How2Guide How Marketers Can Tap into Customer Data to Improve Customer Profitability and Campaign Effectiveness
How Marketers Can Tap into Customer Data to Improve Customer Profitability and Campaign Effectiveness Like many of today s marketers, you may find yourself facing a major challenge: effectively analyzing customer data to gain insight that helps create differentiated customer experiences and elevates marketing success. This how to guide presents the insights and best practices VeraCentra has gleaned through years of successful client engagements. We ve boiled our observations down to three key areas that you must address to fully leverage your customer data and remain competitive in today s market: Create deep levels of customer insight from multiple angles Centralize your customer data, ensuring your data is easily accessible Execute on actionable customer insight Marketing Success Begins with Deep Customer Understanding In a world of increasingly commoditized offerings, delivering a stellar customer experience is often what separates the winning marketers from those who lag behind. And it s not just about attracting and winning new customers it s equally important to retain and gain as much wallet share as possible from existing customers. Customer experience management begins with the use of customer intelligence and insights as a means for enhanced customer engagement. Engaging customers at all points in the shopping journey to better service, provide information, and ease of purchasing, is the key to customer-centricity. Aberdeen Group, Customer- Centric Retailing 101, October 2011 The key to success is understanding your customers and how they interact with your brand via every customer touch point. Based on this insight, you can offer something of value to your customers, something that encourages engagement and ultimately highlights your product or service in a way that is meaningful. To reach that level of engagement, you need to consider offers and communications from the customer s perspective, not from the traditional outside-in perspective, commonly known as push marketing. Understanding What s Meaningful to You and Your Customers Creating a valuable customer experience across all channels is part of building a unique customer relationship and differentiating your company. This is no easy task in today s world because you need deep understanding to deliver that experience. And that level of understanding requires the ability (know-how, skills, and tools) to interpret massive amounts of data into meaningful insight. Achieving this ideal in marketing hinges upon 1) understanding that all customers aren t the same, and 2) delivering messaging that is relevant to each segment or group of customers. At the same time, you need to understand customers in terms of their current and future value to your organization so you can effectively focus and deploy your resources. How Marketers Can Tap into Customer Data to Improve Customer Profitability and Campaign Effectiveness www.veracentra.com 2
Transforming Customer Data into Useful Insight Using Analytics Because so much is possible in the world of analytics, it can be hard to know where to focus. VeraCentra recommends you zero in to understand the following four key areas: Who your customers are as people What your customers want and need Which customers are most valuable to you Where your customers are in their lifecycle Can You Relate to Your Customers as People? Transactional data can tell a story about your customers and many marketers use product purchases and patterns to segment their customers. This is a good initial step but don t stop there! By blending transactional data with customer data and adding additional demographic and psychographic data, you can define distinct customer segments and develop profiles to support relevancy. For example, initially your transaction data may group bargain hunters, full-price shoppers, frenzied shoppers and casual shoppers. This tells you how people transact, but does not tell you who your customers are as people and what motivates them to shop the way they do. As you add demographic details (for example, income, gender, home value, etc.) and psychographic data (such as appreciates music, is into a healthy lifestyle, is a high-powered executive ) you gain a more complete profile for each customer group and can create more meaningful segments. Data is Key to Effective Targeting and Engagement approximately half (48%) of all companies indicate that tracking, capturing and utilizing customer experience (e.g. behavioral, demographic and feedback) data is a key ingredient of their CEM [customer experience management] activities. Insights captured from customer experience information allows companies to target more effectively and engage their customers in a personalized manner. 1 Segments also enable you to take a deeper dive into campaign performance. While at a high level, a campaign may appear to be working, but drill-down analysis may reveal negative results in certain segments. Segmentation enables you to gain greater insight into the effectiveness of your campaigns and to adjust your messaging to optimize your results. Do You Know What Your Customers Want and Need? By analyzing customer buying patterns using product propensity modeling, you can learn what customers like to buy and what additional products may interest them. This is the same recommendation-engine concept you often experience while shopping on the web. When you send your customers a special offer for products or services they want or need, the relevancy factor skyrockets. Customers appreciate the offer (instead of rejecting your message) and will most likely respond by purchasing. The long-term benefit is that you re establishing an ongoing relationship with your customers. And in the short term, you re driving sales. How Marketers Can Tap into Customer Data to Improve Customer Profitability and Campaign Effectiveness www.veracentra.com 3
Who Are Your Most Valuable Customers? By projecting the probability of an individual s lifetime purchases with you, you can predict the customer s overall value to your organization. A common technique for this type of analysis is called regression analysis. Using this technique, you gain the insight of knowing which customers represent the best opportunity. Understanding this early in the lifecycle magnifies your ability to effectively identify where to invest your marketing dollars for maximum results. Understanding the Customer Lifecycle The customer lifecycle offers a primary way for understanding where your customers stand in terms of a relationship with your company. This understanding enables you to communicate with greater relevancy. For example, when customers are new to your company, you need to seize the opportunity to create a level of engagement that encourages long-term loyalty. This is typically the stage when the most attrition occurs. Segmentation and Value A Powerful Combination: Understanding customers at segment and value level helps identify where to focus resources, how to build an overarching customer strategy, and how to create differentiating experiences. Just as important, it enables marketers to target relevant communications that maximize profitability. Think beyond the welcome email! Use your data to identify what transaction point tips the scale to longer-term relationships and create a welcome strategy that shepherds the customer to the next stage in the lifecycle. If you can hook customers at this early point and encourage follow-on purchases, you can grab a majority or all of their wallet share and drive long-term value. Likewise, once you pinpoint the behaviors likely to indicate imminent customer churn, you can create messages and offers that ward off this loss. Overlay Lifecycle Strategies: Deep customer understanding helps manage the entire customer lifecycle. The key is to deploy the appropriate strategies for each stage of the lifecycle, leveraging your understanding of customer segments, wants and needs and then investing effectively based on customer value. How Marketers Can Tap into Customer Data to Improve Customer Profitability and Campaign Effectiveness www.veracentra.com 4
How to Centralize Data for Maximum Value Many marketers struggle to leverage customer data because it is stored in disparate functional systems that lack integration. As a result, it may feel daunting to achieve deep customer understanding and a holistic view of your customers. Marketers need a go-to centralized location that houses the selected data, insights, and analysis, and stores it in a way that s meaningful to marketing. The best-practice approach is to first make a list of every interaction or touch point the customer experiences with your organization. Next, identify the application deployed to manage that particular interaction for your company. By completing these two steps, you ll identify the data sources available to create customer insight. The list of potential sources enables you to prioritize the combinations that deliver quick wins and to determine which sources can be phased in at a later time. The Problem of Big Data 48% of both Best-in-Class and All Other (Industry Average and Laggard) organizations are struggling to synchronize customer data with their backend systems and use this data to personalize business activities based on client needs. 2 To get you started, here is a list of applications typically used to store meaningful customer data: Customer Database: Houses customer list and contact information Email Platform: Holds customer email addresses and campaign information Point-of-Sale Systems: Houses transactional data Loyalty Platforms: Holds loyalty points and redemptions Campaign Management: Contains campaign information E-Commerce/Web: Holds customer preference data and web behavior Social Media: Sentiment The key is to aggregate and integrate the data into a single data mart for analysis and a 360-degree view of the customer. Get Access to Your Customer Data With a Purpose Built Platform To quickly move from insight to action, you need ready access to your customer data. You can access a range of tools to mine data including business intelligence and analytic tools. However, these tools are generic and weren t built with marketers in mind, leaving you dependent on IT to query, slice data or run reports. Even if you can run your own queries, the process can be cumbersome and time consuming. In fact, we ve seen marketers run multiple reports and then work to mentally link the information using spreadsheets, desperately trying to get a valid read on what s working and what s not working. A great option includes looking to marketing service providers such as VeraCentra that offer tools enabling marketers to easily slice and dice data without IT intervention. VeraCentra Intelligence Empowers Marketers The VeraCentra Intelligence Platform optimizes queries and organizes data in a way that s marketing-friendly, empowering marketers to quickly get the information they need without IT involvement. The solution pulls data from different sources and enables marketers to easily drag and drop and ask questions of data. How Marketers Can Tap into Customer Data to Improve Customer Profitability and Campaign Effectiveness www.veracentra.com 5
How to Execute on Customer Insight and Increase Profitability Relevant communications are the outcome of actionable customer insight. The key to success is applying your insights to target the right customers, while promoting the right product with the right offer at the right time. Here s how your insights and analytics can be put to use to create optimum relevancy: Right Customers Use your segmentation and customer value models to improve targeting. Right Product Use customer purchase patterns or product propensity models. Right Offer Use segmentation to identify the most appealing offers and customer value to ensure your offer is aligned with profitability objectives. Right Time: Use triggers based on customer behaviors for optimal timing of messages and to promote relationship building. Pulling It All Together in One Closed-Loop In a closed-loop environment, you can better connect with customers and measure the results of campaigns. One key element of a closed-loop environment is support for advanced triggering that automatically sends messages and offers to customers based on rules you define. Three Attribution Methods Direct: A purchase is directly correlated with response to a campaign. Fuzzy: A purchase is attributed to a campaign because the customer purchased the product or service offered in the promotion time frame. Inferred: All sales generated during the time of a promotion are attributed to the campaign. Many email platforms support simple triggering. Advanced solutions however, allow you to integrate your analytics, insights and data points to create more complex triggering based on business rules. For instance, you could trigger a simple welcome email message when customers supply their email addresses or sign up for your loyalty program. A more robust platform can also predict customer value scores and trigger more appropriate communications. For example, it can send an email thank you to a low-value customer and trigger a full welcome kit via mail to a customer with high-value potential. Going a step further, you want to understand how your messages and campaigns are working. However, limited capabilities within POS systems may keep you from directly attributing customer purchases to the actual campaign. You can leverage closed-loop platforms and design your specific attribution rules that automatically assign purchases to campaigns. How Marketers Can Tap into Customer Data to Improve Customer Profitability and Campaign Effectiveness www.veracentra.com 6
By hooking an intelligence platform to your email platform or campaign management tool, you can easily link campaign creation with living segmentation, value and other insights you ve created. The result is a full closed-loop environment, as shown in the graphic below. VeraCentra Intelligence Enables Closed-Loop Marketing Best-in-Class companies are twice as likely to take the insights they are collecting about purchase behaviors and affinities, and the relative success of current promotion plans, and tying these two together to help shape the overall customer execution strategy. Make Your Customer Data Pay Off Increasingly, customers interactions with your organization are just as important as the product or service they purchase from you. The success or failure of your marketing in this regard is influenced in large part by how well you understand your customers and how well you use your data and insight. By adopting the practices and recommendations in this guide, you can make sure your messages and offers are highly relevant and are designed to maximize profitability. Ready to transform your data into valuable customer insights? Get in touch with VeraCentra. We ll conduct a free data analysis and help you understand your strengths and weaknesses when it comes to taking advantage of the data at your disposal. You ll walk away with a clear understanding of where to prioritize your efforts so you can improve campaign effectiveness, customer relationships, and customer profitability. Contact us by calling 707-224-6161 or connect directly with one our specialists by emailing aroberts@veracentra.com. How Marketers Can Tap into Customer Data to Improve Customer Profitability and Campaign Effectiveness www.veracentra.com 7
About VeraCentra: VeraCentra helps marketers increase the value from existing customers by leveraging customer data to create insights into customer behavior, to implement reliable measurements and assess ROI potential to guide strategy and deliver higher performing marketing. With over 20 years experience in innovating customer-focused strategies, VeraCentra s key capabilities include VeraCentra Intelligence Platform (VIP) a customer intelligence platform, analytics, customer and campaign strategy, as well as integrated marketing execution services; enabling marketers to increase efficiency in a closed-loop environment. VeraCentra has been providing national brand leaders such as Costco Wholesale, Intuit Software, and Johnson and Johnson, with successful customer-focused programs ensuring our clients are maintaining a competitive advantage in an ever increasing competitive marketplace. Sited Sources 1 Aberdeen Group, Customer Experience Management: Using the Power of Analytics to Optimize Customer Delight, January 2012 2 Aberdeen Group, Customer Experience Management: Using the Power of Analytics to Optimize Customer Delight, January 2012 How Marketers Can Tap into Customer Data to Improve Customer Profitability and Campaign Effectiveness www.veracentra.com 8