Your Customer Data is Useless. Here is why.

YourCustomerDataisUseless

These are the 5 biggest limitations in the use of customer data

You can store billions of bytes of customer data, millions of transactions, thousands of data points, hundreds of attributes. All that data could be useless, and most of the times is. Storage costs are plummeting, true, so storing everything will be close to free, but what will you do with it? Not much if…

You spent zillions in tools

General purpose BI tools are useless if you don’t have a purpose, or a set of specific, well defined purposes. It’s sometimes easier to justify a bold investment to the Board of Directors in a single will-solve-everything-top-right-Magic-Quadrant tool than just ask for a bunch of good analysts and start obtaining quick actionable insights. And the later could be the right way to grow organically while obtaining tangible results.

Tools don’t solve everything unless they have a specific purpose, save some money for people, internal or external.

Have you considered who will be the users of the tools? How much time will they have to “play” with them? How many trainings you will have to give in order to be really up and running? What happens with newcomers? How to ensure the right people is using the right reports? Starting your customer data strategy by implementing a BI tool is often a mistake, because you will eat a big junk of budget and attention, and will not solve all the problems tomorrow (which will be expected based on the investment made). Focus first on the people who will think and execute the strategy, no tool will do that. People inside your organization, or outside, if you’re lacking the expertise and can’t hire.

You didn’t spend enough on data protection policies.

And you are already late. Before even creating a database to put data in, you need to be sure you can actually store that data, you have the permission from your customers to keep it and use it in specific ways (i.e. communication vs. analytics). And the matter is tricky because you can obtain thousands of different data points directly from the customer (name, email…) or indirectly (geolocation, ad networks, third party data providers…). Reflect on the usage you are going to make, current and future.

Think ahead, and hire a good data protection lawyer expert.

Once you start it’s much more difficult to change privacy policies, which will necessarily produce legacy customers with old versions of them that you can’t activate or even analyze the way you want. If you are in the EU, or working with EU customers, take a look on the the EU General Data Protection Regulation (GDPR) website to understand more about what is coming in less than a year from now. And don’t forget the lawyer, really, it will save you lots of headaches.

You don’t consider your data infrastructure a profit center.

Today there are several options regarding data storage. You can build your own data center, outsource it, or even put everything on the cloud. Very reliable providers such as Amazon or Microsoft can give you the service on a ‘pay per use’ model, which is great for unknown volume escalation curves. But be careful, you plan your budget with a cost based on a maximum storage capacity, your service suddenly explodes in terms of number of customers or data points per customer, and then you have a problem. You can’t afford to stop gathering data and will have to knock the door of your CFO for more money before the fiscal year is even finished.

Whatever storage model you choose, it will probably have three components of cost: space, bandwidth and processing. Don’t forget the last two, or you will have thousands of petabytes of data without the ability to extract any value at a decent speed.

Data infrastructure is very often considered a cost center, so you’ll have to fight the cost of every Byte and Flop.

The good news is cost cuts half every two years, and that will help you keep your budget, but ideally it should be considered a profit center. For that, you need to demonstrate what is the tangible value the data is generating, that you could use for revenue recognition vs. your costs. Then the whole problem changes. If you are not able to assign revenues (or cost reductions) to your data, maybe you are using the data in the wrong way.

You are looking for the perfect data match

Every business is different, and you might just have an email and an IP address, or, on the contrary, lots of anonymous behavior just linked to a cookie. Whatever is you case, don’t be too strict when choosing your primary ID and desperately trying to attach every data point to that ID, because you might end with nothing more. Instead, choose wisely what ID(s) you want to use and consider different levels of data completion for different customers and inferring the rest of the information missing . You might not have perfect information on a customer geo-behavior, but might try to create a loose link between other clients with similar transactional behavior in order to explore hypothesis you can then validate. Then an IP might serve you to cluster clients or target them in a meaningful way. Not ideal, but better than nothing. Don’t let perfection limit yourself, because one day you could have the data, and then your thinking process would be already done. Going trough the process even not having the data can help you acquire better customer information, so confront yourself to it even the data you have today is not perfect.

You are not starting from the customer

This is probably the most important one. You have your infrastructure, your data, your lawyer, your team (even your tools). What do you do now? Sometimes you have specific pain points to start with (i.e. loosing customers, reducing purchase frequency or basket size) and it’s a very valid approach. But the ideal is to start by the customer.

Focus on how can you make use of data to improve your customers experience

Let’s put an example. Most of grocery ecommerce sites allow you to reuse past purchases as input for your next shopping list. It’s a very gross approach, absolutely not data driven, because your average repurchase period for each of the products is different from the rest, and also different from your overall current purchase frequency. So in some cases you will overstock a product, but most of the times there will be a gap of consumption until your next, let’s say, weekly purchase. You end taking out half of the products of your past purchase list.

Another approach is possible, since all the data points are there. I know your average repurchase period for every product, so I know when you did buy each product, and therefore when are you going to buy it next. For each product in your past purchases (not only the last one), I’ll see which ones are going to “expire” in your next average overall purchase cycle (next week) and include them automatically in your shopping list. Providing intelligent shopping lists is a great service to the shopper and ensures there are no consumption gaps, so on the long run, the average frequency increases, therefore the yearly spend.

Working the data with specific customer centric use cases gives you focus, puts order among the big data chaos, and if well implemented, generate incremental revenues you can then bring to your CFO. Starting from the customer always pays off.

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Join the conversation! If you like what you read, leave me your comments below, and feel free to follow me on Twitter @olopezprat or LinkedIn.


The 3 biggest spoilers of your marketing success are in your own company.

About a year ago, I reflected on thequalities of the new CMO, and why CEOs should be worried not finding them. Let’s imagine you are one of those superhero multidisciplinary CMOs, recently hired by a great consumer product company (you can extend the example to almost any category). You have great ideas, you have the knowledge, you have the team, then it’s time to execute.

I’m pretty sure you will be undermined by at least two of these three:

 

The Legal department. You start some project, it involves digital, mobile, point of sales… it’s perfect, it must increase the numbers, definitely. And then, in the last minute, when you’re ready to launch it, someone asks the ugliest question can be asked in such moment: “Has Legal seen this?”. Oops. You go back to the legal department, tell them what’s the project about (unable to hide your excitement about it). You lost two precious weeks in the process and they come back with quite a lot of things. Most of them, dismantling the so long optimized consumer experience. Now consumers need to accept an endless terms and conditions before even continue, where they accept basically everything to be accepted “just in case”. Don’t get me wrong, legals are necessary, not only to comply with the law, also to be protected from your own consumers, not all of them are friendly and love your brand. Legal is one of the most powerful department in the companies, since they can completely stop and throw your work, your budget and your passion in the trash. How to deal with them? well, first of all the obvious one, involving them in the project from the very beginning. But also requiring them to work as what they are, a support area: “Don’t tell me what I can’t do, tell me how can I do what I want and let’s discuss the trade offs”. Legal needs to work in a consultant mode, and that requires time and a bit of knowledge. But I’m sure your project is worth it.

The IT department. Nowadays, your marketing projects are likely using technology at some point, could be a web, could be a database for CRM, could be a mobile app or an NFC loyalty card or any combination of them. In fact, soon . Some companies don’t have any CIO, since they consider IT as a support area, keeping the laptops and the office networks in shape. That is a big mistake, since companies servicing the marketing area (typically agencies) are neither technology savvy. But since you are a superhero CMO you know what to do. The problem is you need servers, you need security policies, and a lot of things that, well, are not your business. Again, the IT department should help you reach your objectives, not putting obstacles up. When it comes to IT everything can be done, it’s just a question of time and money. If somebody says your project can’t be done, fire him. He or she should tell you what is the cost and times, and then you will decide if you want to spend that money. Well, you and your boss…

The CEO. Oh yes, you have a boss. And probably without the knowledge, nor the time, to understand the fancy things you are doing in Marketing. But you need the budget to do these fancy things, so you need to knock on his/her door at some point in the year. Not only you need to have your elevator pitch ready, but having your boss asking for numbers is actually good for you. Whatever new project you are starting, be sure it has a solid business case behind. Understand all the costs (that you will know because you’re asking for money), the consequences for every stakeholder (consumers, customers, employees), and the return. You need to know how you are going to measure success and what will be the return of that success. Return will not always be money (could be awareness if you are launching a product), but should lately transform into it (if you don’t sell more after an awareness campaign, something is definitely wrong). This measure oriented philosophy, should reach your team, but also your providers. Making your agency win a Cannes Lion doesn’t make you sell more. The scary question you have to always ask is “how much this good idea will contribute to my business?”. If you support your projects with a business case, built with the help of your team and your agencies (Media, Creative, PR), your boss will likely say yes, and you finally will help your company to grow. Wasn’t it your dream after all?

Do you think other internal areas can undermine you marketing activities? I’d love to hear your thoughts on this.