When evaluating data solutions, target providers who provide more than just insights.
The most successful retention marketing fosters mutually beneficial relationships between merchants and their best customers. To create such a high-performing program, merchants need more than generic customer insights; they need proprietary data that maps how customers experience their particular brand. Seek out those innovative providers who can deliver actionable information in order to earn a higher ROI on your loyalty investment.
Why Personalization Matters
Frankly, the amount of information we each sift through doesn't seem as overwhelming as it should – email alone provides 100 different pieces of content to evaluate every day. We cope because we have developed incredible faculties for skimming (i.e. breezing through info trying to grasp the main idea) and scanning (i.e. breezing through info seeking a specific answer). I actually remember the day I learned these skills in grade school. At the time, I was lost. When would I ever need to just sort-of pay attention to something?
Whoops. Talk about a used skill (Thanx Mrs. Bass!). In modern discourse, consumers skim and scan (for simplicity (and fun), "skin") literally everything, including – and especially – content from those businesses where we shop, eat, and make purchases. We have to – the amount of information sent forces us to train our eyes to only register relevant and compelling information.
Thus is the challenge for merchants. Though CRM and device ubiquity have increased metrics like open rates, unfortunately the more-important conversion rates remain flat. Merchants need better ways to cut through the noise. Failing to develop such capabilities poses a significant risk: decreased revenue in the form of less in-store traffic, fewer transactions, no referral business, and zero one-time customers that actually come back.
Fortunately, one strategy for getting the attention of skinners works: personalization. Stats confirm this assertion (e.g. personalized website content increases sales by 20% and 96% of businesses state that personalization is critical to their success), but intuitively personalization makes sense. We decide to engage with only that information which is relevant to us.
Insights ≠ Actionable Data
In order to deliver personalized content to customers, merchants need help creating and managing data. There's simply no other way to manage 1-to-1 communication at high volume.
However, whereas every provider talks about personalization, only a select few can actually actually deliver usable information. The rest provide generic customer insights. The consequences of such low-performing programs are easy to spot:
- No ability to take action: providers' reporting reveals information about customers, but doesn't provide actionable advice. For example, merchants can view a report showing how many customers shop at other stores near their business, but have no way to attract these customers onto their premises.
- No understanding of ROI: weak providers send monthly bills, but cannot articulate any insight into monetary value. The best providers can easily walk merchants through how much programs cost and how much revenue they generate.
- No change in conversation rates: unrelated customer data actually hurts outreach metrics. For example, targeting customers solely according to information obtained from a third-party database increases unsubscribes. Context separates "personalization" from "creepy" (just ask Elijah Wood, holding the best third-party data possible, as he inevitably freaked out Kate Winslet).
Finding Providers Who Deliver Proprietary Data
To succeed in the modern economy, merchants need to act on information relevant to their business. Instead of generic customer info, they need proprietary insight that maps exactly how their customers engage with their brand. Turns out, the best platform for creating this type of perspective is an effective loyalty program. In fact, that's exactly why loyalty programs exist in the first place.
That said, finding loyalty programs that can actually deliver proprietary data is hard. Not every provider is created equal. Generating proprietary customer profiles comes down to synthesizing three data sets – known affectionately (by me) as the personalization data triforce: demographic, behavioral and transaction data.
- Demographic is easiest. Providers get this from loyalty sign-ups and third-party integrations.
- Behavioral comes from location. Whether via GPS, beacons, or other location technology, knowing where customers go and how often significantly increases merchants' ability to deliver relevant content.
- Transaction data is most important. When, how much, and how frequently customers make transactions factors directly in to the ROI calculation. Without this insight, programs are essentially blind. Transaction data is why Starbucks has built such an effective program.
By combining these three data sets, merchants can start launching proprietary programs to reap the revenue benefits mentioned earlier: more in-store traffic, transactions, referral business, and one-time customers that actually come back. Here are three examples of how the combined insights generate actionable marketing decisions:
- Time-switch: a merchant tracks customers activity and sees that a specific location has flat dinner traffic and a vibrant lunch crowd. This merchant also notices that the majority of the customers are millennials. The merchant immediately launches a happy hour special and tracks exactly how many lunch customers convert to dinner.
- VIP: a merchant identifies the top 15% of customers that drive close to 75% of revenue. These loyalists receive a special incentive geared toward driving referral traffic to a newly-opened location. The merchant immediately knows the identities and influence of brand advocates, as well as customers to target for future outreach from the new location.
- Feedback: a merchant requests feedback about an under-performing location immediately following a repeat purchase from a loyal customer. This gives the merchant an opportunity to address issues before feedback hits mainstream services like Yelp. In exchange, the merchant rewards the customer by providing an incentive to return at the customer's preferred time of day.
Note how all the above reflect relevant insights that provoke clear merchant action. By combining demographic, behavioral, and transaction data, campaigns like the above are easily implemented and immediately lead to increased revenue from existing customers.
Sharp marketers will note that there is one more step. No matter how strong the proprietary data set, merchants still need a ton of unique content to personalize the end customer experience. We'll cover how to create proprietary content in a future post. For now, build up those proprietary data profiles and post any questions to the comments.