Why knowing your customers intimately won’t always improve marketing ROI

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And the essential ingredients that will.

We all like to think we possess a good understanding of our customers, but as their needs and wants evolve, so must the level of insight we hold about them. If you did have a deeper and more expansive knowledge of each one of your customers, what would your organisation be able to do with those insights, if anything?

This is the question your competitors are considering right now

It’s what you don’t know about your customers – the unknown – that could open the door to improved marketing ROI, new revenue and hopefully, loyalty and profitability. Unlocking ‘the unknown’ requires you to make use of the valuable data that your customers make available to you every day. In conclusion, build a dynamic 360-degree view of each customer with actionable insights.

How does it work?

Consider a retail outlet that offers womenswear and beauty products. It bases its marketing on a broad segmentation strategy, targeting large numbers of females based on age and household income. Marketing is low cost but there’s little ability to differentiate or personalise communications based on individual customer preferences, lifestyle and propensities. The result is a small number of generic offers and messages.

Layering in additional first and third party data could give more context to each customer’s circumstances to craft more nuanced offers. Adding in behavioural data such as usage, purchase patterns and price sensitivity, lifestyle data such as buyer stage, values and attitudes allows organisations to identify hyper-relevant microsegments.

Is microsegmentation truly beneficial?

Microsegmentation marketing is the best way for marketers to hone in on specific targets. It is the most effective approach to delivering meaningful personalisation through appropriate product recommendations, content and personalised APRs on store cards. As customer numbers grow, sales per customer increase and customer lifetime value improves. As a result, the business is better able to understand and connect with customers using highly relevant and timely communications.

However, it’s not as simple as ‘just add data’. You need the ability to see the detail – to get under the skin of thousands of customers at any one time. Customers are constantly changing and organisations need to track and predict these changing patterns with a dynamic approach to microsegmentation. They will hence remain relevant and avoid wasting time and resources on customers who are no longer profitable.

What approach are your competitors taking?

If your objective is to generate brand awareness to a wide audience, taking a broad demographic or lifestyle approach is fine. However, are you planning to personalise customer experiences based on microsegmentation? But you don’t have the necessary volumes of differentiated content and communications to address every microsegment? Take an approach that targets only those microsegments that meet your main objectives. For example, if your goal is to increase return on marketing spend, put those resources into identifying and targeting the microsegments with higher margins and lower acquisition costs.

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The crucial ingredients of driving business value from microsegmentation and segment-of-one marketing

Take a different approach. Many organisations think investing in a CRM system or building the single customer view will give them the ability to truly understand their customers through profiling and segmentation. They’re a good start, but using microsegmentation to understand customers requires a dynamic multi-dimensional strategy. However, this is impossible without a robust customer analytics application. It must be powerful enough to analyse the unique and ever-changing characteristics across hundreds of thousands or more customers. Consequently, make it able to predict customers’ wants, needs and changing patterns into the future.

A use case by use case approach delivers value faster

Layer up relevant data sources, drill down to the segment-of-one and use that improved depth of knowledge. Secondly, develop new content and offers. Then roll-out the learnings into the next use case and so on. Be proactive about promoting the good results. It’s a great way to gain buy-in from reticent teams.

Exploit the unknown. Prove its value quickly.

We’ve helped many leading organisations on their journey to deliver highly relevant customer experiences. Haven Holidays wanted to transition from a rudimentary rules-based customer segmentation approach to personalising their outbound marketing campaigns. They turned to SAS Results, an analytics-as-a-service approach where the customer provides the data and the business problem and SAS experts deliver the results for you to act on. Furthermore, Kat Miller from Haven says “this approach has delivered fantastic time savings, efficiency gains and improved uplift in campaigns. And we’re starting to see rewards in terms of revenue.”

To learn how we’re helping some of the UK’s most successful brands read our At-A-Glance Guide.

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About Author

Tiffany Carpenter

Head of Customer Intelligence, SAS UK & Ireland

Tiffany has been helping organisations achieve bottom line results from their customer and marketing strategies for over 20 years. She specialises in helping companies gain deeper insight into their customers’ buying habits, preferences and lifestyles, social relationships and influences on purchase behaviour and loyalty – and using this insight to make smarter, data-driven decisions.
Every customer journey is unique and every touch point is an opportunity to nurture customer relationships and deepen customer intimacy. Tiffany helps organisations get in sync with each customer’s journey – no matter how fragmented for a clear competitive advantage and a bigger, better ROI.

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