First featured on Figaro Digital https://figarodigital.co.uk/article/tackling-the-known-unknowns-of-customer-data/
Natalie Cramp, CEO of data science company Profusion, discusses how the pandemic has highlighted how little many companies know about their customers.
The pandemic has hit many companies like a tidal wave. A host of unprecedented challenges have inundated businesses, sweeping away received wisdom and making “business as usual” untenable. As the crisis begins to subside, we are all taking stock of what worked and where we fell short. For many organisations it will have become clear that their digital strategy was nowhere near as robust as they once thought. In particular, the pandemic has highlighted just how little a lot of businesses actually know about their customers. Fairly straight forward questions such as “which of my customers are vulnerable or key workers”, were incredibly hard to answer. The result was online marketing and sales strategies hamstrung by a lack of concrete information. Customers weren’t served as well as they should have been, and businesses subsequently missed out on sales and brand building opportunities.
Solving this problem is not as difficult as it may seem at first glance. The key is to first answer some fundamental questions related to what, how, and why your business collects data. This starts with auditing how you currently segment customer data, specifically what information is used to fuel these models and what answers are you trying to obtain.
Most companies will have rudimentary demographic information such as the age, location, and sex of their customers. This may be supplemented with previous purchasing information or some basic marketing preferences. However, without deeper analysis and additional data points, it is only capable of delivering sweeping generalisations. It cannot tell you with any confidence your customer’s profession, whether they are a parent, who else lives in their household, their potential disposable income, and many more answers that are critical to serving them effectively. Thinking about what you know, don’t know, and need to know about your customers will reveal the data points you need to obtain.
Next, attention naturally turns to working out how to collect this information. The most effective strategy will differ between businesses. However, there are some basic principles that apply in nearly every situation. First, trust is key. Businesses need to approach data collection in a transparent and ethical way. Attempting to dupe customers into sharing more information than they want to or misleading them on how you intend to use their data is a surefire way to wreck your brand. Second, only collect what you need, and in a way in which it can be effectively used. Third, data science can be a powerful tool for filling in the blanks. By analysing customer behaviour, certain information can be inferred with a reasonable degree of certainty. For example, purchasing pattern or marketing engagement changes that indicate a customer has changed jobs or may have a child on the way.
Finally, you don’t have to get bogged down in complexity. In our experience, a surprisingly large number of companies simply fail to ask their customers questions in a direct way. This may be due to fear of alienating them or the perception that few will readily provide information. In reality, many people are willing to part with personal information if they understand that it will result in a clear benefit to them. Articulating how their data is used and what they get out of it is incredibly effective. Of course, restrictions still do apply. When and through which channel you seek to ask your questions will depend on each person’s individual preferences. There will also be limits on how many questions you can ask over a particular time frame. Using data science to first work out the type of question which will glean the most useful information, and then testing your customer base to ascertain the most effective strategy for asking them questions is an absolute must. A one size fits all approach with the idea of collecting data and then working out what to do with it afterwards will not work.
It is worth noting that the pandemic hasn’t just been a profound learning experience for businesses, it has also radically changed the perception a lot of people have about the institutions and organisations they have relied on on a daily basis. Quickly switching to a largely online only world will have made a lot of people understand the value and convenience of a business anticipating and catering to their individual needs. They will know that parting with personal information is a price more than worth paying. However, this understanding and trust is fickle, and can be quickly undermined by brands that misuse their data.
In short, if you want to know more about your customers, simply ask them – you might be surprised by what they want to tell you.