Marketing receives a SMAC on its head… and it is loving it! (Part 1)
A radio taxi service I hired recently to go to the airport came in half an hour late. Naturally upset, I called their customer care and gave them a piece of my mind. “We are sorry for the inconvenience, Sir. We will give you Rs. 400 off on the next ride.”, said the customer care executive.
I narrated this to a friend. He said he was in a similar situation and got the same offer. Is that what they do with every customer whose taxi would arrive half an hour late? Was there a pattern to it?
On the other end of the spectrum is a bank. Even after having paid the credit card bill six days before the due date, they sent me an SMS saying the payment was due. They sent the SMS four times even after I made the complete payment that was due, well before time. The cost of an SMS is understandably miniscule but if I multiply the cost with the number of customers who had received this SMS in a week, it would be a significant amount and a significant cost.
What’s the difference?
The first case is of an organization, intently listening to its customers at all times. Furthermore, they have created knowledge by grouping a customer scenario and offering the same incentives to the customers in the group, often called “cluster” of customers.
The second is that of an organization following a set procedure of sending SMS’s a week before the due date, irrespective of whether the customer has paid or not. They could have taken a cue from the first, created a knowledge base based on customer’s paying patterns, and then drastically cut down on the number of such SMS’s, which more often than not irritate the good customers.
Furthermore, the same knowledge can be used to understand behaviours such as payment patterns and spends on the credit card, thereby creating a cluster of loyal and retainable customers.
Divide and Rule
If there’s one function that is in a constant state of flux in the organization, its marketing. While internal changes to strategy and the messaging affects marketing, so do external factors such as change in technology and more importantly, the corresponding behaviour of customers.
A lot of effort used to go into dip-stick, pilot study and market research before launch of a product. The need to identify the right target audience and relevant price points had been paramount. The evolution of technology, the new-age consumers (millennials) and their usage and buying behaviour has changed the way marketing is done. The changes in technology, encapsulated under the famous acronym of SMAC (standing for social, mobility, analytics and cloud) has transformed marketing like never before.
Marketing has been SMACed on its head. However, marketing is really happy about it.
For the first time, marketing is now empowered to understand customers better and hence engage, interact, and pamper the customer like never before. It is able to divide the customers into segments far more effectively. Customer segmentation or clustering is now done by analytical models. And, since it is not based on intuition and limited structured data, but a sea of data on various attributes of the customer, the models have a high likelihood of predicting the future behaviour of customers.
SMAC, along with IoT will revolutionize everything as we see it now, before we even realize it. This post would concentrate on “A” of SMAC and its impact on a particular aspect of marketing.
“A” for Analytics
Big Data and Analytics has been in great demand. The new age technologies, and social media has ensured that everyone has something to say, everyone has a voice and everyone has a platform to voice their opinion. Introverts are a thing of the past. Social media and digital platforms have given every customer the ability to talk about a product/ service. Every brand can hence seamlessly communicate with its customers and get a huge amount of insights into their thoughts, their actions, their loyalty to the brand, their grievances etc.
Hence, for the marketer of today, “A” is Analytics. Clustering models are helping the marketer to segment his customers like never before.
The new-age segmentation
Segmentation is not about two or three attributes anymore. It is much beyond. I would call it “multi-dimensional” segmentation. This is made possible only by leveraging the power of technology and analytics.
Depending on data, customers can now be segmented on:
What products they will buy?
When they will buy it?
How frequently will they buy?
What would be the immediate next purchase?
Will they buy only when there’s an offer?
Will they buy only prestigious brands?
Will they buy certain colors of products only?
Are they averse to certain product types?
Are they brand loyal?
Do they fall for cross-sell, up-sell opportunities? … the list goes on…
Now map this with the millions of customers (even thousands if you may) and imagine the possibilities.
The segments of customers thus created are a treasure trove for marketers. Suddenly, it gives a more realistic insight into mapping a certain product for a certain customer.
Email marketing doesn’t work. … Really?
Once the segmentation is clear, the basic marketing tenet is to target the customer and position the product.
Email marketing, often considered one of the cheapest ways to reach a customer is often ridiculed because of low hit/ click rates. However, like in case 2 earlier, does it even reach the right customer at the right time? If not, the drop in hit rate is obvious.
However, with analytics coming in and propensity models assuming importance, marketers are now able to understand whether the prospect will become a customer at all and if yes, what offer will ensure the conversion. The propensity models also give keen insights into whether the customer will do repeat purchases, unsubscribe and move on, be easy or difficult to retain etc.
Analytics powered Email Marketing matrix
Using propensity based models, Analytics can segment customers and sharpen the focus of Email marketing as explained below.
Within the matrix, written in black font is the behaviour/ psyche of the customer and the content in red shown the email marketing strategy that can be adopted.
After applying the Analytics powered email marketing model, the mind-set towards a simple email marketing activity can change drastically.
With segmentation and targeting made easy, the marketer now has to solve the easiest (from a marketer’s point of view) part of the puzzle. – that is positioning. If he can position the product and ensure apt messaging, his emails are bound to work better and give him more conversions/ results.
A drop in the ocean
What we have discussed is just Analytics and its impact on marketing. It does seem like a huge relief to an experienced marketer. But is that all? Definitely not. The series will continue with more on new age developments that is SMACing the marketer right on his head and aligning his efforts towards creative marketing strategies.
From among the new age digital revolution ocean, “A” for analytics is just one drop (very significant though). The “S”, “M”, “C” and IoT and their combined power will unleash possibilities for marketers like never before.
The combination will enable marketers to disrupt all media (be it offline or online), measure success and RoI, tweak plans in real-time and actually put up a SMACing show that will delight their customers to no end!