Matt Naeger is the Global Chief Strategy Officer and Chief Marketing Officer at Merkle.
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Data is today’s marketing currency. Those who know how to build it, manage it and use it will create substantial competitive advantage for their businesses, no matter the industry. But possessing lots of customer data isn’t enough.
Much like “shopping your closet,” building a robust data strategy requires that you first examine what you already have to uncover hidden gems that could be put to good use and democratized across the organization. This will not only maximize the value of your existing data but lay the groundwork for your ability to capture, integrate and optimize new information that you invest in over time.
Stretch Beyond Marketing
To understand the data you have, you need to first identify its existence. You must take a broad view of your first-party data to discover what you have, know where it is and build a strategy for its access and use. It’s important to look beyond just marketing data, such as personally identifiable information (PII), self-reported behaviors, campaign responses, loyalty performance data and creative testing results. You have to consider and integrate all types of data that can benefit your business, such as the profitability of certain actions people take, interactions with service representatives, the influences of current customers on potential ones, and what factors drive customers to engage (or walk away). With this knowledge, you can develop programs that respond to customer behaviors throughout their journey with your brand, helping you keep and grow your most valuable relationships.
For example, in the world of insurance, actuaries use a certain set of criteria to determine premium rates. Can those same criteria be used to identify prospects who are more likely to take out the same type of policy? Is the data useful to evaluate risk from an auto or homeowner’s insurance perspective?
In the financial services industry, companies may study how customers build wealth over time to distinguish between people who are early in that build cycle and those who have already established a solid financial position. Most marketers place a myopic focus on the marketing data, without considering the wealth of data that can be found throughout the broader business, which can be incorporated into customer acquisition and retention efforts.
Explore Market Data
Lifestyle and demographic data are great, but they don’t tell you why people behave the way they do. When you incorporate market-level data into the mix, you add another layer of intelligence to your strategy. Data around external influences, such as recent news and events, economic factors and societal changes, help you fully understand your customers. They bring clarity to the “why” behind their preferences, influences and behaviors.
For example, if a tornado hits a particular area, how are the customers in that geography going to change their behavior over the next six months? They are likely to be in rebuild mode, seeking products and services that will help make their lives whole again. If a certain geographic region is experiencing an economic boom where housing prices are skyrocketing, how will that affect how people make decisions?
New home buyers tend to make additional big-ticket purchases within the next six months, such as remodeling services, furniture and cars. So, if you’re a mortgage lender, you might refer your new mortgage holders to the other lending divisions within your organization. Conversely, consider a customer who recently placed a home on the market. That person is now a prospect for a new mortgage origination—and the subsequent major buying behaviors prompted by that potential new home purchase. Using market-level data, businesses can benefit from a whole community of data and the insights it offers.
Examine Household Data
Household data has been less of a driver in marketing in recent years. However, while your relationships may be with individuals, if you make connections among the multiple people in a household, you’ll gain better insights into how those individuals make decisions. By examining the properties of everyone in a household, you’ll better understand not only who is making the decisions, but what factors are informing those decisions.
To illustrate, if you consider the person who tends to make the bulk of a household’s purchase decisions—furniture and décor, for example—it is very useful to understand the makeup of that household. Who else is in the house? How many kids are present? How many adults? Are there pets? Is this purchase made to furnish a new home, or is it meant to refresh the look of a stale design trend? What is the mentality and motivation behind the purchase? All those things will come into consideration when deciding what kind of furniture to buy and what level of spending is acceptable. And the answers to these questions can lead you to better marketing decisions.
Mind Your Manners
One thing to consider when studying the available data is the notion of data sensitivity. It’s important to understand in today’s privacy-conscious environment that you don’t have to use the raw data to accomplish these strategies. For example, instead of using actual financial data, you can use informed criteria on that data to develop custom models. These models produce scores that reflect a person’s propensity to mirror your best customers and guide the ongoing development of similar relationships.
All Things Considered
In our increasingly regulated market landscape, where third-party data is becoming more difficult to acquire, you must be resourceful but ethical in your data usage. Examine every corner of your organization to unearth data that can fuel a robust decision engine. This owned, first-party data resource will enable you to broaden your existing customer relationships while more precisely and efficiently acquiring the most promising stream of new customers, ultimately creating sustainable competitive advantage.
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