DataIQ NOW! in June showed the breadth and depth of how data is being used by organisations. As David Reed reports, the examples provided on the day added up to a compelling business case for investing into data management.
If you want to know why your business should be investing in data, just consider this example, provided by Steven Martin, director of insight at Aimia. “Aeroplan started off as a frequent flyer programme - it is now worth more than the airline.”
Back in 1984, Air Canada was looking for a way to incentivise its most regular customers to stay loyal. By the mid-1990s, Aeroplan was spun out as a coalition loyalty scheme with multiple partners. Then in 2005, the company floated with a market capitalisation of C$2 billion (and has since been renamed Aimia).
That value was driven by “a group of companies leveraging the power of a very large data set to drive customer insight,” noted Martin. And he added that, “if you don’t use your data, somebody else will. If you don’t craft the right offer for your customers, somebody else will.”
Competition in markets no longer comes just from matching products and prices. Increasingly, it arises out of new ways to take available data and use it to identify opportunities and weaknesses. Get that right and it can transform a business, as many speakers at DataIQ NOW! pointed out. Get it wrong and you are not understanding the true drivers of your business.
As Oliver Glanville, a consultant and head of CRM at Pfizer, said: “Until recently, every year Homebase ran sales promotion TV campaigns. These usually coincided with Bank Holidays and summer holidays when people stayed at home and did DIY.”
The retailer also ran one of the first store loyalty cards in the world - the Spend and Save Card (later subsumed into the Nectar Card programme). During sales promotions, 90 per cent of the incremental revenue generated from the campaign was due to the direct mail voucher redemption scheme.
“But curiously, 90 per cent of the campaign expenditure was on TV advertising. This seemingly inexplicable 90:10 situation is often justified by brand managers who will argue that raising awareness is the task of above-the-line media. But if it doesn’t actually generate sales - which is after all the whole point of advertising - should it be continued?” asked Glanville.
His point is that data needs to be rigorously analysed and used to inform strategic decisions about where budget should be spent. That does not necessarily mean spending a lot of money on technology to operationalise customer data if it is not appropriate.
Glanville recalled Home Choice, an early entrant into the IPTV market, which paid £20 million for the rights to screen live football as video-on-demand, except that the contract conditions stated that it could only be screened a minimum of 24 hours after the match was finished. “Did anyone on the board support a football team, you may wonder?” Even worse, he noted that, “this same business planned the implementation of a Siebel CRM system at a cost of £13 million pounds at a time when the company had less than 3,000 customers.”
Ultimately, he was able to develop a system sitting on top of the existing Oracle database at a cost of £80,000 which was perfectly capable of managing retention and acquisition communications for a UK-wide roll out. The TV channel ultimately failed as a result of being too early to market, having the wrong proposition and facing better competition.
The point is that data resources can be scaled to suit business needs, rather than getting ahead of them. Across the day of the conference, multiple examples were provided of businesses that were steadily evolving their data and insight resources, gaining benefits and then growing them on.
Glenn Cook, group solutions, The REaD Group, provided an example from his time working at Macmillan Cancer Support. “Our legacy programme wasn’t growing at the rate we needed, especially compared to Cancer Research UK which was five or six times bigger. So we looked at who had pledged and key descriptors beyond demographics, for example the products they had bought and their customer journey,” he said.
Using this data, the charity built predictive indicators which it then mapped back onto its database. The goal was to identify existing supporters who had started on a similar journey to those legacy pledgers five to eight years ago. “From scratch, we built two new prospect pools and were able to run a campaign four times larger than we’d ever done, growing response rates up to 9 or 10 per cent - or even 30 per cent in one segment,” said Cook.
Helping companies to identify new prospects and opportunities from their data is at the heart of what the conference’s sponsors deliver. From headline sponsor Callcredit Information Group, across stream sponsors The REaD Group, Experian Marketing Services and Royal Mail, there has been a remarkable level of innovation around data sources, analytical systems and delivery approaches.
Outcomes from this are what can help to make the business case for investing in data during a downturn, said Kevin Telford, strategy director at Callcredit Information Group. Combining offline and online data is what will reveal the new consumer persona and open up new marketing approaches.
As an example of this, Telford cited the use of Twitter by Boots. “If somebody in Leeds tweets that they have caught a cold, they know it will crop up in Bradford, so they are using it for predictive purposes,” he said.
This new generation of data fusion is becoming critical to align marketing with emerging consumer behaviours. Matthew Bayfield, founder and managing director, Tree London, pointed out that, “if you want to change behaviour, you have to understand motivations because they are the bedrock of human behaviour.”
His agency has been developing a new research-driven approach to answer the question, “what are you like online?” This has identified six key factors - involvement, time wasting, dependency, expertise, privacy, fear - that can be identified via survey questions. This has allowed Tree to accurately predict online behaviour for 70 per cent of consumers in tests. “That is where the world is going in big data and real-time, behaviour-driven marketing,” said Bayfield.
Innovation may be important, but core data products can still drive success. Royal Mint worked with Experian Marketing Services and used Mosaic to profile its customer base, helping it to sell 10 million commemorative items in the first half of 2012, using automated personalisation to deliver on those insights.
Virgin Atlantic Airways worked with RAPP to segment its own customer base, revealing seven major groups and 29 micro-segments. These were then fed into a marketing automation process and combined with profitability and propensity models. Trigger-based marketing is now delivering conversion of new flyers at 15 per cent above target, miles redemption at 44 per cent above target and miles plus money at 52 per cent above target - creating hundreds of thousands of pounds of value for the airline at a very low cost per trigger.
Examples like this could be found across the whole day at DataIQ NOW!, from speakers as diverse as Aprimo, Communisis, Data Talk, DQM Group, Neolane, Osborne Clark and Trillium. They underline how diverse the needs of data practitioners now are and also the depth of the opportunity which data might be able to open up.
As Elizabeth Kessick, head of insight at JustGiving, noted, new online consumer behaviours like “slacktivism” can be harnessed to positive effect if they are understood and acted on. But there is still a long way to go. “Only 7 per cent of donations in 2011 were made online, compared to 45 per cent made in cash. Yet 58 per cent of UK consumers are doing online shopping. That is a very big opportunity,” she said. Just like the airline which spawned a bigger loyalty business, the potential is there, it just needs to be flagged and followed.