How to Leverage Big Data for More Targeted and Effective Marketing
With research firm IDC estimating that data is more than doubling every two years, the use of “Big Data” for many data-conscious companies has become increasingly important, with some even declaring data a new class of economic asset, like currency or gold. However, while it’s fashionable to focus on data, one has to remember that what matters is what companies can do with the data they have.
Retailers are already collecting various data sets such as customer data, competitive data, social data, online behavioral data and offline data to tailor product selections, determine pricing and timing of price markdowns, and even provide online product recommendations. While this is a step in the right direction, retailers are still faced with numerous challenges when it comes to fully leveraging their data to make real-time decisions that can produce additional revenue and/or cost savings.
Current Big Data Challenges
Data challenges for companies dates back hundreds of years. In the early 1900s, Harry Burnett "H.B." Reese understood chocolate, but it wasn’t until his research showed that people were dipping it into peanut butter that he invented what we know today as Reese's Peanut Butter Cups. Fast-forward to today’s online world, where retailers face the same issue of connecting the dots between products and user experience. Using purchase data, iGoDigital helped a client discover that men who recently had children were buying more razors. The likely explanation: these men didn’t want their children exposed to rough skin.
On the surface, cross-selling diapers with razors doesn’t make merchandising sense, but with time and expert analysis, these data connections can be unearthed. Marketing feats like these are the promise of Big Data. While there's no shortage of data, difficulties in amassing, analyzing and using these large and disparate data sets keep many retailers from maximizing the asset.
With the massive piles of data retailers continue to collect, the challenge isn't to keep pace with consumers, but to catch up with them and take advantage of the opportunity Big Data represents. Inefficient data storage and nonintegrated systems for managing it are just a few of the challenges marketers contend with at a time when it's critical that customer data be timely, accessible and rich with demographic, behavioral and contact information. Although reports can be pulled using current methodologies, they can sometimes take weeks for an IT department to produce, leaving marketers unable to make real-time decisions that could positively affect sales.
Leveraging Big Data
As companies seek to store, analyze and derive insights from their data, they’re looking for tools to help them make sense of it all. It’s not how big the data is, but what you can do with it. Luckily, the market is innovating and delivering software to retailers that will allow them to create custom reports within hours, design a marketing campaign around it and send out near real-time communications to produce additional revenue and/or cost savings — all without the need for IT or analytics staff to interpret it.
Great marketers understand how to connect these Big Data points to create personalized and highly targeted marketing campaigns that can drastically change a company’s merchandising strategy. As a marketer, imagine being able to use data to send these kinds of personalized campaigns:
- Inventory management: When retailers buy stock for seasonal promotions (e.g., Super Bowl, Halloween, St. Patrick’s Day), they have a sense of urgency as the date gets closer to get rid of the inventory. Take Halloween for example. A retailer in this space could pull a customer report of everyone that came to its site but didn’t buy a costume, then send an email campaign to those visitors offering last-minute costume ideas.
- Brand upsell: Marketers pull a report of everyone that purchased a lower-level brand product, then send communication around the benefits of a higher-priced brand.
- Geographic/Location: Marketers pull reports of people who are in an area where it recently snowed and market snowblowers to them.
- Timely events: When an exciting event happens (e.g., a team winning a national championship), marketers can quickly pull a report of customers whose browsing or purchase behavior indicates they're fans of that team and then send an email to them featuring that team’s products.
- Remarketing offers: Marketers pull a report of past customers who haven’t returned to the site in six months, then send out email campaign with coupons and product recommendations based on the last time they did shop with their brand.
Big Data will be an essential component as retailers continue to work to provide a personalized experience for their users. As tools become available, marketers will be able to answer analytical questions without needing an analytics infrastructure or staff to interpret it for them. It begs the question, “What can your data do for you?”
Eric Tobias is president of iGoDigital, a provider of personalization and product recommendation tools that guide smarter retail. Eric can be reached at firstname.lastname@example.org.