fcommerce

An increasing number of brands are taking their online stores into the realm of Facebook in the hope of increasing sales and word of mouth recommendations. We’ve been thinking about the impact this has on customer data.

As many predicted, F-Commerce is fast becoming one of the ‘next big things’ this year. A number of brands, including Lynx, Heinz and Domino’s, have used this tool to sell various items over the last couple of months with great success. However these brands have only used Facebook to sell small numbers of new or limited edition products to devoted fans who have ‘Liked’ their pages.

If a Facebook user wants to make use of a brand’s Facebook shop then they have to allow that page to access their personal information. This gives that organisation access to a wide range of personal details about that individual. Most of the brands are upfront about exactly which details they will be using in return for access to the online store and only use what they will need.

This has been a hot topic in the Quant office over the past few weeks as we are building applications to allow customers to register for our clients’ loyalty programmes through Facebook. We know how important good quality customer data is to a business and as a result we have been debating how much of an advantage Facebook data can actually offer.

We’ve come to the conclusion that using more than the essentials turns customers off the idea of purchasing through Facebook, especially when they can just go direct to the regular e-commerce site. This is why Lynx, Heinz and Domino’s have only been offering something special which cannot be bought anywhere else in exchange for this more detailed personal data. Consumers also have a problem when it comes to the security of F-Commerce. A recent survey found that only 26% of respondents think Facebook is safe against fraud when buying through the site.

We believe that although Facebook is effective when building brand awareness and perception, when it comes to collecting good quality data that can be used for modelling, strategy and targeted communications it is best to utilise data gained through a method which is taken more seriously such as the initial sign-up form or incentivised surveys.

Marketing is about the creation of demand and the driving of aspiration, and as the BRIC countries awaken to the growth opportunities provided by stimulating domestic demand new opportunities will be created for foreign brands and services. Marketing skills are embryonic in these markets and it is here that the UK with its long history of marketing knowhow and expertise can do good business – increasingly the opportunities will not be just here but beyond our shores. But more importantly are the opportunities for us to export our famous brands to these markets. There is a huge appetite for UK brands in China for example where we are associated with quality and good breeding. Jaguar Landrover can sell every car they export and the average Range Rover with tax retails at close to £200,000! The trick however will be to provide products that are affordable by the mass middle class of which there are 450 million – more than the population of the EU. There is much work to do to understand the drivers, motivators and buying behaviour and to create a credible segmentation that truly represents the consumer. A thoughtful approach to matching UK brands and products to segments will be a great step forward.

Relevant insight, product positioning, targeting and communication needs good data and that is rare in developing countries. Brands already in these markets and those planning on entering must take the lead and specify data strategies in their marketing plans. This will lead to the growth of infrastructure and the setting of the right standards for privacy and commercial arrangements.

Nigel Gatehouse

Only today it was announced that Yahoo is to offer email customers the chance to opt out of having their email scanned by third parties in order to offer more relevant content. This is surely outrageous – why would they think that anyone would want to offer up their privacy on a platter to a company for nothing other than a few promotions. The assumption behind this is that personal data has no value to the individual and that everything in life boils down to a commercial or materialistic benefit – we don’t believe this is remotely true. There is a new kid on the data block offering consumers the chance to sell their data for blood money – even the founders own research uncovered that most were sceptical and would not join up. Great brands would never do this and would always act in their customers interests; they would take a responsible approach to privacy not just because it’s good for business but because it’s just the right thing to do. As the one time data protection registrar Elisabeth France once said – responsible and professional marketeers treat their customers in the same way as they themselves would want to be treated. This should be the mantra for all of us working in marketing.

There is a general agreement now that UK PLC needs to get back to making things and selling them to increasingly affluent consumers and business in BRIC and other almost developed countries. Marketing people have a huge opportunity to lead this mission through their role of understanding customer needs and wants and then guiding factory and production people to enable them to design and deliver world-beating products. As the digital environment expands it offers consumers more touch points with the brands they like and marketers more data to help shape their understanding of customer behaviour and needs. Collecting and organising the increasing flow of data is a strategic business imperative but one where there is insufficient investment or focus. There is a real danger that as the pace of digitisation accelerates that marketing will miss the boat and be seen as the people who do marketing communications and not the owners of business intelligence that can make a substantial impact on business growth.
The Quant team are specialists in harnessing data to generate value for our clients, visit our website, give us a call

Social networks are not CRM tools but are powerful mechanisms that enable markers to track customer attitudes and preferences for brands , products and services. This is much better than the old PR mentions analysis and the growing number of tools available enable really useful analysis of conversations in the social network space. But Social Networks so far are not places to overtly sell products to customers based on an in-depth understanding of them and their buying habits – for the most part that data doesn’t exist in this space.

Most companies haven’t yet got to grips with CRM let alone Social CRM. Most companies don’t fully understand or believe that if you take the trouble to get to know your customer better and then make sure you get things right for them then that will produce good business – that’s proper CRM. Social networks are a distraction for many who should still focus in the basics.

Nigel Gatehouse
May 2011

And then came the age of cheap computing power which has helped to revolutionise the potential for all organisations to understand their customers. And with this understanding allow their business to prosper. In spite of the growing number customer programmes and commitments to CRM, customer data remains locked within in the Marketing department and is not seen as a core business driver.

I know that Tesco’s is an example that is often used but that’s for a good reason, just take a look at their performance in the run up to Christmas.

• Tesco’s Double Clubcard Points offer and the additional Clubcard voucher mailing in December, resulted in customers redeeming £34m more vouchers than in the same period last year. This contributed 0.7% to UK like-for-like sales growth.
• The UK supermarket giant also reported strong growth in its online business. Total sales of 20% across both food and non-food led the retailer to deliver to almost 1.5 million customers in the run up to Christmas. (Marketing 12 January 2011)

Many a retailer has looked on in awe at Tesco’s supremacy and either been jealous of their card holding customer base or been more cynical and steadfastly stuck to ‘we don’t need one of those’ to drive our retail business.

But look at the other retailers who have benefited from gathering and using customer data.

• Sainsbury’s posted a 6.2% rise in total sales for the 13 weeks to 2 January 2010 and in the seven days leading up to 25 December, it attracted 24 million customers to its stores in its busiest Christmas on record. (Marketing 12 January 2011)
• For the year ending 31 March, Boots’ profits increased by 13% with revenue up 9.6% to £22.5bn, an increase of £2bn on the previous year. (Marketing 17 May 2010)

In Andy Hornby’s (Boots CEO) last annual retail address he put a lot of the success down to the focus on the consumer and personal service and employee engagement with little mention of the power of the Advantage Card (Fresh Minds, May 24th, 2010). But it is clear that the Advantage Card has done a lot to engage customers and get them to buy more from the store. So much so that Superdrug is set to launch their own loyalty card later this year.

“There will be a big difference between the haves and have-nots, with data. Those with loyalty data can see what customers are doing. If they are going elsewhere for a certain product, we can incentivise them to buy it with us.” (Justin King, Chief Executive of Sainsbury’s – The Times January 8, 2010)

But those believing in the power of data and what it can tell you have worked hard to gain this position. “Tesco has also invested millions of pounds in IT platforms” (Telegraph, January 2010). If you want to use data you need the right infrastructure. There are still many big brands who might have a lot of data (the high street banks are a good example) but don’t necessarily know how to organise it and then use it. And data often isn’t at top table in these organisations.

“Technology is a huge enabler. It can help you become more efficient, agile, rigorous and automated in what you do. Marketers don’t need to know how it works if you go under the hood, but we need to understand what technology can do to help us achieve high performance”. (Nick Smith Managing Director, Global Marketing Transformation, Accenture.)

And the only way to do this is to invest, the beauty is now that this needn’t be that expensive, to have a system that can easily show you what customers are doing and when. A system that the marketing team can access and see themselves and therefore use to create customer growth and in turn business success.

The data enables us to look at what we offer customers and how we can improve it which surely is the way to gain competitive advantage and business growth. But unless data is at top table in your organisation, it will always belong to the back room boys.
Nigel Gatehouse

But a lot of us have been affected by identity theft – a third of us in the UK have had our cards fraudulently used by someone else, much higher than in most other European nations (and it’s even higher in London). There are 27% more identity frauds than there were two years ago. And it is costing the UK economy £1billion every year.

And they are happening in more and more places. It could be your bank account, your card, mail order account, mobile phone or any other electronic / digital profile.

A poll of 970 UK adults, part of the bi-annual global Unisys Security Index, reveals that cyber-security is the public’s chief concern, with 85% of respondents “worried”, and over 50% “seriously concerned”, about bank card fraud and identity theft. (Brits switching banks over security and privacy concerns – Unisys)

But it’s not confined just to consumers.

A significant 54% of businesses have been victims of fraud or online crime in the last twelve months: 37% had an issue with phishing emails. 15% were victim to card not present fraud and 15% experienced IT system issues (such as viruses, hacking, etc). (Federation of Small Businesses – February 2009.)

Being online is like being in public, but because we often do it in private and sitting at a screen it doesn’t feel like that, it feels secure and safe. And we tend to trust the social networking sites, banks and email providers to protect our identity. I think the thing I found recently was that they simply can’t. People have become cleverer about how they go about invading your world in all the places that you are transacting or interacting with others.

A piece of advice that I thought was good was “In order to safeguard our identities we need to start treating our identity in the same way we treat our property or our private lives”. (Richard Hurley CIFAS Communications Manager)

Of course when my email was taken over I contacted Yahoo, my provider for some answers. They came back with a stock reply and told me how to improve security levels, which I’d already done. But I didn’t think they took it very seriously and was disappointed with the lack of importance they placed on something that was a real violation against me and my friends / family and contacts.

It is increasingly important to manage your own online data. The European Commission has called for individuals to have more control of their personal data online. Just think about where you store personal information about yourself: Linkedin, facebook, flickr, online banking, online credit cards, online shopping sites and so on and so on.

This recent incident of my email hijack has made me much more aware of what I’m doing online, what data I store there and how I look after its security. I’ve realised how important my personal data is to me, have a think about yours…
Sophie Grender

Whilst email has been hailed as the solution to serve dynamically tailored content to people straight to the heart of their lives through their inbox – spare a thought for direct mail and in particular variable digital print. Mail produced this way is equally versatile in terms of creating highly tailored messages with literally thousands of variables, both images and text available for each mailing.

Here’s some of the key benefits of digital print:

• Channel preference
  The marketing industry has got better at asking people how they want to be communicated with and offering the choice of on or offline communications. However, we see time and time again that offline communications get a better reaction even if the customer said they wanted email.
• Return on investment
  Yes it costs us more to print and mail than to broadcast but we still see that mail can generate a better return on investment. The response rates and direct action taken from a mailing more than compensates for the extra cost. People may say they want email but it is still so much easier to ignore somehow than something landing on the door mat.
• On and offline behaviour
  People have their own ways of organising their mail. There’s a place for things you want to keep, not only statements but also things you’ve requested or like; these can then be reviewed later. But there are very different ways for getting through email. Let’s face it, it’s so easy to highlight what you don’t need now and click delete.
• Who likes mail
  Direct mail has become a relatively expensive medium so targeting becomes even more important. With the use of variable digital print a mailing can become very personal and with the decreased volume comes higher cut-through – how does this compare with your inbox?

  A significant group of mail order customers prefer their information by mail (51%), with only 21% favouring email.

  A staggering 82% of 25-34 year olds have used a voucher or coupon after receiving direct mail in the last year (so this is not just confined to the old). In fact there’s strong evidence to suggest that young people value personalised mail even more as they are largely neglected through this channel.

• Environmentally sound
  And variable digital print can claim some environmentally friendly credentials as well. It’s paper-saving, you print only what you need. It’s white paper in and personalised coloured mailing out.

  IKEA for example would mail the engaged customers with a highly tailored variable digital mailing piece, tailored to their lifestyle, previous purchasing behaviour and much more. But to the less engaged the additional cost was not worthwhile.

• Mail generates actions
  We keep mail and we act on it later, in a way that we don’t with our inboxes (even though often the information is only a click away). But we can use email to remind or enhance the message that has been kept.
  • 51% of AB adults have looked for information on the internet after receiving mail.
  • 40% of men have visited a store after receiving mail in the past 12 months.
  How many could claim these sorts of results for email when most are lucky to get more than 30% open rates (and that’s a pretty good result).

If you want to know more about how to harness the benefits of digital print speak to our resident expert
Robin Presky on 0207 4201407

It then struck me that this is a perfect parallel for us as marketers using data. We should be looking more closely at our customer behaviour and what it is showing us. We can’t make consumers do things they don’t want to do; we can observe their behaviour and see the path they want to take and encourage them along it.

This is particularly true in the digital age when so much depends on what consumers say about your brand in the digital space and how much they value it. They now create a lot of the content relating to your product or service. So what are the golden rules on how to use the behavioural data you collect to understand the needs of your customers and guide them down the right path.

• Step 1 – Understand existing behaviour
  What behaviour can you see and understand? Do you have a single customer view? Do you know what each of your customers’ engagement with your brand is? What products do they hold, how much do they spend, have they complained about anything? There are many metrics that drive customer behaviour to investigate. There are still companies who can’t track this and as a result aim their budgets entirely in the wrong places. For example, they keep pumping money into acquisition at vast expense, rather than concentrating on stemming the tide of attrition. It’s cheaper to save customers than get new ones. A well-known charity brand in the UK kept throwing more and more money into acquisition without paying attention to the terrible rising rate of attrition, which is where the real focus of their attention should have been. Much better to find out why those customers lapse and invest in developing those relationships so they don’t.
• Step 2 – Fill in any gaps
  If you have gaps in your understanding of customer behaviour research it, use qualitative data, do an online survey or find a way of augmenting data. Even desk research can sometimes give you some of the answers you need to address a situation. An online retailer realised that to get people to shop frequently with them they needed to form a habit. Only those getting through the first few shops went on to be loyal customers. Research showed that it was the complexity and time it took to do the first few shops, once you get into the swing of things it gets easier. The solution was therefore to focus on helping the customer form a habit fast and get them through the first few shops easily and with as little hassle as possible.
• Step 3 – Identify any key triggers
  Do you know if there are any key triggers that cause a certain consumer behaviour, so you can predict it and therefore do something about it before it happens. Propensity modelling demonstrated to a mobile phone network that those people who didn’t use all of their contracted minutes were more likely to leave than those who did use their allocation. The simple solution was to offer those people not using their contracted minutes a more suitable deal.
• Step 4 – Understand customers’ digital footprint
  By looking at web stats you can often see emerging behaviour that tells you where the weak points or strong points are. It’s surprising how many businesses can’t see all the points where a customer might be dropping out of the sales process, for example. One leading insurer knew there were problems but until they put the right analytics in place couldn’t see the individual customer behaviour it needed to work out where people were dropping out in the customer quote engine. Once they knew the weak points they were able to improve the customer experience and help get customers through the entire sales process.
• Step 5 – What do good customers look like?
  Think about what customer behaviour you would like to encourage and how you might be able to do that. One retailer simply thanked a segment of really loyal customers and guess what, the value of their sales increased through a simple show of appreciation. By understanding the behaviour of your best customers it is of course possible to identify ones that might look like them but you may not be realising their potential.
• Step 6 – The networked customer is the future dominant force
  Work out where your customers want to connect with you and with other customers. The ‘networked’ customer is the future dominant force. Brands that understand this are able to harness their customers to become full advocates for them. I love the LegoFactory.com idea. Not only can you design your own Lego model online in the 3D Lego Digital Designer, you can buy all the pieces to build your design and it comes by mail with all the instructions printed out for you, with your own name and model number! But it doesn’t stop there, you can share your design with other users of the site and they can select your model or make their own modifications. 300,000 people globally have used the design tool. Promoting customer behaviour that allows customers to endorse the brand, a powerful marketing tool..

By unlocking customer behaviour it can help you put them on the right path.

Sophie Grender
25 January 2011

I think back to when the direct marketing industry was in its infancy and even then we were all talking this dream that one-to-one communications were finally a reality. Brands no longer needed to talk to customers in a big broadcast way but could do so on a single customer basis with personalised information. We all know that what we were really doing was talking to segments of customers who looked similar, as the technology and practicalities of print (digital didn’t even exist) meant that we could only tailor things to groups of people who exhibited similar behaviours and doing a bit of personalisation.

But I keep hearing that technology finally has the solution. We are led to believe that many of the CRM systems available can solve all of this for us and finally deliver us this vision through automating communications to a much higher degree and reducing cost to the business.

But the reality is that brands who have adopted this kind of technology (even if it can be totally adopted) still don’t necessarily get it right. Take my Christmas shopping. I tend to try and get ahead and do quite a bit online to avoid that last minute dash on Christmas Eve. I’ve therefore done rather a lot of toy shopping on Amazon. As a result of my order I’m being bombarded with suggestions of other things I might like to buy. All very good stuff one might think but when you look at what’s being sent:

• The suggestions included things that I’d already purchased, so how is Amazon not able to take the things out that I’ve already bought?
• And the timing of the email, I’d literally just placed an order for a significant number of gifts, before I get an email screaming “buy this and this”. As I’d placed a pretty big order I would have thought it might indicate that I’d done one big shop and was not about to go on and purchase more at that point.
• All of the toys I’d bought were for a young boy yet I’ve actually got a lot still to get for siblings, grandparents and aunties to boot – no suggestion of gifts for them.

It’s no wonder then that a Forrester report in 2009 showed that only 7% of consumers think the email communications they receive are relevant and only 10% of those receiving direct mail think so. Automation is great in certain instances but it can’t factor in consumer insight. Data is only as good as the marketing people interpreting it and the communications have to be based on that insight.

Take another example where they get it right. I was looking at a dress recently on a well-known high street retailer’s site. I went back and looked at it several times. Now whenever I go online there are appropriately placed banners with similar style dresses, always there, always in the background when I’m browsing.

This particular example of automation works. Whilst we know there’s a complex algorithm behind this that has worked out if a customer looks at one thing online they might also go on to buy a series of other related items. It also works because it is not overt, there’s something subtle about gently reminding me the dress is there.

The challenge with data in this increasingly labyrinthine world where brands reach consumers in so many different places is not just having the single customer view but what you do with all that information. All the technology in the world will only ever help you drive some efficiencies. Ultimately it is still about using that data intelligently and deriving customer insight that helps you drive communications accordingly. This needs smart, down to earth marketing people who know what to look for and what to do about it. For most automated responses will always look simply automated and that’s fine for certain communications but not all. And as consumers become increasingly sophisticated (as they continually do) doesn’t this just look a bit shallow and not very focused on me!

There are some good CRM systems now that really can join up my online, offline, in-store and mobile communications but once you have a single customer view don’t squander it. It is a wasted brand message that only shows the consumer you’ve sent an automated message without really understanding their needs and desires as a consumer and their interactions with your brand. And you can’t automate insightful thinking. Data insight should always sit at the heart of what we do and find the relevant pieces of information that help to formulate communications that are getting to the right person, at the right time, through the right channel and with the right message.

Sophie Grender – Quant Marketing