According to the old marketing adage, ‘the customer is king’ – and never has this been truer than today. The digital age has bestowed much greater power upon consumers, and they are now also judge, jury and executioner when it comes to their relationships with companies.
Customers have access to more information and options than ever to help them decide how and where to spend their money. Social media chatter influences consumer trends and online reviews drive purchasing decisions. With just a few taps on a screen, people can quickly be wooed by brands or turn stone cold towards them. They are able to judge and assess their options in an instant, and we know not all customers choose to remain loyal.
Data gathered by Gartner indicates that 80% of a company’s future profits would come from a mere 20% of their existing customers; it seems the Pareto Rule is alive and well. This means that a company’s profit is directly linked to its ability to retain customers, so building brand loyalty has never been more important.
Because people have chosen to live digitally, businesses have no choice but to use data and technology to understand and serve them. Critically, companies need to use data in ethical ways to gather insights that deliver better customer experiences. Thankfully, this is something senior marketers and leaders know very well. Acxiom’s proprietary research shows that 83% of marketers agree or strongly agree that a good customer relationship relies on data. In fact, 79% agree or strongly agree that data is the most important factor in delivering a positive customer experience.
So, what’s stopping businesses making the most of data as they seek to build enduring relationships with their customers?
Most business struggle to make effective use of data. It’s not because they don’t get the potential, they do. And it’s not because they don’t embrace data and technology, because they do. Most struggles come from the fact data is fragmented, siloed and not unified.
Our research showed that while marketers ‘get’ the importance of data, 28% would like to get more data and 49% want to make more of the data they have; it seems it’s not achieving its full potential. But is this such a surprise when many businesses have marketing, product, IT strategies and more, but no data strategy? When data is now the binary lifeblood of any organisation, why do so few businesses have a strategy that looks at what data exists, what data it has, what they need, how to get it and manage it effectively both in terms of privacy and marketing practice to create positive customer experiences based on being able to understand the customer through data?
We know first-party data is the most precious and powerful, but it’s often the ‘smallest’ in a ‘big data’ world. A strong data strategy will consider the still relevant sources of third-party data and increasingly, second-party data exchanges that breathe new life into insights through another’s first-party data.
We must also solve for identity – this is now such a multi-faceted issue online, offline and across the line. As is the case with most data and tech related marketing these days, the answer is not just buying a product and switching it on. It’s about being able to rely on data systems that work together and intelligent rules that can make the right call when two or more competing data points challenge each other. Getting it right can make a consumer interaction meaningful and valued. Getting it wrong can make a brand look dumb.
Now as part of IPG, it’s easier to see how a unified view of the customer can empower greater creativity and more effective media strategies. Yet again, there’s no silver bullet, it’s not about buying a DMP, CDP, SCV or BBC; I jest. Yet again, it is about using a data strategy to define the data layer you need to bring your strategy to life. It’s not about out with the old and in with the new, it’s not about dropping in a stack or sending things to the cloud. It can be about all of those things but more than anything, it’s about a unified data layer, designed to let data serve your customer because you better understand them.
Back to the beginning and the fact that people can now embrace or disengage brands in seconds, based on good or bad experiences, means we have no option but to get data right. Good data managed well lets brands achieve the golden rule of business – know your customer. When you do, you can deliver the customer experiences that matter. It’s easy in principle and we all get the importance of data, so when we want to realise the true potential, we must first address the fundamentals.