Learn about a data opportunity retailers could be missing.
In a field rich with potential customer data, retail marketers are feeling more data-wealthy than ever as data big and small seem to rule the world. Meanwhile, though, the promise of all this data has lured more than one retailer into a frustrating marketing technology maze that didn’t pay off as planned, sending them in too many directions for too long to cost-efficiently find the customer magic they were promised.
Now is an important time for retail marketers to balance their awe of big data with the practicality of achieving measurable business goals that don’t break the bank.
Technology exists now that allows data to be processed and analyzed at speeds barely imaginable just a few years ago. And it wasn’t long ago that businesses looking to get smart about customer data were forced to invest heavily in technology and resources. Now, marketers can use technology to analyze and understand their customer data in a way that does not rely on expensive infrastructure and systems.
The lure of the 360 degree customer view is hard to resist. But, too many marketers find themselves swimming in a flood of data to reach this dream, losing sight of why they want that 360 degree view of the customer in the first place.
Marketing exists to drive more sales. Companies throw time, money and staff at the dream of this complete view of their customers and often spend more time building systems than executing well thought out, data-driven campaigns.
Big data offers big opportunity, but some big problems, too. It won’t fit on a single server and likely comes from outside your business transactions. And, it will be in an unstructured format, such as customers’ social media comments.
The foundation of any data-driven marketing strategy should be a deep understanding of your current customers. Devoting attention and resources to examining and discovering the value locked into their behavior is often the fastest, most cost-effective route to ROI.
What’s the smartest way to dig in?
The best predictor of the customer of the future is the customer of the past – if we can identify the attributes of the best past customers, we can use them to predict the best future customers…
So, before signing up for a major plunge into your data in search of magical, undiscovered rewards, ask yourself if you can identify your best customers. If not, get started. Pick a metric, define it, and let the data lead you.
Then use a combination of recency and frequency, plus sales information to identify those best customers. Depending on the circumstances, you may also use another measure like lifetime value. Rank your best customers and understand how these customers drive your business.
The 80/20 rule usually holds – 20% of your customers will drive 80% of your business. And that’s where you really dig in to start replicating your most profitable sources. Once identified, use these customers to find your best prospects across all channels.
Get a good look at attributes and behavior in terms of the metrics you’ve set. Develop a deep understanding of customer attributes such as distance-to-stores, income, urbanicity, interests, etc., and both offline and online behavior. Combining knowledge of both attributes and behavior will lead to powerfully predictive models of your best prospects.
Now, you can start your marketing already knowing you have the best prospects targeted. Then measure everything to keep sharpening your focus. Begin the usual test-and-learn cycle with this supercharged starting set and you will be getting a jumpstart on your competitors while reaching your objectives for a better marketing payoff.