If Customer Data Is The New Marketing Battleground, Then Analytics Are The New Weapons Guidance Systems

In my previous blog I argued that Marketing and CRM are in exciting times because is it now economically viable to unlock the incredible value that’s often hidden in inaccessible and disconnected company databases. This theme strongly echoed through the SAS Analytics Experience conference that I recently attended in Amsterdam.

New Battleground – What’s Your Strategy?

I asserted that customer data is the new marketing battleground, but data isn’t a weapon in itself – it needs to be generating insight that directs deployment. Analytics are therefore the ‘weapons guidance systems’ that accurately deploy insight through all your marketing tools (your arsenal) to improve personalisation and immediacy and thereby win more share of attention and wallet.

We all say that strategy is important, and nevermore is this true when considering the application of insight because there is so much data! Our Customer Strategy needs to be clear about the ‘battlefronts’ on which to deploy and win:

“The expert in battle seeks his victory from strategic advantage and does not demand it from his men.”

Sun Tzu

This blog considers these battlefronts – the drivers of value that the new analytics tools are helping to turn into hard commercial benefits. By value I mean profitability – too many marketing strategies are concerned only with Market Share, but this is bad Customer Management as it takes no account of the quality of the acquired customers (and can lead to all sorts of counter-cultural and short-termist behaviours, but that’s another subject)!

The Customer Management Battlefronts are:

Acquisition – winning sales from first-time buyers and conquesting sales from other brands. Our data analytics need to be ever-refining and honing our insight into targeting and propensity to improve our conversion rates and – highly importantly – to measure and manage the cost-to-acquire. This still isn’t a key measure in most businesses!
Retention – winning long-term customer loyalty, continuity, repeat sales, renewals, etc. Are our retention analytics still based on product lines rather than customers? It is essential that the business has agreed definitions and measures of its active customer base, the cost-to-serve and thereby the value derived from that base, and the attrition rates from different value groups/segments. This should be setting the baseline from which Acquisition and Cross-sell targets are set.
Purchase cycles – in many sectors just getting customers to buy more frequently will significantly improve profitability. It’s easier said than done, though! Our analytics should be uncovering the insights into ability and propensity to buy more frequently so that marketers can cost-effectively target these individuals.
Cross-sell and Up-sell – selling extra and higher margin product lines/categories to existing customers. This looks like an obvious thing to do and many customer strategies major on this element of value creation. In my experience, however, I have seen dramatically differing results from similar strategies!
I have come to a couple of conclusions about cross-selling/up-selling campaigns:
– We have to earn the right! Too many strategies leap to cross-sell to customers without first earning their TRUST. I believe trust is probably the most valuable asset that gets ignored in most organisations (until they lose it)! Analytics can help in defining, measuring & managing the behaviours that relate to trust. Using insights from data can drive more personalised communications (not necessarily offers) that the recipient will value as relevant and timely, rather than a crude attempt to get them to part with their cash.
– Cross-sell success is a function of Acquisition & Retention quality. I have witnessed Market Share-grabbing programmes that lead to the acquisition of low value or unprofitable customers, which are then compounded by ‘loyalty’ programmes that are only about tactical purchasing behaviour (i.e. not about trust and commitment). The cross-selling teams then get beaten up about missing their targets! All these symptoms can be diagnosed with good analytics.

Winback – giving customers a positive exiting experience and staying in touch with selected ex-customers to make it easy for them to return. Lost customers are often written off as unlikely to return, or simply dumped back in the prospect pool and treated as if there was no relationship. Joined-up analytics can qualify and identify the best winback targets for your marketing teams to sensitively re-connect with and warm to regain their business. You will be surprised at the results!

Weapons guidance

You will note that each of these battlefronts is dependent on analytics and insight. Your strategy needs to decide on which fronts to ‘hold firm’ and on which to win strategic advantage. It’s unwise to try and win at everything.

Your sales and marketing plans then deploy the ‘weapons’ (tools & techniques) to meet these objectives, using your analytics as the guidance systems to ensure that targets are hit.

Times are exciting because new and advanced analytics are becoming more accessible (at relatively lower cost) than ever before. I’d particularly encourage you to make sure that you are up to speed with:

IoT (IoE) analytics. The world is changing fast and customers will soon be super-connected but time-poor.
Artificial Intelligence (AI), Machine Learning and Cognitive. Sometimes the machine really will make better decisions than humans!
Real-time personalisation, which is utterly dependent on analytics.
The compliance (GDPR) and ethics of data management and analytics. Who will customers trust with their data?

These are all more reasons why I attended the SAS Analytics Experience conference, as these topics were debated and demonstrated.

One of my clients recently told me that their customer experience-driven transformation programme has resulted in 25% of their employees now being Data Scientists. He’s got the message. Have you?

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Peter Lavers

Peter is an expert in relationship marketing and customer experience management. He is a Director of Customer Attuned, helping clients to develop new and innovative ways to find, engage and satisfy customers.

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