While big data offers brands a chance to build that ever-elusive 360-degree view of the customer, throwing money at big data may not be the best way to achieve this. IT vendors would have you believe so. If you can answer the following six questions, you may find that you can reach big data nirvana without an expensive investment.
1. Do you know what you know about your customers?The most underleveraged assets your organization has are existing customer relationships. Begin with a review of your in-house data on these customers, although it may be in silos and hard to sort. Analyze individual transactions to help you establish the highest value relationships, then segment them by value, product and channel preferences, purchase frequency and recency, relationship longevity, geography, and more. Understanding the characteristics of your best customers will help realign acquisition efforts to focus on new prospects that look like your best customers.
2. Do you know what data you really need?If you tracked every customer tweet -- including sorting out the 99 percent that are not about you --how would that help you make better decisions? If you knew that your customer owned a motorcycle, what would you do with that knowledge? Map out the data necessary to drive your programs -- acquisition, conversion, activation, upgrade, cross-sell, win back, etc. For the data that isn't already in-house, you should be able to describe what actions procuring it, will enable, and what the net value will be.
3. Do you optimize the entire customer journey?Many companies work hard to optimize marketing tactics, but do you bring the same energy to optimizing customer relationships? Do you focus on a short-term, one-time profitable customer action or are you taking the longer view? Profitable customer relationships move through many phases, and may cover many years. Each phase has different needs, but all give you the opportunity to add value. Do you manage them individually or holistically? Your customers already know where they are in their journey with you. You need to build the relationship marketing capabilities to accompany them.
4. Do you allocate marketing investments based on revenue potential?Do you manage your marketing investments by value? Or do you overinvest in below-average-potential audiences, and underinvest in higher potential opportunities? Use the data you already have to drive lifetime value modeling and segmentation, identifying both current and potential value.
5. Have you established marketing investment guidelines?Most marketers have bought into marketing return on investment. If you can't demonstrate it to finance, your ideas won't get funded. Today, we know what things cost. But what was the value? You also need to specify how you will measure success, how long it will take, and what you expect the precision of these results to be. If you can't demonstrate proper stewardship of corporate funds, you may be told that you don't deserve it and resources will flow elsewhere.
6. Is your organization agile enough for big data?Data-driven marketing won't help if you can't act on what it is telling you. That doesn't mean throwing out your longer-term plans, but it does mean having the operational flexibility to achieve your strategic goals based on new information.
No Wall Street investor makes a plan 16 months in advance and sticks with it regardless of circumstances, but marketers often do so in their customer investments. One solution is to set aside a "success pool" of supplemental funding, based on exceeding key performance indicators. Because managers compete for the pool, they do a better job of syncing up objectives and measuring their outcomes, and the organization capitalizes on proven winners.
If you've answered and addressed these issues, you may find yourself well on the way to becoming a big data expert. There will be setbacks, but an iterative approach can make these manageable while you continue to make strategic progress. Big data starts at home.
Jim Carey is an Adjunct Professor of the Marketing Measurement and Integrated Marketing Communications Program, Medill School, Northwestern University, and a contributor to the Leapfrog Marketing Institute.
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