The Second of Five Truths for Tomorrow’s Marketer

Despite all the hype surrounding big data, it’s the small data – the customer’s data – that really impacts the bottom-line. Every time your customers choose to tell you where they are, what they’re doing, what they want and what they’re thinking, they provide bits of information you can use to enhance the customer experience. Over time, all this data, the information you earn from – and learn from – your customers, becomes the currency of engagement. As with any precious resource, you need to protect it and use it wisely. But once your customers trust you with their data, you can leverage it to gain the insights you need to market your brand more effectively

According to a study by IDG Enterprise, by the end of 2014, 31% of companies expect to manage more than one petabyte of data. (One petabyte is equal to a million gigabytes.) But even in this enormous sea of digital information – which is destined to grow larger and larger with each passing year – when you focus on using customer data to deliver better experiences, you’ll quickly realize: It’s all about the customer’s data.

After all, unique customer data is the only data that can help you create the hyper-targeted customer experiences needed for a competitive edge. That’s why customer data will become increasingly vital; it’s what fuels the deeper, more intimate relationships that lead to brand advocacy, long-term customer commitment and higher revenue and margins.

Many marketers feel uncertain about collecting and using customer data. They fear backlash from consumers wary about sharing their personal information with brands. And rightfully so. Our global data privacy study of more than 4,000 consumers in the United States, United Kingdom and Australia found that most of them (62%) are worried about personal information being used for marketing. (Marketing Data and Consumer Privacy: What Your Customers REALLY Think, SDL, 2014) Perhaps that’s no surprise, given the recent high profile media stories about identity theft, data breaches and privacy issues with large, trusted companies, as well as the reports regarding government agencies tracking data. However, in another global SDL study of only the Millennial demographic (Understanding Global Millennials, SDL, 2014), we found indications that customers of the future may be more accepting of data collection and tracking – provided they’ve opted in and their information is used responsibly.

Millennials are well aware that companies gather customer data.

Today’s 20-somethings know they leave a digital footprint, and without prompting, 42% of the Millennials polled were able to accurately identify specific types of digital information collected and tracked by companies.

And more positive news… Millennials are willing to share personal information with companies they trust.

Respondents are seven times more likely to provide personal information to a trusted brand – a company they’ve purchased from before.

But they want value in return for their personal information.

46% of Millennials are willing to provide more data to businesses if it meant they wouldn’t have to waste their time with offers that aren’t relevant.

A 2013 Forrester study uncovered similar sentiments, leading the researchers to conclude that consumers are more loyal to, and willing to share data with, brands they trust, and that marketers should take a privacy-led approach to customer data collection and use (Differentiate With Privacy-Led Marketing Practices, Forrester Consulting). So, treat your invaluable customer data with care; not only because that’s a best practice, but also because when you do, you’ll reinforce trust and bolster brand loyalty.

At SDL, we’ve seen how focusing on the small data can have a big impact. As these examples demonstrate, you can gain significant competitive advantage by leveraging small data – the customer data - to obtain deeper insights about your customers’ preferences and buying behaviors.

Recently, we worked with a global clothing brand and using customer data, determined that 52% of the company’s market was comprised of one specific customer segment and that this segment spent an average of 25% more annually. We also established that these customers congregated on blogs, and identified 10 key messaging themes that inspired them to buy. Armed with these insights, the brand was able to engage its most profitable audience using messaging themes known to drive purchases across the channels those customers preferred. The result was hyper-targeted messages and offers more personalized to individuals who could drive a rapid ROI for our client.

In another example, a chain of high volume restaurant & entertainment complexes used customer data to generate targeted communications. In one year, targeted emails accounted for $52M in additional sales compared to only $2M in additional sales for non-targeted emails. This equates to $38.50 in sales per registered member versus $2.85 in sales per non-registered member.

We helped a coffee retailer use its customer data to better understand how buying behaviors vary in different European markets. Once the company’s marketers knew more about who buys what when, they were able to effectively tailor point-ofpurchase messaging.

Where do you stand on the path towards the future of marketing? Next are three key questions to ask your team.

Are we equipped to deliver personalized communications?

In order to start using data effectively and efficiently, you may have to overhaul your organization’s current systems and processes. Because customer data is typically stored in many disparate silos, integrating and managing it will likely require a significant up-front investment, as well a commitment to ongoing customer data stewardship. Paradigm shifts like this don’t happen overnight so plot a strategy and start with small steps. Think carefully about how to best focus your efforts. For example, you may not be prepared to deliver personalized content to every customer right away, but you can likely use what you do know more effectively. Perhaps your communications can be more tailored for your target market, or you can deliver better experiences based on the device someone is on, or if you’re entering a market where your brand isn’t known, you can focus on building brand awareness and trust, versus selling, so consumers are more willing to share information with you.

Do we know our customers well enough to hyper-target our messaging?

Even in our personal lives, hyper-targeting is the new norm. From personalized social networks, to customized online news feeds and music streams, empowered consumers are constantly adjusting preferences to their changing tastes. Ongoing collection and analysis of customer data will enable you to keep pace. If you want to maintain their attention, you’ll need to continually evolve as your customers do to deliver the hyper-targeted experience they expect.

What value do we offer in exchange for the data our customers provide?

Customers are aware that companies collect information – but they expect a fair exchange of value in return. What’s “fair” is in the eye of the recipient, but for most customers it means using their data to deliver offers that are well-timed and relevant. Then, as you cultivate these deeper customer relationships, trust builds, and customers will likely open up access to even more data. Customer data is the lifeblood of your company. You need to collect it responsibly, analyze it, protect it, and then act on the insights it reveals so you can build the experiences and trust that drive conversion, loyalty and advocacy.