As we’ve discussed in Part 1 of this series, personalization can mean a multitude of things.
In data-driven marketing, personalization can be as simple as manipulating a graphic or letterhead to relate directly to your customer, like a sporting goods store putting a customer’s name on a football player’s jersey to promote a sale. In our opinion, this is least effective; it’s a “been there, done that”.
Personalization can also be more complex, like when a company utilizes segmentation — breaking the market down into specific demographics — and more advanced data collection to make the most effective use of their marketing efforts.
However, there’s a term in use which is represented to be the “Holy Grail” of marketing, and that is “1-to-1” marketing. This extremely advanced level of data-driven marketing and personalization theoretically goes beyond the specificity offered by segmentation into an entirely new realm of customer understanding. But is it real?
What is 1-to-1 Marketing?
1-to-1 marketing implies a deep understanding of the customer as an individual using extremely specific data like search habits, online order histories, and information in CRM systems and on personal social media platforms, like Facebook or LinkedIn. This customer profile is fleshed out further using more generic types of data common in segmented marketing strategies, like a potential customer’s zip code, age, family status, level of education, etc.
Ideally, using this information as the core element of a data-driven marketing strategy allows a marketer to predict, target and promote with unique messaging, timing and offerings based upon your individual attributes and data points. Successfully doing so should indeed be the most effective way to reach prospects with a very high relevancy about specific product or services. This is the crux of 1-to-1 marketing.
As an example, I am reminded of a scene from the Tom Cruise 2002 action film, Minority Report. Tom’s character is desperately trying to escape pursuit as he runs through a futuristic mall in which “smart” mannequins actually can sense the identity of the customer and morph both their clothing and sales pitch, specifically calling out the customer name (to Cruise’s dismay) and explaining why their offer is so well suited to him. Now THAT is 1 to 1 marketing.
Well it is 2016 now and that futuristic vision has yet to be realized.
The 1-to-1 Marketing Problem
The problem, and the reason 1-to-1 marketing may not even be an attainable marketing strategy, is no one really knows how to do it. Predictive modeling has always been a difficult marketing task, and drilling down to the individual level is daunting indeed. However, the proliferation of data, or Big Data, is one of today’s hottest topics.
The publicity surrounding big data leads many to believe 1-to-1 marketing is being routinely accomplished today. And we disagree. Sure, retailers are using couponing applications based upon past purchases in what might be considered 1-to-1, but this is a very narrow and specific slice of loyalty marketing.
On the other hand, the vaguely related use of “if you like/bought this, you might also like this” is not 1-to-1 marketing at all. It is instead a relational suggestion built around products, not around the individual. In fact, it is more of a segmentation strategy than it is 1-to-1 since it relies on the collective buying patterns of a group to make recommendations.
Companies like Amazon, Google and Facebook, can take advantage of consistent input by their users through search habits, order histories and other user details. While this data may be invaluable, it’s hard to determine whether or not companies like Amazon can use this information to do anything but offer the user similar products based on their searches and the identical purchases of other users. For instance, if a customer was searching for a memory foam mattress, perhaps Amazon would suggest a memory foam pillow or perhaps a memory foam mattress pad, based on the searches and purchases of other users. Still, it’s hard to say this is truly 1-to-1 marketing.
Let’s not forget, Amazon, Google and Facebook are some of the biggest companies in the world, all dealing with personal data and real time, streaming user input day in and day out, simply as a fortunate byproduct resulting from the nature of their business. This same data is not as easily available to most companies. The analytics are monstrously complex, and wildly expensive.
What is Segmentation?
The compromise between simplistic personalization and 1-to-1 marketing, and the likely best practice for companies interested in more relevant data driven marketing, is segmentation.
Segmentation groups prospects and customers by shared data attributes AND to personalize the outreach with individual information that will give your approach a more personal touch.
Segmentation allows you to take the perspective of 1-to-1 marketing, in that a campaign is based upon a shared persona of a group of like candidates. Personas are another interesting aspect to effective direct marketing. My Marketing Director may disagree, but I see personas that are often utilized in marketing automation (yes, marketing automation is also not 1-to-1 marketing) as equivalent to a segment.
In short, with segmentation being a perfectly sufficient option for nearly all marketing strategies, 1-to-1 marketing may fall short when it comes to ROI for the average company, and with great options like segmentation, perhaps the “Holy Grail” of direct marketing isn’t worth the quest…yet.
Is it a Question of Semantics?
Perhaps, but for those interested in pursuing more relevant, data-driven marketing strategies, a thorough understanding of what is being accomplished through better use of data and how it is being accomplished is critical. Created within that understanding is a better realization of what and how to collect, maintain and organize data. Without good, dependable data the rest really does not matter.
Get Help Driving Your Data-driven Marketing Forward
Data is a powerful marketing tool. Strata specializes in highly targeted and personalized data-driven marketing programs that align to our clients’ specific strategies, goals and budget. We also offer complete support services including data acquisition and management, design, digital and print. Explore our marketing services offerings and contact us today to learn how we can help you increase response and ROI in your direct marketing.
Core Concepts of Data-driven Marketing
One word can be used to define the most important element of data-driven marketing strategies — connection.
In order to market successfully, your team not only needs the most comprehensive overview of each target demographic, but the individuals that comprise it. No longer can companies not have a “Single Customer View (SCV)”. Yet a mere 18% of marketers do. Personal details can introduce your product or service as not only relevant, but essential, to your consumer’s needs.
There are many strategies that utilize data to relate to your customers, but what exactly is data-driven marketing and how is it employed?
From data at large, to basic personalization, to its highly sophisticated and effective use in the form of segmentation, this article reviews some of the core concepts of data-driven marketing.
Data-driven marketing spans all types of data subject to change from consumer to consumer.
These different types of data can be applied using mediums like direct mail or digital advertising directed towards an individual consumer or prospect. Working in tandem with your overall marketing strategies, everything from direct advertisements and offers to online experiences can be generated on demand, making them unique to your consumer and more effective as a marketing tool.
There are a host of different marketing strategies that employ data-driven marketing methodologies.
On one end of the spectrum, there are less complicated, and easy to employ strategies such as a personalized greeting or an altered image. These are viewed primarily as “attention-getters,” meaning that they have no real relevancy to the product or service advertised, but simply make a connection with the potential consumer.
On the other end, you have complex and highly effective forms of data-driven marketing that link specific sets of consumer characteristics to your product. Not only does this connect your product to the lives of customers and prospects in very concise terms, but as a marketing tool, it ensures that your approach is highly relevant, and relevance is the cornerstone of marketing success.
Personalization with Variable Data
The term “personalization” has experienced an interesting shift over the last decade or two. Where traditionally it fell under the most basic end of variable data use, its meaning and use has expanded in the online world to highly-personalized, audience-driven experiences, typically fueled by data and complex algorithms. In variable data applications, often related to digital printing, it means simply adding personalized elements to templates, whether in the form of an altered image or altered copy.
For instance, perhaps a sporting goods distributor wants to run a promotion ahead of the fall youth football season. Using variable data like their sales logs, they send out a direct mail promotion, on the front of which is a quarterback with the potential customer’s name on the jersey.
Personalization in this manner is widely regarded as the most rudimentary form of data-driven marketing. That said, there are significantly more effective ways to utilize data in your marketing strategies. Though we have seen this applied more elaborately in the online world, there are still opportunities in all marketing mediums that must be embraced in order to maximize response and ROI.
How to Use Segmented Marketing Strategies
Segmented marketing strategies are some of the most effective you can employ. Segmentation uses consumer-specific data to build demographics to maximize market response. Segmentation effectiveness has been proven time and time again in ROI…so long as it’s built on data with integrity and applied correctly. In just email marketing segmentation alone, Lyris found 24% of survey respondents experienced greater revenue.
The effectiveness of segmentation lies in dividing large demographics into niche segments. As a result, consumers are more easily accessed, understood and related to. In this way, marketing efforts can be refined in order to market as efficiently—and effectively—as possible.
For example, imagine Company A, dealing in fiduciary products, manages large investments for their clients. In general, percentages dictate Company A should market to a more mature client base—baby boomers for instance—as they’ve had time to accumulate the wealth needed to make such investments. While this is a good start, there are plenty of baby boomers who are not in a financial position to make the types of investments Company A is looking to manage.
Segmentation would break down marketing efforts into more specific subsets of that original demographic. By logging data like age, zip code, size of family, education, etc., segmentation breaks down a wide scale demographic into more manageable markets, allowing Company A to market to the most likely candidates to make the investments they hoped to manage.
Summarized, segmentation uses data to target relatively large, but significantly more concise, demographics than basic large-scale marketing efforts.
Using Data as a Marketing Tool
Data is a powerful marketing tool, and when employed correctly, can yield fantastic results. From the most basic personalization all the way to the most sophisticated segmentation, there is a unique solution for every marketing strategy and budget.
To find out more about data-driven marketing, including all of its applications and most effective uses, stay tuned for Part 2.
Strata specializes in data-driven marketing programs and offers complete production services to execute them efficiently and cost-effectively. Explore our marketing services offerings and contact us today to learn how we can help you increase response and ROI in your direct marketing.