Businesses today are certainly not lacking when it comes to access to customer data. According to new research by Vanson Bourne and Sitecore, on average, brands say they’re collecting seven different types of data about online customers. The proliferation of new channels means companies can now aggregate their customers’ interactions across multiple touchpoints, which should – in theory – mean that they understand their behaviour, preferences and expectations better than ever before. But it seems this isn’t always the case – the same research revealed that 64% of UK consumers think brands make assumptions about them based on single interactions.
It’s clear that, whilst the digital age has opened up exciting new ways to engage with audiences and amplify brand messages, the challenge is standing out from competitors and being the voice your customers hear. So, with discerning customers in control of their journey and quick to become frustrated by businesses’ who don’t seem to understand them, what can brands do to prove they have a deep understanding of their needs – and have the solutions?
We believe the secret lies in smart segmentation; basic grouping by age or gender doesn’t go far enough anymore. If marketers want to build great relationships with their customers, they need to create a relationship with the customer as a segment of one.
A whistle-stop tour of customer engagement programmes
Back in the 1980s and 1990s, Customer Relationship Management (CRM) technology, or a company’s own database system, underpinned the way organisations stored and managed their customer data. This technology was functional but lacked sophistication; it ensured that employees knew who they were talking to, and could access the necessary details of the person on the other end of the line.
Yesterday’s loyalty programmes were simply product and offer driven. Customers were often only rewarded based on purchases made and how long they’d used the company – rather than pre-empting what they may want or need at their current or next life stage, for example buying their first home. Data was segmented to some degree, but there was no such thing as multi-channel delivery and personalisation was basic at best.
Today, businesses need to meet the needs of tech-savvy and multi-connected customers who expect real-time responses with minimal effort. The key challenge, therefore, is companies having the ability to interpret customer data and use it to fuel insight. According to Experian, 87% of customers find it acceptable for brands to use their data to personalise interactions, but only if it’s relevant to them.
We all know how annoying it can be to sift through emails, or scroll past ads on Instagram, that have no correlation with our lives. At best, irrelevant offers can be a mild nuisance to customers, but at worst, making assumptions can risk causing offence. Just because customers are in the same age bracket does not mean they are a group of people who share the same behaviours, needs, attitudes or desires in life.
A segment of one
In the past, life stages were more fixed by ages. Now the lines are blurring and things are more fluid. Gen Z, for example, are the first “mobile only” generation, and therefore may not fit into expected patterns of the customer journey. With so much data now available to them, companies should have the ability to be smarter about building a much more holistic view of their customers which will enable personalised, relevant interactions – giving people what they like most, at the right moment.
A good example of this is Thomas Cook’s “You want, we do” campaign, which tailored its offerings to different groups. The travel operator used segmentation based on past customer behaviour and household insight to increase the relevancy of the campaign. Its own-brand hotels and holidays were targeted by customer segment (factors including life stage and social economics) as well as demographics. Their adverts addresses different kinds of ‘holiday wants’, for example ‘I want family time’, or ‘I want me time’.
In the world of banking, EY found in its Global Consumer Banking Survey that basic segmentation is inadequate for banks because it doesn’t understand consumers from different angles. Instead, EY recommends dividing consumers into one of four-segmentation buckets assessing each person’s level of digital sophistication and financial acumen. These include ‘Digital Stars’ (people who prefer to manage aspects of their life with digital technology) and ‘Traditionalists’, those who are least in control of finances and least comfortable transacting online.
Building the future of customer engagement
These examples show that next-gen engagement is more than data-driven marketing; it’s about getting to the intangibles of human motivation and encouraging behaviour to create more rewarding journeys, thereby understanding and making the most of the relative value of different rewards to different people.
This is certainly an approach we’ve taken when developing programmes for the large banks we work with. We know that many loyalty programmes in the past haven’t worked because they’ve not been personalised enough. If businesses want to truly become a valued part of their customers’ lives, better segmentation is the answer.
By Nina Conseil, senior director of product & marketing at Affinion UK
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