I think we can all agree – the days of mass marketing are over. Even if you have a relatively homogenous target market, you should probably spend some time thinking about how you should segment your customers to optimize your marketing efforts.

In an earlier post, I discussed the difference between market segmentation and customer segmentation. Today, lets dive deeper into the realm of customer segmentation.

John Forsyth, former partner at McKinsey & Company, noted in a Harvard Business Review blog that segmentation is the building block of customer centricity, “We see many, many companies saying, 'I want to get more consumer-driven and customer facing. But sometimes organizations dont know how to start. Id say you really start with a basic understanding of your consumers or customers, right? And thats segmentation."

Customer segmentation can be used for many reasons for a given organization, the most obvious today would be for the development of personalized communications and offers and/or different marketing programs by segment. Additional reasons set forth by Bain & Co. include: prioritizing product development efforts, designing distribution strategies and determining product pricing.

So how do businesses start down the segmentation path? First, they need to collect the right customer data. In todays world, the sources of customer data are manifold. For a retailer, shopper specific streams of information can come in through in-store technologies (POS, traffic counter), digital sources (social activity, ecommerce browsing and transactions, digital ad interactions, email, etc.) and third party data providers like Nielsen or Acxiom.

At Manthan, we believe that all data relevant to an individual shopper should be incorporated into a single customer profile to create a baseline of understanding. This may include the data points that fall into the following categories:

• Demographic: Basic customer information, such as age, income, education and gender.
• Lifestyle: Understanding the routines and habits of a customer, such as vacations and memberships.
• Preference: Oftentimes, this includes the stated communication preferences of a customer, such as email opt-in. In other cases, it may include implied customer preferences, such as what sort of channels the customer is most likely to redeem an offer or what day/times the customer is most responsive to a communication.
• Loyalty: Loyalty data generally includes statistics relative to the business loyalty program, such as when the customer joined the program, whether they are active, how many points have been earned and/or redeemed. For companies without defined loyalty programs, this can include a recency, frequency, monetary (RFM) score.
• Behavior. This can include various behaviors, such as browsing, redemption, sentiment or cart abandonment. This also can include customer transactional behavior, such as spend by category and/or brands and spend by price point.
• Value. This is the value an individual shopper represents for the company, whether in terms of revenue or profitability. This can be expressed in terms of historical spend, lifetime value, average spend per visit, etc.
• Predictive. Sometimes, customers should be segmented based on projected activity, such as a propensity to purchase a given item or likelihood of leaving the company for a competitors offering.

I know, seven categories can lead to an overwhelming number of options when starting down the customer segmentation path. The best way to approach customer segmentation is with an objective in mind. What are you trying to achieve by segmenting your customers? Are you trying to maximize marketing lift in terms of revenue? Increase customer retention or merely optimize your email deliverability? As with most customer insights, the marketer should always begin with the business question.

To learn more about customer segmentation strategies or solutions to drive better marketing performance for your business, contact Manthan today.

In a former life, I worked for a cloud-based retail technology solutions provider looking to bring a retail merchandise planning application to the US market. As with all IT vendors, the actual marketing of the solution preceded the finished product.

In the solution pitch, we talked a lot about top-down and bottom-up planning processes. Top-down planning includes the strategic objectives mandated by management based on a number of inputs, included last year’s actual company performance, growth objectives, forecasts and general market indicators. For most, top-down planning was only as granular as the department/category level (most retailers employ at least a four-level merchandise hierarchy often starting with department and/or category). Then the merchandisers work the plan to devise a bottom-up plan. Oftentimes, these plans can go as granular as the SKU by location level, but might be higher in the overall product/store hierarchy.

OK, enough background. This is what I found interesting: when we were building the messaging for the merchandise financial planning solution, the VP of Product Management, our resident retail expert, insisted that the following message was included in the sales pitch, “The bottom-up plan always wins.” I remember the conversation like it was yesterday. I looked at her inquisitively and asked, “Why?”. She looked at me, shrugged her shoulders and responded, “Ask a retailer. It just does.”

Fast forward nearly 10 years – I’m on a call with a retailer and we’re talking about buyer personas. Although this particular retailer did not have a ‘360-degree view of the customer’, they had a distinct vision of the person that they were trying to pursue. Affluent, career-oriented, female, 35-44 years of age … you know the type. Then I asked the question “Is that person actually buying from you?” The response was, “Nope.”

Market segmentation and attempting to define your ideal buyer persona is a little bit like top-down merchandise planning. You have a general idea of how you’re doing and what the market conditions look like. For those that lack the “bottom-up planning” (i.e., actual customer analytics and the ability to segment based on actual customer data) – the marketing tends to be more aspirational. In short, it’s just guesswork. We pursue target segments based on our assessment of the overall market opportunity – but not an understanding of the reality.

If this retailer knew that, although they were trying to reach the career-minded mother, they were actually stealing the hearts, minds and wallets of the young woman getting ready to graduate from college, would that change their overall strategy? It’s tough to make a call without the data.

Without the data, one cannot determine whether pricing, promotions or other communications could be better for slices of their current customer base. Or if they are missing out on an opportunity to market more effectively to a more profitable customer segment (e.g., ones that never buy on discount) or drop ineffective advertising channels. You see the big picture in terms of overall market movements, but fail to see the details. And, in failing to see the details, you cannot take advantage of the quick wins with the customers that you already have in your hand.

I spent some time yesterday thinking about the following: “If I wanted to be a data-driven marketer, what would that look like?”. Fortunately, I have a dusty old book on an office bookshelf called, “Data-Driven Marketing: The 15 Metrics Everyone in Marketing Should Know.” Author Mark Jeffery from the Kellogg School of Management lists out the 15 things that marketing executives should be able to reference (and calculate). But it was published in 2010. Ugh. I took gander anyways. Jeffery details out the following metrics:

• Brand awareness
• Test-drive
• Churn
• Customer satisfaction
• Take rate
• Profit
• Net present value (NPV)
• Internal rate of return (IRR)
• Payback
• Customer lifetime value (CLTV)
• Cost per click (CPC)
• Transaction conversion rate (TCR)
• Return on ad dollars spent (ROA)
• Bounce rate
• Word of mouth (WOM) (social media reach)

And, I think there’s an easier way to go about it (in terms of data-driven customer marketing). As a marketer, I want to understand three things:

• My customers
• My channels
• My campaigns

In addition to accumulating all the relevant information regarding the above, I also want to understand each entity relative to how it impacts my business in terms of revenue and profitability. So, instead of a laundry list of metrics and starting with the math – the best approach is starting with a question related to my customers, my channels and my campaigns. When McKinsey Research projected the looming shortage of digital and analytical resources – to the size of 190,000 data scientist and 1.5 million managers skilled in analysis in 2018 – many managers took pause. Analytics vendors saw this as an opportunity (i.e., let’s sell products or solutions or services to give the business users the data and a digestible form of analytics!). Educational institutions saw another opportunity (i.e., let’s create a data science and business analytics advanced curriculum!). Last year, I spoke with an incredibly thoughtful Big Data services consultant on the topic of metrics. Although much of his revenues were derived by providing the right questions and the right answers to the organizations that contracted with him – he generally spent project kickoff sessions educating all project participants on how to come up with the right questions for the business. Questions first, metrics second. Applying this to the top three (customers, channels, campaigns), a data-driven marketer could start with the most basic question framework – the 5 W’s (because we all know these!):

• Who are my best customers?
• What products do my customers prefer?
• When are the most effective campaigns delivered?
• Where do my customers buy?
• Why do they buy in this channel vs. that channel?

Start with one of the W’s – then make sure at least one of the three entities (customer, channel, campaign) reside within the question. Then iterate, drilling down into more granular detail, or re-direct down a different path. Asking the right questions is like any sort of activity – ‘practice makes perfect.’

Data-Driven Marketing. Given all the references to data-driven marketing in the marketplace, one has to assume that there is no one single definition for the word. Lisa Arthur, CMO of Teradata Applications, took a stab at defining it for the Economist Group in early 2014: “Data-driven marketing is the process of collecting, analyzing and executing on insights from unstructured and multi-structured data that are integrated across the enterprise.” She goes on further to state that it’s NOT data-driven marketing if (1) a single view of the customer does not exist; (2) you are not taking a coordinated cross-channel approach to connecting with the customer; and (3) you are using mass marketing tactics. Using Arthur’s definition, data-driven marketing only occurs in a perfect world where the business is at the bleeding edge of technology and data science. It’s possible … but not primetime just yet! Tom Kaneshige, the senior writer for CIO, asked the same question of several tech vendors earlier this year. I liked the response of EVP of Advertising at SundaySky’s response: “Arguably, the most important evolution in the history of marketing is the ability to understand what data you have, what data you can get, how to organize and, ultimately, how to activate the data.” I wouldn’t necessarily put it in that order – but I can jump on board with SundaySky’s definition! Here are my two cents: a marketer is doing data-driven marketing if they are:

• Analyzing the data available to them to understand marketing and business performance
• Mashing up different/multiple sources of data to get to a single version of the truth (remember the term mashup?)
• Seeking to incorporate new data elements into their analysis
•  Using insights from analysis to take action to improve marketing performance and the connection with the customer

This way, everyone can be a data-driven marketer if they’re using insights to drive marketing decisions.

Today’s marketer needs to be savvier than ever to succeed. The power now rests in the hands of the discerning consumer – who can view, on-demand, any detail related to the four P’s. That is, a consumer can access information on your (and your competitor’s) – product, pricing, promotions and places,right now. Competing on price isn’t an option for most businesses today. Sustainable competitive advantage now rests in the marketer’s to meet the demands of the customer – and delight her with a positive brand experience. Watch this webinar, hosted by Manthan’s Head of Customer Analytics Hillary Ashton, to learn how to cultivate the right marketing skills to connect with the modern consumer. You’ll learn:

• How to build an agile marketing organization
• How to approach 1-to-1 marketing
• How to use marketing measurement to evaluate the customer journey
• How to use marketing analytics to deliver customer insights to your business

Access The 4 Marketing Skills You Need to Survive webinar now.

I had the opportunity to attend recent Forrester Marketing Forum for Marketing Leaders on April 14-15, 2015 in New York City. The Forrester B2B Marketing forum was a two-day event chock full of session content that mapped to what’s at the top of mind today for most marketers, whether B2B or B2C. Although the conference guide prominently displayed the event theme as “Connect, Engage, Deliver”, in my mind, the forum’s takeaways can be summarized as follows:

• Customer Obsession: This is a step beyond customer-centricity, where the customer should be the basis of all marketing decisions. Obsession is not only being “considerate” of the customer and her wants and needs, but it takes it a step further – marketers should be intimately aware of all aspects of the customer and their behavior. In a world of customer-centricity, the question was “Will my customer like X?” In today’s customer-obsessed world, the question is, “I know A, B, C about my customer, so does that mean that they will like this?”
• Customer Journeys: We all know that a shopper embarks on a path-to-purchase, interacting with multiple touchpoints across various stages of the funnel – from awareness, consideration, decision and post-purchase. However, the traditional, linear funnel is no longer a good representative of the customer journey. Marketers need to work on re-imagining and re-constructing the experience to best suit the consumer expectations – and this requires an incredible focus on attribution techniques and marketing measurement. 32% of Customer Insights professionals plan to adopt journey analytics soon. Don’t get left behind.
• Customer Privacy: Consumers, in general, are getting savvier about customer privacy, with Millennials leading the pack. However, marketers must view privacy through a different lens – rather than the lens of – “I can no longer get this customer’s data!”. Instead, Forrester Principal Analyst Fatemeh Khatibloo notes that customer privacy is no longer about tactical execution, but about building a different relationship with consumers. She went on further, “[Customer privacy] is about building trust and services. She referenced several examples of brands leading the way in this dialogue, including Under Armour. The brand recently purchased multiple apps fitness apps to provide services that consumers value – while aggregating and analyzing user data.

After the initial keynote, I think all marketers in attendance could agree that marketing is tougher than ever. In the absence of a Chief Customer Officer, we are the protectors of the customer experience, yet forced to continue to increase our activities, whether by market, channel or frequency. The types of digital touchpoints are growing at a rapid rate, and as marketers (as a whole), we’re struggling to keep up. Boiling it down, Forrester VP and Group Director Carlton Doty mentioned that, “In the age of the customer, your only source of competitive advantage is customer obsession.” At Manthan, we believe that moving toward a single view of the customer with robust analytics is the only way to achieve that competitive advantage.

In my previous posts on the Internet of Things (IoT), I wrote about the importance of the customer journey and marketing analytics – prior to marketers exploring the notion jumping headfirst into the world of devices. I anticipate that this question might be overwhelming for the average marketer: “What is the role of advertising when our refrigerators buy half and half?” But marketers can start small in this world of IoT – with the friendly beacon. Here’s why:

• Market penetration for wearables is < 2% globally
• Market penetration for smartphones is ~70% in the US (depending on the source)

Online publication Retail Touchpoints succinctly lists the value of beacon technologies for retail in five areas:

1. Beacons support location-based marketing by pushing notifications to a consumer based on their exact location (e.g., store)
2. Beacons provide additional shopper data for retailers to use to decipher customer behaviors
3. Beacons serve as a combat tool for showrooming and drive shoppers back to in-store purchases
4. Beacons allow retailers to deliver offers to loyal customers to continue fostering the retail-consumer relationship
5. Beacons enhance the overall customer experience by providing a conduit by which to deliver personalized offers

The benefits of beacons extend to manufacturers and CPG suppliers as well. CPG companies can affix beacons to in-store displays and leverage data to push offers to consumers lingering in front of the brand offering (in addition to a variety of other use cases). In a time when 76% of purchase decisions are made in-store (Source: 2012 POPAI Shopper Engagement Study) – the beacons serve as a useful tool to capitalize on this opportunity. Use cases abound for beacons! For more use cases, visit here. Don’t believe in the value of beacons? Apparently, London’s Regent Street is seeing incredible results with its 80-store beacon experiment. These stores leverage beacons to communicate product information, campaign offers and coupons. The initial results are in – Regent Street has reported a 6% click-through rate (CTR) on location-based marketing and beacon-enabled communication. So, now I have to plug Manthan. This is possible – today. If you want to envision how you can leverage customer insights, personalization solutions and beacon technologies to enhance your customer experience and take advantage of the IoT, give us a call.

In my last post, I talked about the meaning of the Internet of Things (IoT) for marketers. As a quick recap, marketers must understand that (1) their customers are ALWAYS on and (2) they must always be ON to their customers. In this post, I intend to cover IoT versus personalization. In an earlier post, I mentioned that marketers must remain customer-centric. Therefore, the IoT should not be a distraction, but an enabler to building better relationships with their customers. Marketers round the world agree about the gravity of the IoT. Acccording to recent research from the Economist Intelligence Unit, marketing executives believe that IoT, compared to other trends, will have the biggest impact on marketers by the year 2020. Personalization fell just short of IoT on the ranking, by a mere 1%. At Manthan, our point of view is that the customer comes first. The marketer should work to cultivate a meaningful relationship with the consumer using personalization technologies. These technologies should be based on critical customer insights supported by predictive analytics. To arrive at critical customer insights, relevant data sources much be aggregated and analyzed. This includes data from internal systems (e.g., CRM, transaction data, browsing data, etc.) and external systems (e.g., social media, third party data providers, consumer devices). IoT comes into play with the data collection and the personalization pieces of the puzzle. But here’s the danger with buzzwords and marketing phrases of the minute like IoT. Like Big Data, IoT is a concept. We see that marketers are still struggling to build effective business cases for Big Data (they are out there though!). When you look at wearables like Google Glass and Apple Watch, it’s easy to fall into the trap that it’s all just hype. Unfortunately, it is likely to stay in the realm of hype until marketers commit to customer-centricity first, then execution second. A recent Ad Age article warned against the hype of wearables, noting that marketers must create a vision on what the future customer experience should look like. At Manthan, we agree with this recommendation wholeheartedly. Therefore, marketers must arrive at an understanding of the current customer journey to architect the future state journey. This involves analytics. IoT has the capacity to provide very personal data – what I’ll call “micro-moments” for now. The customer journey is not linear, it’s a series of ups and downs and loops around points of interaction. Each interaction point results in a customer action or non-action. Today, many marketers can create assumptions as to why the customer decided to act or not act to a given trigger (e.g., ad, coupon, etc.). But IoT, with the promises of smart watches, apparels and otherwise, can start to record some very interesting data points, like heartbeat, moods, location, stress levels, calendars and more. Instead of sending a new email offer when a consumer abandons an online shopping cart – could we possibly obtain data regarding the consumer’s individual sentiment at the time of abandoning the cart? Then, instead of delivering an offer to incentivize a return to purchase – can we provide an intelligent offer that overcomes the exact customer objection to the sale? This is the “micro-moment of truth” and when the rubber meets the road, in terms of IoT. However, the “micro-moment of truth” is still under construction. Marketers need to understand the path-to-purchase first, then layer over additional characteristics on this journey, such as customer emotion. So, how can marketers get their proverbial feet wet with IoT and get closer to the customer – perhaps even as close as the moment of truth (note that this is not the micro-moment of truth!)? The answer lays within the beacon – which I’ll cover in my next post. Stay tuned.

In the tech industry, especially us marketing technology providers, have a tendency to overuse buzz words and phraseology. And, as we all know, leopards don’t change their spots. So, when I was asked to draft a post on The Internet of Things (IoT), I contemplated using the following for a post title: Death to the Smartphone. But does IoT mean that the smartphone is going away? Do a quick Google search and many bloggers say yes. But we haven’t even perfected our use of the smartphone yet, especially in terms of connecting with the consumer. In addition, consider this data:

• Nearly 3/4’s of all people in the US that access the Internet also use a smartphone
• Depending on your source, estimates show that 70-90% of the US population access the Internet

Talk about mass market! On the other hand, according to Kantar Worldpanel ComTech surveys, approximately 1% of people worldwide are using wearables. Of course, this dismal market penetration is only expected to grow. But is it possible that it grow so quickly that IoT is a main driver of how marketers communicate with the consumer in 2020? Keep in mind, 2020 is only five years away. For those of you that are new to the Internet of Things, let’s look to research giant Gartner for a quick overview. Per Gartner, IoT is “the network of dedicated physical objects (things) that contain embedded technology to sense or interact with their internal state or external environment … comprises an ecosystem that includes things, communication, applications and data analysis.” In short, IoT encompasses devices that talk to one another. Of course, there are already successful use cases of the effectiveness of IoT in many industries, including energy and healthcare. For instance, IoT drives effective energy useage with sensors that monitor levels and adjust for peak versus downtime. In healthcare, IoT can fundamentally change the way the medical industry delivers care, especially for chronic disease management, such as continuous health monitoring (as opposed to periodic) for patients with congestive heart failure. But for other industries, like we’re seeing with Big Data, the use cases might not be as clear. Here’s the most fundamental “truth” when marketers and other digital professionals consider IoT: Your customer is always online. Today, your customer is online much of the time via their smartphone. And marketers are just beginning to scratch the surface here and leverage mobile devices to employ location-based marketing tactics and mobile offers. With any sort of digital interaction, the marketer has the ability to collect behavioral information, analyze and take action. Now that we recognize that customers are always online, let’s consider the ramification: Marketers should always be ON to their customers. What I mean by this is that marketers should take every viable opportunity to leverage customer data in order to enhance the shopper relationship. Since the consumer is always online, there are many data points that one can glean. With wearables, the data point volume rises exponentially. I recently ran across a research report from RSR, which noted that retail marketers are moving from emphasizing information distribution to their customers (i.e., store location, inventory availability, etc.) to emphasizing understanding the customer. The latter allowing the retail marketer to give the consumer the right information at the right place and the right time, via the right channel. So, here’s the thing. IoT is big. It WILL change the way B2C businesses interact with the consumer (which I will explore in my next post). But, marketers and IT professionals shouldn’t be distracted by IoT. Yes, it’s important. But it’s more important to keep your eye on the prize, that is, keeping the customer at the center of your customer marketing and marketing technology strategy.

Jingle the Dog was a fun gift from Hallmark. At least, it was for a little while. Much like new marketing solutions out there. As marketers, we are dazzled by the bells and whistles. The furry toy barked along when parents read a special holiday story about doggy adventures to their little one. With every woof from the fuzzy stuffed animal, the story came to life. The child, captivated, clapped his hands in delight. Until Jingle stopped barking. Bewildered parents tried to console their wailing children and pored over every aspect of the puppy to determine the point of failure. Initial composure turns into rage. The parent turned to her current social media channel of choice and unleashed a battery of wildly negative comments or posted videos that documented their young child mid-tantrum, banging the floor with their fists and whimpering, “Why is Jingle dead?”. As a last resort, the parent stomped to her local Hallmark store and demanded a replacement. Much to the parent’s dismay, a befuddled store manager offered a meager refund (Jingle is no longer in stock!). The parent fumed, uttered a few expletives intertwined with remarks regarding poor product quality and stormed out of the store. The above scenario could happen at any business. As marketers, we were so enthralled with the beautiful campaign reports pitched to us during the analytics solutions sales process. Using these reports, we patted ourselves on the proverbial backs when sales for our recently launched “Jingle” (insert your hot product here) in our “mommy” segment (insert most profitable customer segment here) was off the charts. But we failed to notice that we only had a part of the story. And that our brand story extended well beyond the point of purchase. What can Jingle the Dog teach us? Campaign data visualizations may paint a pretty picture, but often don’t relay a complete understanding of the customer experience. Analytics that only address the magic moment (i.e., purchase or conversion) is no longer sufficient. To effectively build a better relationship with the customer, analytical solutions must provide marketers with the whole story. To truly understand the customer, the marketer must keep tabs on the entire lifecycle, from awareness to consideration to purchase through use. This requires the incorporation of multiple data streams into customer insights analysis, including offline, digital and social.

At Manthan, we’re always interested in anything related to marketing or analytics. So when we learned of the American Marketing Association (AMA) Analytics with a Purpose event, we signed up.

A few members of our team attended and returned buzzing about the rich content and case studies presented during the conference. I spent a good chunk of my morning speaking with Sherri Schaffroth, Director of Sales, regarding her observations and and takeways:

Joanna: What did you learn at the Analytics with a Purpose conference?

Sherri: The conference was jam-packed with interesting marketers and content. With numerous academics and professional practitioners in attendance, I had so many interesting conversations. There were three distinct presentations worth noting, including a key note from the Chief Data Officer at Wells Fargo and presentations from marketing leaders at The North Face and Bi-Lo Holdings.

An echoing theme throughout the event including the growing pressure on marketers to prove their contribution to business growth. In particular, as A. Charles Thomas, Chief Data Officer at Wells Fargo stated, “ (Marketers) have business pressure to continually do the following: (1) ROInvestment (2) ROInteraction (3) ROInvolvement (4) Demonstrable performance (5) Optimize continually." What’s amazing is that four out of five of those activities are related to the marketer’s value to the organization (ROI or business performance), while the fifth is all about improvement. It really reflects the mounting pressure on marketers today to show results.

Joanna: What is the role of analytics in alleviating this pressure faced by marketers?

Sherri: When thoughtful marketers apply data-driven insights to make business decisions, that’s when the marketing organization can achieve better results. Ian Dewar, CRM & Loyalty Manager at The North Face gave a presentation on how the business is using data and analytics to better engage their customer base. According to Dewar, “Analytics today is a hybrid of predictive and persuasive human decisions with data guidance.” That data guidance drives the loyalty program at The North Face, where the business looks to build emotional connections with its consumers through carefully crafted rewards and relevant messaging. With data-driven insights driving marketing decisions, The North Face was able to see results such as higher average order value and increased repeat visits.

Joanna: So the goal is to leverage analytics for better customer engagement. Did you hear any case studies related to any other major trends in marketing, like personalization?

Sherri: The key to personalization is relevance. I sat in on a case study presented by Kim Smithers, a Senior Manager of Sales and Marketing at Bi-Lo Holdings. The segment was about Winn-Dixie’s foray into new neighborhoods and how the business leveraged behavioral insights to ensure that new store openings were successful. Smithers referenced an interesting Gartner prediction – by 2015, companies that focus on integrated processes for local marketing enablement will increase revenue by 15-20%. Bi-Lo took this prediction very seriously in planning their new store openings. Hyper-local media was used to ensure that marketing was relevant for the potential local customer base. As a result, with the last three new store openings, Winn-Dixie observed the most successful store openings in 10 years.