Customer Relevance Comes of Age
The challenge for marketers is getting tougher year on year. New digital marketing skills, from mobile to social networking, have to be continually added to the existing portfolio. Consumer expectation is changing, with customers expecting not only to be treated as individuals but also engaged with higher value offers that are truly relevant to them. While the sustained economic downturn has led to demands for measurable results and return on investment (ROI).
In theory the digital model addresses all of these issues. Indeed, the advent of the Internet and eCommerce activity was heralded as the chance to deliver measurable one to one marketing and personalized customer experience on a global scale as far back as 1994 by the likes of Peppers & Rogers. The reality has been somewhat different. Very, very few organizations have even attempted to embrace one-to-one marketing and even most of those that have – such as Amazon and Tesco – are in reality still using aggregated and trending data rather than true, individual customer information.
So what happened? Why has the vision of web-enabled customer relevance not yet been realized?
A number of factors have contributed to the current situation. The collection of web analytics to date has been an IT led project, with a primary objective of delivering business data and an emphasis on web performance and building better websites. With no customer data that can be attributed to individuals, web analytics have offered only limited value to the marketing team. Yet rather than push for better, more relevant insight, many in marketing have also shied away from the perceived complexity of leveraging web analytics to deliver customer relevance.
This attitude is now changing fast as far-sighted organizations begin to recognize that technology has finally caught up with the vision and can now enable one-to-one marketing and true customer relevance. These organizations are leveraging the latest generation of data capture technologies (OCDC systems) to evolve data capture from the web server to the client device, providing data about customer interactions - their actions, responses and behavior - rather than just the hits, clicks and page impressions that deliver limited value to marketing.
The key benefit of online customer analytics is the provision a complete understanding of the customer experience. Organizations can understand not only what each customer has purchased but what products were searched for and what products were looked at. They can track why baskets were dropped – such as out of stock events – and, critically, whether the customer then revisited and purchased the item in a different color or size; or opted for a similar item.
Understanding the complete customer journey and having insight about previous visits by the same specific customer enables companies to create a full history from the first site visit through all subsequent ones; tracking where they came from and their on-site behavior for each and every visit. As well as providing an incredibly rich source of customer data, this deep insight into the full customer journey enables a complete understanding of the role and impact of all marketing activities in leading a customer through the sales cycle, rather than relying on the standard “last click” analysis. On top of this, real-time data and technology enables companies to assess what a customer is doing right now, as well as their previous behaviors, and tailor an offer accordingly, for example by replacing a banner on the website with a relevant promotion whilst the page is loading. You can’t get more relevant than that.
Realizing the Vision
At the vanguard of this shift from business focused web analytics to customer analytics are organizations with a strong history in database marketing – most notably mail order companies that understand the importance of in-depth customer insight to support tailored marketing. Adding online customer analytics to the existing customer data warehouse has enabled JD Williams, one of the UK’s largest catalogue shopping companies, to not only gain new insight into each of its six million customers, but actually transform that into real-time online offers. Indeed, the company has rapidly evolved from using customer information to gather insight to actually driving communications and, of course, measuring the value of the new level of engagement.
Greater understanding of what drives customers online also enables a re-evaluation of promotional activity, for example natural and paid search. For insurance company Hiscox, evolving campaign attribution from last click to full customer journey and understanding the influence of specific Google AdWords on customer behavior at each stage of the lifecycle has enabled a reduction in search spend by 10% without reducing online sales.
Proving the Case
While the technology is in place, barriers to adoption remain. The shift towards one-to-one online marketing marks a significant departure from traditional marketing activity. Success requires a multi-discipline team that embraces not only creative marketing expertise but also data specialists, analysts, IT security, legal and finance. This is a big change and one that demands a radical review of activity that is, to be fair, some distance from the creative and communications skills that have traditionally characterized marketing expertise until more recent times.
Indeed there is a risk that marketers will be tempted away from achieving true customer relevance and one to one marketing just at the time technology truly enables this utopian vision by the massive interest in social media. Developing campaigns to engage consumers via Facebook and Twitter plays directly into the heartland of creative marketing activity. But it can also be used as a way to get marketers truly excited about the value of data and the importance of a deeper, broader customer understanding. Complex analytics and creative marketing in one perhaps?
Yet while creatively compelling, the big issue for marketers in 2012 is return on investment. The vast majority are struggling to justify a social media marketing spend that offers no compelling return. In contrast, leveraging real time, highly detailed-level online customer analytics information effectively can deliver ROI within just a few months – from an effective re-allocation of marketing spend to improved sales as a result of delivering truly relevant and personal customer offers.
Nearly two decade since the concept of one to one marketing was presented to marketers, the technology is now available to realize that vision. Online customer analytics is now being used to transform customer engagement through personalization and relevance and drive quantifiable additional value from the marketing spend. One-to-one marketing has finally come of age. Now it’s up to marketers to ensure they know how to use it.