Rupert Duchesne is group chief executive, Aimia. This column was adapted from a longer white paper called The Power of Real Relationships
To marketers of a certain age, the hype surrounding Big Data resembles the hype surrounding the Customer Relationship Management (CRM) revolution of the late 1990s and early 2000s. Like the rise of Big Data, the rise of CRM was driven by technology firms selling to companies that were afraid of being left out of the future.
As with Big Data, the definition of CRM often depends on who was doing the selling. Because there was no standard definition, companies often installed CRM systems with little strategy behind the technology, and with little understanding of how the investment would deliver measurable return. The result of this hype was a global hangover of dashed expectations as companies realized that, in many cases, they had been sold a pipe dream.
It may yet be possible to fulfill the promise of Big Data — by thinking small. Rather than joining the race to gather as much data as we can store, perhaps we should focus instead on collecting and leveraging “customer-centric” data — data most predictive of customer behaviour, most correlated with emotional and transactional loyalty, and most directly beneficial to building real relationships with best customers.
The alternative to this world is one in which data exploitation actually raises the cost of marketing for brands while offering little benefit to consumers. The good news is that the future is in our hands. By leveraging customer-centric data, we can build a world where brands and their customers alike reap the benefits of value and relevance through relationships based on the principles of trust, commitment, and reciprocity.
The most obvious prediction we can make about the future of Big Data is that, just as we think we’ve found our place in this new world, everything we understand about it will change. Wearable smart devices are merely the tip of the iceberg. Soon our homes, our appliances, and many of
the products we buy will be connected wirelessly to the cloud and transmitting data about our behaviour back to marketers. Machine learning applications such as Apple’s Siri will become smarter and more efficient. Natural language processing will make conversations with our devices eerily similar to conversations with our flesh-and- blood counterparts.
Meanwhile, web search results will increasingly be driven by behavioural targeting. Payment networks will migrate to mobile devices, resulting in a convergence of geolocation and purchase data. New technologies and business models currently percolating out of sight will soon challenge even these assumptions.
Even as the challenge of data integration and the lack of analytical talent slow the progress of Big Data, the dangers of “offer anarchy” and “pay-to-play” will remain omnipresent. Placing Big Data in the service of real relationships affords us our best chance to realize its potential. But market forces fixated on short-term results will continue to steer us toward more dystopian outcomes — unless we harness the power of customer-centric data.
To focus your efforts, consider rallying around these simple principles:
1. Place all your data efforts in service of customers. If you live by this principle, customers will reward you for it. Serving customers with your data efforts means seeking permission, using data transparently, and rewarding them for voluntarily sharing personal information. Even the largest social and search giants will live or die on their willingness to serve their customers, rather than abuse their trust.
2. Start with transactions; add interactions. If you’re unsure where to start your data journey, begin with the transaction. Connecting a purchase to an individual customer opens up tangible and immediate benefits — you can devise offers that increase lift, gain wallet share, and reduce churn, and you can measure the impact of each one. As your analytical ability grows, start connecting the dots from the transaction to interactions through social, mobile, or web channels to build a robust view of customer value and potential.
3. Build relationships based on trust, commitment, and reciprocity. Information is useful only if it provides insight that helps you strengthen relationship value. Customers are fickle and promiscuous, but they are loyal to brands that build trust through transparency, demonstrate commitment through recognition, and deliver reciprocity through rewards. Data collected in service of relationships will pay dividends on the investment.
4. Treat data as a renewable resource. Data has been called “the new oil,” but leveraging data to create long-term enterprise value means thinking of data less as a fossil fuel to be extracted and consumed, and more as a sustainable, renewable resource. Treat your data as a capital asset rather than as a marketing expense, and use that asset to collaborate with partners who possess the expertise to help you build real relationships with your best customers.
If we rally around these principles as marketers, we will ensure a bright future in which technology, data collection, and marketing communications serve their proper place in building a future of real relationships. While we may be some time away from mass adoption of wearable computers, we can proactively position our businesses to place data and technology in service of our customers. It’s the difference between using these tools to spy on our customers, and using them to see the world through their eyes.