CCG - Data Gets Personal

excerpted from
StrateScapes - Volume 3, Number 1

Data Gets Personal:
Marketing has come full circle — from knowing a customer because you see her every week to knowing her from a computer profile that’s so intuitive, it’s the next best thing to being there.

With more and more companies realizing it’s customer-centric or bust, demand for affordable data-manipulation tools is ushering in a new generation of marketing.

The More Things Change …

You’ve heard the story: To the ’50s shopkeeper, relationship marketing was calling Ethel when the first crop of cherries arrived and having a pound of the choice ones waiting for her when she stopped by on her way home to make pie.

You don’t need us to remind you that, while Ethel skipped toward retirement, we marketers set out on a long, bumpy road through a land where growing mountains of digital code began to gobble up the space once inhabited by people. But now we’re finally coming up on a scene that, though more high-tech than ever, looks a lot like that very human world of the good old days.

Humble Beginnings

About the time the Me Generation hit its stride, marketers began to realize they could use a mailing list generated from a computer database to send offers to a certain age group or ZIP code. But while revolutionary at the time, direct marketing ultimately proved merely a trumped-up form of mass marketing.

“It was the age-old ‘garbage in, garbage out’ problem,” explains CCG President Sandra Gudat. “You might target a ZIP code or Census tract whose residents had high household incomes, but a small number of residents with extremely high incomes could significantly skew the average income for the entire ZIP code.”

Superdatabases Promise the World

Computers could soon store and manipulate much more than name, address and income. But even now, all this data often resides not in one database, but several. Enter data warehousing, which has finally allowed marketers to gather their discombobulated data into one place. This lets them make decisions such as which catalogs to send to which customers with an insight they’ve never had before — and with incredible profit per customer.

But data warehousing isn’t the be-all end-all. For one thing, it’s still a monstrous undertaking that many small and mid-sized companies can’t hope to afford. Yet with more and more companies amassing huge quantities of customer data and realizing it’s customer-centric or bust, demand for affordable data manipulation tools is ushering in a new generation of marketing.

The New Data Frontier

Today’s marketer is lucky enough to be seeing faster, friendlier data tools that, together with shifting corporate philosophies on the value of customer loyalty, are changing the face of marketing. Showing you a highly specific profile of how your best customer thinks, feels and acts, these utopian new tools include:

New customer segmentation tools, such as Cohorts^® by Looking Glass, that go way beyond demographics to paint a vivid picture of what makes your customers tick. These tools can tell you, for example, that 30 percent of your top customers are sports fanatics, another 25 percent foreign travel aficionados with young children. Voilà – you’ve got versioned envelope teasers and Web site links that speak their language … or partnerships with NFL teams and family-friendly hotel chains with incentives to use your credit card when your customers buy Super Bowl tickets or book that family jaunt through France.

Sophisticated datamining tools that automate identification of transactional, behavioral and attitudinal patterns that let you target the right message to the right customer. While a data specialist is usually still needed to help you make sense of the results, datamining can often save you money on the total human resources required to extract meaty, usable data.

The Net, the best thing to happen to marketers since the computer chip. The Web has opened invaluable two-way dialogue that builds customer relationships with an ease never before imagined. For example, a retailer can use interactive forms and automated e-mail response tracking to learn that Jane prefers fluid fabrics and buys mostly black — then use that information to customize the page content Jane sees with a photo of the new black matte jersey coordinates.

On-the-fly analysis tools that let marketers target messages more quickly, selectively and accurately than ever before. These include instantaneous message and image versioning via Net and Web TV — as well as real-time data crunching in other applications such as telemarketing. So you can, for instance, customize your phone script with data collected over a few days of testing your campaign, rather than waiting weeks for pilot stage results and then weeks longer for implementation of new tactics.

“The future of marketing will be about ‘how fast can I analyze the data and use it?’” says Bill Schneider, CCG senior data analyst and principal of the data consulting firm IntelliStats. “Being able to analyze data on the fly will become crucial to delivering the instant, customized experience customers are already beginning to demand.”

New Territory, New Caveats

All this makes for a thrilling new marketing hinterland. But even the most hopped-up data technologies are only as good as your decisions in choosing and using them. Words of caution to help you make your way on the new frontier:

Don’t be dazzled by superhero software. “Be wary of software makers who claim their applications can do it all,” says Schneider. “Sometimes data analysts come back with a result that doesn’t make intuitive sense. A data specialist can bridge the gap between the results of the analysis and how best to use that information from a marketing perspective.”

Don’t overestimate your marketing department. It’s easy to get tunnel vision with your own customers. And no matter how experienced, many marketing professionals have difficulty knowing which questions can be turned into smart strategy. If you can’t hire a relationship marketing agency, be sure your in-house staff can be left- and right-brained at the same time. You need people who can crunch the numbers and implement strategies that turn those digits into relationships and sales.

Don’t assume you’re stuck with the data you’ve got. While experts like Schneider predict that data warehousing will become affordable for players of all sizes within the next decade, today it’s still cost-prohibitive for many. But data marts and data appending offer more affordable alternatives that can beef up the data you have without years collecting other data or implementing a monstrous data-integration project. Find out why in When Data Warehousing Isn’t in the Budget.

Don’t be afraid to start over. Have the guts to 86 your marketing plan and go back to the drawing board. Yes, you need clean, comprehensive data. But more important, you need a true customer-centric ideology. Many data-driven strategies are too opportunistic or short-term. If your marketing strategies aren’t paying off, maybe it’s time to make sure you’re truly building customer relationships for the long term.

Whatcha gonna do with that data?

For some new ideas, read Make Your Data Do New Tricks.

STRATESCAPES and STRATESCAPES SUPPLEMENTS are published by Customer Communications Group, Inc., a full-service agency specializing in relationship marketing and customer communications. Our comprehensive, turnkey services include data analysis, customer segmentation, strategic consulting, account management, creative execution, print production and multimedia solutions.