12th May 2017
By Scott Logie, MD, Insight at REaD Group
That most contentious of acronyms – GDPR – draws ever closer, and as each second ticks by the clamouring voice of the media continues to cause a frenzy around the repercussions of this new regulation for the marketing industry. As the finer details of GDPR’s implementation are not yet fully known it has left a lot of people wondering how it will affect brand’s ability to communicate and ultimately understand their customers.
The crucial aspect that has many marketers running for the hills are the changes being instigated concerning ‘consent’; essentially the permission given by an individual to allow the processing and use of their personal data. For starters, you can kiss goodbye to the pre-ticked box. Instead, businesses will be required to obtain unambiguous consent from consumers with active opt-in protocols, and must bare each tiny detail of how exactly they intend to use said data. Consent requests can no longer be sneakily hidden away in terms and conditions like a needle in a haystack or indeed be a precondition of signing up to a service. Separate consent must be obtained for EACH separate channel through which a brand wishes to communicate, as opposed to having a blanket opt-in.
All things considered, surely putting consumers at the heart of marketing and promoting more transparency and trust in the industry is a good thing? Nevertheless, these new stringent rules could ultimately mean that marketers find it difficult to target new customers and struggle to profile customer data. The key question is: as consumers become more and more sceptical about parting with their personal data, how can marketers win them over and ensure they are maintaining relationships with them once GDPR comes into full force in 2018?
The big, well-trusted brands such as Amazon, John Lewis and Marks and Spencer will be sleeping soundly in their beds in the knowledge that they should continue to have little difficulty with this conundrum. It is the less established, less trusted or less appealing companies that shall be biting furiously at their fingernails.
Companies that offer insurance or utilities will inevitably find themselves at more of an impasse when it comes to securing consent, as consumers perceive these services as a purchase made from necessity and not for enjoyment or pleasure. The reality is that while consumers are happy to provide their personal data to their favourite retailer with the promise of receiving personalised and rewarding customer service, industries such as insurance just don’t provide the same sex appeal.
Fear not! Marketers from all industries and sectors should refrain from DEFCON 1 just yet. Consider this to be a fantastic opportunity to get a head start and organise highly targeted marketing campaigns to source consent from consumers in the run up to GDPR. In order to achieve this, customer databases would need to be profiled and different consumer segments identified. Each of these target audiences will already have different relationships with your brand, underpinned by their individual lifestyle factors, attitudes, purchasing behaviour and communication preferences. By segmenting audiences and analysing these different relationships, marketers can build a detailed picture of their customers and best understand how to persuade them of the benefits of providing their data in the most relevant fashion.
Truth be told, won’t this ultimately provide brands with a more valuable customer base and allow brands to hone their marketing approach? Evidently, some consumers will still refuse permission to their personal data, but on the bright side those that do would probably be averse to ongoing communications anyway. Why invest in consumers that are not willing to engage with your brand? Time and effort are far better spent on those that have actively requested contact. Furthermore, these consumers will appreciate the open, transparent foundation on which you have initiated this relationship and shall anticipate the same standard in future.
Of course, it goes without saying that it is vital for brands to continue to secure consumer data from May 2018, and undoubtedly (and unavoidably) there will be consumers that choose to opt-out of providing consent. However, this new focus on a transparent approach to data collection will, in due course, result in more reliable customer data and more profitable customer relationships. This new chapter of consumer consent should not be cause for concern; if tackled head on and in an effective manner, the results for marketers could be extremely lucrative and rewarding.
Talk to us today about how to effectively segment your customer data!
22nd November 2016
By Scott Logie, MD, Insight at REaD Group
Not just sex but age, household income, number of kids, car driven, property type, digital engagement, supermarkets shopped at and loads of other variables. As an analyst, or an ex-analyst who employs much cleverer people than I ever was, one of the joys of working at a data owner is how much data we have to play with.
I do firmly believe that there is no business problem that data can’t solve. Quite often the challenge is getting the right data to be able to solve the problem. This can lead to long lead times while research is carried out or additional data sourced. For most of the analysis we do we combine the data that REaD Group hold on every individual in the UK with the data our clients hold on their customers to develop outcomes to help solve our client’s challenges.
One of the questions I am asked most often is what analysis I would do if I had free reign and the time and data to be able to carry out any project. While there are lots of really good options, such propensity modelling, attrition analysis, lifetime value analysis, next best product or marketing mix modelling, my own personal choice would be a segmentation of the customer base.
Segmentation is sometimes sneered at a bit by analysts, and indeed by marketers. What will you do with it? What are the directly attributable outcomes? What benefits will it bring?
For me though, the amount of work that has to be done to get a good segmentation delivers benefits in itself, never mind the outcomes of the project. For example, as part of the initial work there are always profiles created; a need to understand who are active and lapsed customers and what the retention rates are; who is providing the most value and through what products; what channels customers are engaging through and what impact campaigns are having – that’s lots of projects rolled into one!
And that’s before you really get into the outcomes of the segmentation itself which can often help provide real insight into the customer base, in a way that even profiling can’t provide. The multi-dimensional aspect of segmentation means that sub-groups are often created that just wouldn’t be found otherwise. With a client I was working with recently we unearthed a group of well-off middle aged mums spending a lot of money which was a segment the client didn’t even know they had.
In addition, there are cultural elements to a good segmentation that you don’t always get from other insight projects. Once the initial segmentation is completed, getting the personas built, the naming of the segments agreed and the strategies on how to manage the customer groups developed takes much more than a team of analyst in a dark room.
This creates a real opportunity to open up the data to a wider group of people across the company who can get involved and really get under the skin of the customer groups created. In my experience, this additional knowledge can often help guide and develop the segments to such an extent that the data can both educate the client but also the other way around. I have seen many customer groups broken into two, or combined together to create other segments based on inherent business knowledge that the data would never find. This is often the most fun part of the project.
For many on-line, or fast growing businesses, there are just so many things going on, often around service and responding to client queries that actually getting to know who the customers are is a step too far. There is a real irony here as frequently deep customer engagement is what made them successful to begin with but as they have added millions of new customers that is lost. Segmentation can really help redress that balance.
Of course, it isn’t just new businesses. Many years ago I worked at Bank of Scotland, when it was a really well run, well managed small local bank. We were very lucky to have a great CRM database, a good insight team and a boss at the time who really bought into segmentation. We spent a lot of time breaking the base down into small, manageable groups, getting to know them in detail then creating contact strategies to deliver relevant campaigns. The work was justified by astounding response rates – up to 25% in some of the segments. Even a postcard to just say thanks to an older, long-time customer group brought new products opened by over 10% of them.
Maybe this is where my love for segmentation started as it showed that there are actionable outputs and business transformation can take place with deep customer understanding and clever strategic implementation.
So while a propensity model might give you directly attributable income, and help decide who to target for a campaign, for me a segmentation provides so much more. And now with the additional variables that can be added from the vast quantities of data that REaD Group holds, the joy of sex, age, income and the rest really does add an extra dimension to the segmentations we build for our clients.