Marketers are aware of their obligations around the messages they send. When it comes to getting the data element right, however, there is more of a gap in their knowledge. David Reed looks at new research from Royal Mail Data Services that helps to explain why data-driven marketing is still more talked about than practised.
If you judge by reports from major industry analysts last year, the role of the chief marketing officer has become more influential over the technology footprint of organisations than that of the chief information officer. Understandable, given the explosion of digital and mobile channels to market and the huge volumes of data they generate - a whole new infrastructure is required to handle these flows and execute marketing through such media.
Beyond the headlines and on the ground, however, the picture of data-driven marketing is in most cases far behind the claimed adoption curve. For all the supposed data-saturation of media and behavioural indicators which result, much of marketing remains set in a model which is pre-internet in design - define a proposition, develop creative to express it, identify an appropriate audience and buy media that reaches it.
This is the reverse of how the ‘new marketing’ needs to operate. Audiences should lie at the heart of marketing planning, defining the paradigm scale and scope of the opportunity, driving the nature of the creative and sit alongside the all-important “where, how and when” each campaign should be run. So why is there such a difference between the idea and the reality?
“A lot of businesses talk about how well they know their customers, but very often the data that underlies such knowledge is either inaccurate or out-of-date,” argues Jim Conning, managing director of Royal Mail Data Services. “Conversations about creative don’t matter if you’re using poor quality or incomplete data about your audience.”
At an Executive Roundtable hosted by Royal Mail Data Services in conjunction with DataIQ, there was a strong focus on the strategic implications of big data and digital, mobile and social media. What was absent from much of the discussion, however, was an acceptance that the tactical demands of data need to be resolved first or those strategic goals get undermined.
“If you get a customer’s details wrong, they will become dissatisfied and may well decide not to buy from you again. Then the costs really stack up as you’re having to spend again to regain lost customers. The way to get effective marketing is by using your customer data to determine the most effective message and channels through which to engage. Sometimes that is direct mail, other times it is email or display. What you need to know is not only where and who your customers are but also when and why they’re actively in-market,” says Conning.
Focusing on what are perceived as the more “exciting” dimensions of marketing, such as creative, is understandable - “it is human nature,” says Conning - but it happens at the expense of those very same activities. There is a double cost to failing to put data first - reduced efficiency in reaching the audience because contact information is incorrect and lower effectiveness because the proposition and creative is not in line with their interests. “You need to join up the costs of lost opportunity,” he says.
A key finding from the Royal Mail Data Services Life Event research conducted among the DataIQ community helps to explain why this disconnect between strategy and tactics might exist. Respondents were asked what they found to be the biggest obstacles to executing data-driven marketing - 42.9 per cent named their database or CRM platform, while 39.6 per cent said it was down to the culture within their organisation.
The first of these obstacles might seem surprising. With the big data movement in its fifth year, it could be assumed that fundamental data infrastructure issues have been resolved, delivering to marketers a fit-for-purpose resource to support their goals. Yet that is not the case at more than four out of ten firms where these essential components are still not optimally architected.
Equally, the problem of changing culture within an organisation should not be overlooked. Data-driven marketing calls existing working practices into question and can even make some marketers and other senior executives feel challenged because of its emphasis on evidence over instinct. To some, that does not feel like a creative way of working.
Conning believes that a degree of hype around big data has also distracted some marketers from getting the fundamentals right. “In looking at all the new, emerging opportunities, some marketers have gained the impression that they know their customers and what they are doing all the time,” he says.
Behavioural indicators certainly exist in digital, mobile and social data. But they are different from up-to-date, accurate and permissioned contact data. So if the marketing function has been telling the board it knows exactly where its audience is to be found and how to reach it, returning to ask for investment into a single customer view or data quality programme can be hard to justify.
Even hardened data practitioners acknowledge that data quality and data integration can be boring - unless they are closely aligned with a positive outcome for the customer and, therefore, the business, that is. It may seem dull to validate a postal address, but making a sale as a result of a timely piece of direct mail about furniture which is delivered just as an individual is equipping their new home is not.
“If you have got millions of customers, you need a systematic way of doing that type of ‘just-in-time’, personalised marketing. The only way to achieve that is through good technology and data services,” says Conning. He says the second half of 2015 revealed a significant increase in the number of clients working with Royal Mail Data Services to ensure they have the optimal technical and informational resources their marketing function needs.
Evidence of this shift in emphasis emerged in the survey. Automatic validation of customer address data from web sites was reported by 46.1 per cent of firms, up from 34.8 per cent in 2014. Similarly, 45.3 per cent said they carry out automatic validation on data as it enters their internal systems, a significant increase from the 30.5 per cent doing this the previous year.
As Conning points out, “You need to make every effort to ensure the data you are capturing is correct at source. That isn’t an easy job and marketers do not become marketers to clean up data and make it more effective.” The absence until recent years of data management as a component of marketing courses is part of the explanation for those cultural barriers to data-driven marketing identified in the research.
That is changing, not least because of the arrival of a whole new generation of highly data-literate marketers who are determined to leverage this resource to their benefit. “If they want to do their job well, they need to know the data they are working on is as accurate and complete as it can be,” notes Conning.
Third-party data and data services providers will be an important part of that process because of the dynamic datasets they can offer and their specialist skills in maintaining high quality data. As the importance of accuracy and timeliness becomes more visible in the new marketing process, so the demand for these skills and capabilities will rise.
Good news for those providers able to help, but also better news for data-driven marketers with the right outlook. Says Conning: “We’re achieving response rates for our clients which are at least two or three times better than those organisations had been getting in the past.”