term understanding of where the data can take you, but be disciplined in getting there or you just might miss a lot of insight on the way. 

The Case for Why Marketing Should Have Its Own Engineers

Today, he runs the marketing team like an independent agency within the organization complete with its own engineers — a strategy he highly recommends for small teams that need to get a lot done fast.

An interesting article to set up an in-house agency to support all of marketing.  As a database marketer, I truly believe the team needs its own database and its own engineers to maintain this database.  It has to be separate from the IT processes that slow down progress.

Why?

Why shouldn't marketing data be included in the rest of the organizations data?

The simple answer is time.  Most data put into data warehouses are used for analytics.  Sounds just as important right?  Analytics is the driver of making money in the organization correct? 

Sort of.  This data can also include financial data that has different processes based on financial rules, especially for public companies.  Some data might include credit card information, which need to be PII compliant.  This data needs strict data governance and encryption of sensitive data.  All of this takes time.

Time is the enemy of marketing.  The amount of time it takes to get data into a marketing database relates to an amount of revenue that is being lost.  Most data requested into a marketing database is used right away in segmentation for campaigns.  These campaign changes either drive revenue or save on expense.  Having engineers able to get data into the marketing database in an expedited process gives an organization a competitive advantage. The quicker new data equals the more efficient database marketers.  All this leads to more money to the bottomline.  

How to Get More Value Out of Your Data Analysts

Organizations succeed with analytics only when good data and insightful models are put to regular and productive use by business people in their decisions and their work.

Actionable data is a buzzword that I have used and heard for many, many years.  However, in practice it is much harder to produce actionable insight for business users.  C-level executives are always trying to dissect old information which can be very useful, but only in cases where the answer will have some actionable insight.  If the answers to question have interesting insight, but don't provide any action, it creates a time consuming chase in how to make something out of the data.

Organizations have to educate themselves of what is capable of their data.  It's no use to ask questions that the data will not be able to turn into actionable insight.  Organizations should spend time on questions that can be solved with the current capabilities, in other words the low hanging fruit.  Once there is no longer any low hanging fruit, enhance the analytics with new tools and modeling capabilities to find the next round of low hanging fruit.

If you want to put analytics to work and build a more analytical organization, you need two cadres of employees:

• Analytics professionals to mine and prepare data, perform statistical operations, build models, and program the surrounding business applications.
• Analytical business people who are ready, able, and eager to use better information and analyses in their work, as well as to work with the professionals on analytics projects.

Very true.  An organization can hire all the analysts they can handle, but if the analysts have no business acumen and the business has no data acumen, there will always be a disconnect.  

Organizations need to have both the business and analysts working together to find the best answers.  Data Scientists can find very interesting items for them, however the business side may provide insight that shows the data scientists work is a known insight.  The business may be working very hard to solve a problem that the data scientist can solve, taking intuition out of play and using data in the place of trial and error.

In my history I have always liked business and data analysts reporting to the same group.  Many organizations don't like this structure because it can lead to a group "grading their own paper".  However, the tight integration of the teams produces results more efficiently.  Analysts are not wasting time chasing problems that don't exist and business people can bounce ideas off of analysts for quick insight before making decisions.

How A ZIP Code Can Tell A Marketer Exactly Who You Are

Yep.