It is not just markets that have changed - consumer data and the companies that specialise in handling it have as well. David Reed (DR) talked to Kevin Telford (KT), strategy director, and Adam Leslie (AL), head of data sales at Callcredit Information Group’s Marketing Solutions division about the way their business is evolving in response to new consumer behaviours and client needs.
DR: What are the major changes you are seeing in the market, in terms of consumers and how organisations deal with them?
KT: The consumer is in charge - they have the power. Consumers are now out in the market researching products long before the brand knows about it. They are using the Internet to look at what to buy, compare prices, talk to their friends and brands have no access to that activity. Often, the consumer knows more about products and services than retail staff when they finally go into a store to buy something.
We are already seeing that happen in taxis, nightclubs, some stores - people are checking in so they can find out about how to get into VIP areas, what merchandise is on sale, who else is there, even what tracks the DJ is playing. How you structure your business around that is complex and difficult. You need data assets, technology and people to pull everything together into the right processes and effective marketing.
Power is shifting rapidly to the consumer. They know their data is important and will start locking it down and keeping it in their own safe storage services. Ultimately, that might include things like medical records, so if somebody is in an accident, important information about things like blood type or allergies will be available there and then through a mobile permission-based device.
There is the extreme saving lives scenario and then there is the day-to-day release of information to make consumer experiences better. Callcredit is shaping up for consumers with the likes of our Noddle proposition, that is all about releasing credit information back to the consumer for free.
AL: Last year saw marketing expenditure online outstrip TV advertising for the first time. Marketing directors are always looking at return on investment and the most appropriate marketing channels. The switch from the existing model to the new one will occur over time and consumers who are leading this change are a subset that is smaller now than it will be. Leading brands will be agile in achieving that - some will lead and others will follow. We have to offer solutions for both of those groups.
Connected is a new service we have just launched that assumes consumers have got Internet access and looks at how they are using it - for example, for social networking, financial transactions, researching products before they go and buy them, reading news, etc. It also looks at how consumers access the Internet, for example via their phone or laptop. It then segments the whole of the UK into five broad technology groups - Online Trendsetters, Family Fun, Spending Big, Follow The Leader, Lagging Behind. Within those groups there are 23 detailed categories and propensity scores can also be applied at individual level.
KT: It is a polarised market. One group of customers are able to spend, the others are struggling, looking to spend more frugally and better. Some people are in good jobs at the moment, driving down their debt and paying off their mortgages. They have got more disposable income to spend, but most of the direct marketing is not focused on this sector and encouraging them to do so. It is a difficult conundrum when there are two wider divides. Even so, we are seeing the rise in profits at some luxury brands, across markets like high-end fashion and entertainment.
At the other end, discount retailers like Brighthouse, discount stores and even mid-market stores are experiencing growth as a business, or in specific areas within their portfolio, such as meal deals. They have structured themselves to the current environment. Utilities are doing the same thing, for example with energy plans for people who are finding it difficult to pay.
DR: What are the implications in terms of data and for data specialists like Callcredit?
KT: The era of the data expert is here and now. We are now seeing main board appointments of customer insight directors in the United States - that will impact on the UK. Companies need to build themselves around the customer - where they will get them, what their preferences are, how they are behaving is critical. That is the new backdrop to how companies are structured.
We are increasingly getting a seat at the top table and are being asked to link up with marketing agencies. As they becoming more about customer engagment, data is driving content and creative, so we have to work hand-in-hand with them.
For one major retail client, we put an entire end-to-end solution together without the involvement of a creative agency. It involved drawing on a library of imagery and stock content, email templates and online landing pages, as well as direct mail and telephone calls, all based around customer data.
We make it easy for clients to test different propositions and test new marketing propositions before scaling them out. We are also innovating by finding new markets for data we are collecting through strategic partnerships. In one example, we have identified a new life stage that can be targeted which is outside of the parameters that the data owner collects the information for.
We also have technology partners for things like online tracking, where we are using partners to collect IP addresses and cookies data. As soon as that consumer registers and gives an email address, we can link it to a physical address and get the full picture from our database.
AL: We have 41 million physical addresses, 20 million emails, 20 million landline numbers and 15 million mobile numbers which we can append to existing customer files where a client lacks those variables on their own database. You can’t create a true single customer view without that holistic set of addresses.
Share of wallet is a critical data tool for these times. It allows you, for example, to look at two consumers who have both spent £50 on a product and see where for consumer A that is their total spend, but for consumer B, they spent another £20 elsewhere. So instead of treating them both the same, the brand may be able to use a reward programme to stimulate consumer B to spend more with them.
nGauge Profitability gives our SHARE clients the opportunity to look at what share of wallet and total credit utilisation their customers have. It allows telcos, credit card companies, lenders and even home shopping companies to see whether their customers are genuinely high or low value and to screen out targets who might be an unacceptable risk.
DR: How is marketing changing to reflect the new consumer and the new data available?
KT: We are seeing a lot more joined-up marketing by brands - TV ads directing people to a Facebook page for the full story. To make the customer visible in this era of multi-channel marketing means recognising them from an IP address or an email address and matching that to physical addresses.
In the next few years, however, I expect to see a decline of Facebook in favour of Google + which gives the consumer more control over their data. It will allow consumers to leverage their buying power by asking others to put their hands up if they are looking to get the same product, then coming together to get something extra in return, like a discount or an added benefit.
Marketers are also starting to take risk factors into account which is about looking forward, rather than looking in the rear view mirror. There may be changes from the current way a credit card issuer, for example, can positively discriminate people based on their forward behaviour, such as between students when they apply. If you know one is a scientist, they may get a better job than somebody studying the arts at a broad level.
It may apply to individual level in practice, too. Using conventional credit practice that may prove a non-starter in the process. But in profiling forward behaviour rather than historical, it may prove prudent lending for a particular company. A tricky and complex area, however, balanced between diligence, compliance, legality and governance - these new future practices through data insight and mapping a person’s journey may yet become reality.
AL: Marketing is focused right now on how to retain customers and offer them a better experience, so they will buy from a wider product range and be loyal for longer.
People in Play is about spotting consumers who are using comparison sites, looking at reviews and researching products - activity that brands don’t know is happening. Organisations sometimes do have information on lifestages and changes, but don’t do anything with it - for example, a bank may know a customer has got divorced when they change their name on an account. If you know somebody is in the market or their circumstances have changed, you can interrupt those research processes to make them an offer.
Pre-Movers is an example of what we can do by identifying people who are planning to move up to twelve weeks before they actually do. It means we can tell the mortgage company before they do and let them contact them about a mortgage offer before it is too late. For a company with a book of 1 million mortgage holders, telling them each month who is looking to move is a powerful signal.
It also allows local service providers, like restaurants, gyms, energy providers, to contact a new mover right at the moment when they are thinking about who to sign up with at their new address. For years, companies have relied on changes to the Electoral Register to find new movers. But that data could be up to six months after the event.
KT: These changes are taking into different areas of the business than before. It is about working together across data, people, technology and operations and creating joined-up teams that deliver customer insight. Data guys will be everywhere!