Customer Engagement - Customer Segmentation Beyond the Numbers
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In past articles we have talked about reaching out to markets in a more structured way, understanding our customer segments better. (And we will discuss this in our upcoming webinar with Inez Blackburn.) Most often when marketers talk about segments, they still think in ‘groups.’ But today customers are willing to engage, and this creates a much richer set of information about customers—what they want, and what they are willing to pay for it. But are marketers taking advantage of this opportunity?
Are Demographics Dead?
More research has been done on ‘the customer’ than has been done on cancer, yet we barely understand who our constituents are. Whether you are a retailer, a manufacturer, a community or social service, a good understanding of who you serve or sell to is critical to success.
Old demographics systems relied on the census as a foundation and built on top of that to determine such things as density of services, stores, etc. as well as types of products. But census data is collected every ten years! http://2010.census.gov/2010census/index.php And we have learned in marketing that you have to ask questions based on the outcomes you need. So census questions may not help us derive the real data we need about customers.
So now we have ‘lifestyles’ and other types of archetypes to describe customers. Other consumer marketing organizations collect a plethora of data, but how do they determine what and who you are and what you are likely to do? Example: a middle income family of four, who belongs to a certain political party, and a certain religious institution, and whose children attend a certain school, and who ski every winter. This information is crammed into a system along with all the other people in your neighborhood and a customer archetype is defined. Given the density of these in your neighborhood, the provider now needs to determine if this family and the other families like them will be good constituents for them, and how to provide products and services for this group of ‘ski families’. This is progress, but the level of participation in a ‘one technique’ system is insufficient to truly and completely understand the consumer or citizen and create real winning products with segmented programs and pricing.
Insights have been indirect in the past, such as POS and sales numbers. Sales for ski products went up. But I am not sure if that came from my programs and which buyers. I need one step more— I need to know about those specific buyers. And I need to see every purchase and location where that customer buys. The theory goes, and it is a good theory, if I can collect and analyze all the data I can see about their activities, from search to shop, and the time of day shopped, whether promotions have had an impact, what they actually buy, then I can organize my store layout, merchandise selections, pricing, etc. to match my customer base. This requires very individualized knowledge about the behavior of customers.
There is a plethora of research techniques on predicting markets, but actual behavior trumps most methods. But even behavior raises questions, and the answers to these questions will change how we serve that constituent in the future. Ongoing engagement is critical, since one success does not necessarily beget the next.
From Proprietary to Populist
Many progressive and ambitious organizations put together systems with some depth to entice their customers to self-define. Traditional systems seem to miss the mark in predictive social and commercial behavior. Will new web and mobile technologies transform how we see and define our customers? The internet, Social Media solutions, Mobile/tribe opt-ins and sensor devices are creating an opportunity to redefine how we understand our constituents.
Tweets and tubes are interesting, but they are not particularly effective in creating commerce. Although virtually every company has a ‘follow me’ button on their home page—so what! We already get catalogue and promotional updates with richer content in our email. The tweets that are interesting are the third party layer—not by the retailer or product company—but fashionistas, product analysts, social critics, etc., gushing about sales, or analyzing the product features, the newest gadgets and how they work (these are extremely popular YouTubes). (left photo credit centrikidblog.com)
The challenge is how to get this working for you, in order to understand your customer base in a much richer way and engage them—interest, information, sales, and lifetime loyalty?
Consumers engage directly with their favorite brands and outlets from retail to sports arenas (baseball, hockey, etc.) and manage their loyalty points with these organizations.
At the same time, the company is able to create member-only sites, which learns about the consumer, has dialogue on offerings, provides promotions, and gains and retains these customers. Member-only sites have distinct advantages, which we won’t go into in this article, but are profound in value.
Promotional and other info can be distributed thru devices, email etc.
In-store approaches such as virtual mirrors, kiosks, and mobile integration are all viable technologies, but whether web, SNs, Mobile, or in-store, they all need to be integrated into a holistic strategy to gain value. Whether a smarter web site, or more trendy technologies, customers are ‘online’ and signaling what they want.
Location-based Service and Mobility
Your digital movements are part of the ‘public’ record, more or less. And many consumers grant permission to collect data on their location and other data to gain access to location-based services or gain information about products, services, events and promotions. Where is the closest Starbucks? I am not feeling well; I wonder if there is a Doc-in-a-Box nearby? Where is there a good place to get a veggie pizza?
From the provider’s side, using this data is highly valuable and will be the ultimate source of data to create new customer and constituent models.
Mobile data is highly valuable since it elicits a dynamic response from people on the go. Where they are located now can feed a real time capability execution system—and signal for more buses, food, or real-time promotion to drive people into your establishment (dense populations on the move after a public event can be a source of business).
The point is that engaging the constituents in the way they want to be engaged—multi-channel engagement if you will—will generally produce richer data that can expand your model insights to improve your services and products.
Analytics and Reasoning
Part of the challenge is pulling all this data together in a construct that can be analyzed. We are dealing with non-standard data, so users have to be fairly creative on designing and using these models. 4D models (we talked about this a lot a few years ago) are of more interest now; it takes a while for the tech community to catch up with the concepts. But also the user pull has to be there. Users are interested now. They are virtually buried in data—from traditional CRM systems, as well as web-site marketing automation systems.
Conclusions - Are the 4Ps dead as a marketing construct?
The 4Ps of marketing?
First, who is the customer? Might that not be the most important question a marketing executive might want to ask?
Last week we talked about price. But it is critical that price must match who the customer is. And there are ways to get very personal on price and really up the value for customers and profit for the company.
Let’s challenge some thinking!
The 4Ps of marketing? In fact we haven’t heard anyone use this term to us in about 10 years—till last week. This source is a good candidate to be mothballed, we think. And we hope that at the college level this is not the core of the academic program for marketing these days, though understanding products, price, markets and customers is obviously the game here.
There are modern strategies that are working—even conservative organizations like the US government are socially networked. The density and complexity of communities, the popularity of blogs, the growth in interest groups, and the ease of collecting information are producing a profound social revolution.