Hitmetrix - User behavior analytics & recording

BIG Data Must Create BIG Experiences

Here we are, in the Age of Big Data.

Haven’t we all had the dream that one day we would have unprecedented insight into customer expectations, preferences, and aversions with data so granular that we’d no longer have to guess what the customer wanted?

For all of the “high-volume, high-velocity, high-variety information assets” (Big Data, as defined by Gartner), we now have access to, our response rates still aren’t very good, are they?

Big Data has certainly encouraged the evolution of marketing practices; but the question is, “How far have we actually come?” Traditionally, we loaded the marketing blunderbuss with marketing dollars, pulled the trigger, and prayed that something, anything hit.

But today, even with the intelligence we now have thanks to Big Data, we’re still relying on traditional—albeit more sophisticated—“spray and pray” marketing. According to the DMA’s 2012 Response Rate Report, the results aren’t so good:

  • On a good day, 97% of what marketers blast gets thrown away or deleted.
  • Average direct mail response rates are 3.4% to a house list, and 1.8% to a rented list.
  • Average email response rates are 0.12% to a house list, and 0.03% to a rented list

Despite our advancements, recipients are still throwing away—or missing entirely—the majority of what we’re sending them.

We must do better.

Consumer preference data is the next big deal

In a previous Spotlight column I cited results from more than 130 voice-of-the-customer (VoC) research studies we conducted on behalf of our clients. Based on more than 10,000 hours of in-depth interviews, the wisdom of the customer has provided us with a few critical truths:

  • Customers, both B2B and B2C, are sophisticated enough to recognize that to receive increasingly relevant offers, they must share detailed preference information.
  • Customers want to share detailed information about themselves, but only if they trust the brand.
  • This reframes data privacy concerns into the following: a beneficial exchange of information that improves the customer experience. This information will constantly change, grow, and be enriched through two-way interactions with consumers.

For consumers, personalization is the true value of providing personal preference data

The payoff to the consumer for sharing their personal information is exponentially greater personalization; and the most effective way to demonstrate personalization is to provide consumers with increasingly relevant experiences, communications, and offers.

Per our VoC research findings, we’ve learned five important takeaways for marketers:

1. Consumers view personalization as the next step in a company’s commitment to service excellence.

2. Personalization must be viewed as a service and a benefit, not just a sales tool.

3. Consumers look to personalized follow-up messages as value-added triggers to go online and evaluate relevant products.

4. Online shoppers view personalization as a necessary requirement for engagement.

5. Consumers are clear in defining personalization as being about more than simplistic transaction-based communications. In our research, people frequently state, “I want more than just buying history–based emails,” and, “With today’s technology, I expect the experiences and emails to reflect my preferences.”

Preference-based personalization as a competitive differentiator

Even among a brand’s most loyal customers, expectations of marketers have changed due to a challenging economy and the variety of online purchasing options. Amazon has been an early innovator of preference-based communications. However, it too must go beyond transactionally driven communications.

A best-in-class example is beauty marketer Sephora, which revamped its website and mobile apps to deliver personalized, and integrated, in-store and online experiences. Online searches and purchases are saved to a customer’s profile if they’re a member of Sephora’s opt-in loyalty program, Beauty Insider. Up to 25 different preference data points are then used to personalize on-going and increasingly relevant emails.

What does this mean for you?

Here’s how you can leverage the power of Big Data to deliver truly personalized experiences to your customers:

1. Define the value of Big Data as delivering more than just transaction-based communications.

2. Remember that getting detailed customer information is a privilege, not a right. Repay customers for providing you with their preferences by delivering highly personalized communications, offers, and experiences.

3. Respect your customers’ information or you’ll do irreparable harm to your trust and brand. B2B and B2C customers alike provide personal information based on trust.

Per the results of our clients, adhering to this approach helps to achieve consistent double-digit increases in response, revenue, and customer lifetime value.

Let’s not just use Big Data to sell; let’s use it to understand, engage, and delight customers with incredibly personalized offers, communications, and experiences.

Ernan Roman is president of Ernan Roman Direct Marketing Corp. A recognized customer experience innovator, Roman is a Marketing Hall of Fame inductee.
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