Data Strategy (DS)/ Customers are engaging brands in new, more dynamic ways than ever before, for example through social media – how has this changed the customer lifecycle that marketing works with?
Allison Wightman (AW): At Virgin Atlantic we have been following a test-and-learn strategy with social media for the last two years. We have yet to add this to the customer lifecycle in a formal way, but we can already see the potential to do this in the future. It’s fair to say that this medium provides a new comms channel for consumers where they require a much more immediate response. But I think customers understandthe concept well and do not expect it to be all joined up just yet – just cross channel, including social media.
Andrew Ground (AG): Our whole customer lifecycle is a real challenge compared to anybody else. People come, make a list, look over the site, then subscribe for a time, watch some things, then come back less frequently. They may leave, but they are likely to come back any number of times.
We do not offer our service on contract, so the whole thing of people coming and going is infinitely different and does require some adjustment. Social media is a big part for us of gaining traffic and is also one of the factors in our marketing cycle to prevent people leaving too early in service.
Colin Bradshaw (CB): The world has changed. The customer journey is no longer linear – people jump in and out of engagement cycles at different times. They also engage differently depending on the persona they are using. So a 30-year-old female looking at travel sites might be planning a hen do, a romantic weekend away or a family holiday – three personas, but one person.
The lifecycle has to be about engagement between purchases, particularly where there is a long buying cycle, such as with high-value products. You have got to maintain the relationship as people go through that.
Social media mean that marketing is now living in the age of transparency. Web 2.0 is giving the consumer close to 100 per cent market knowledge, visibility and control. If you are launching a technology product, early adopters will listen to the technorati, go to the forums and check the reviews. Many consumers will only look at sites with 20-plus reviews and products with average scores of four out of five.
So if you get it wrong or screw up on customer service, in the past somebody might write and complain and maybe six people were involved. If they wrote to a newspaper, maybe 10,000 people would see it. Now a bad review on a website can be seen by millions and is there forever. Lifecycles are still structured, but people are leading what psychologists call a “bricolage” lifestyle – seeking out different things at different times under different personas.
DS: Are customers who are strong influencers of their social network necessarily also the most valuable customers to the business? And can a value to the business be placed on influence?
AW: A value can definitely be placed on influence and it is vital for brands to have firm plans to “influence the influencers” for maximum effect due to the power this has to get a brand’s message out there. In the future, when we bring together social media with our customer database, we would certainly look to include “influence” as a key measure of value to our business. But systems to do this easily are still not sufficiently developed.
AG: I have seen some research done on this, but we have not done a lot of work on it ourselves. There is a small number of people who are prepared to actively review films compared to the number of people who follow them. Our customer base reflects that.
We do tracking on how many people make recommendations, create collections or post other user-generated content. At the moment, we are just observers of that, but it is likely that you could put a value on it.
CB: You certainly can put a value on influence – the importance of word of mouth is well known. Royal Mail used to say that a satisfied customer would tell three people, but a dis-satisfied one would tell 20. You can see the value in that, but it can be positive or negative. Somebody could be a promoter, a collaborator or a detractor in the Net Promoter Score schema.
You can look at NPS and work out its impact using econometric modelling. In some markets you can see the value, such as the six key individuals you want to influence in the technology sector or a few 16-year-old bloggers in New York if you are fashion brand. The time you really find out their value is if you put out a poor product – just ask Toyota.
DS: Does recency, frequency and monetary value still provide an effective way to segment customers?
AW: We have found that recency and frequency works well to define macro segments, but more detailed behaviour and activities are required to drive out micro segments.
AG: RFM has to be customised to your business because things like frequency will be very relative to your own sector. For us, recency is how long it is since you watched a film, frequency is how many things you watch and monetary value is closely related to frequency because that is how we charge. The principle of RFM still holds good.
CB: It is a good way of prioritising customers. At the start of the customer journey, however, you are not able to do that. Segmentation also needs to be about the whole individual, not just what they have bought, so you also need to look at channel preferences and net promoter score. But a value-based segmentation can help.
DS: Is the concept of the single view of the customer elastic enough to incorporate data from outside of the organisation, such as social media activity, without breaking the resources available to build the SCV?
AW: We have yet to see how other data sources impact our resourcing to deliver a single customer view as they are vast and numerous, but we recognise that data is the key strategic asset in understanding and serving our customers effectively. Virgin Atlantic is very focused on a strategy predicated on data so that we can deliver a differentiated experience from our competitors for our customers.
AG: Our inhouse customer database was built for operational purposes, which is why we have an outsourced customer database for marketing. There are certain things we struggle to do operationally, so we do them in the bespoke marketing database, for example looking within a household at who might still be in service with us, because we can have more than one member in a household. We don’t want to offer free rentals if there is still a customer active there. Our operational database can only look at that by account.
We use a higher level of data aggregation for targeting of our marketing, but we are not currently using much data from social networks. That is something for the future. But we do include data on what customers do on the site, such as posting reviews, which we put into the single customer view, but not the operational database. That might form the basis of who we target based on a RFM overlay – we don’t need that in the operational view.
CB: You can put as much information into a single customer view as you want to now – data storage is not the problem. Get as much data in as you can, then you can sift out the nuggets. When you are looking at spending patterns, a wine retailer might see somebody one their website once or twice a month. They may be spending hundreds of pounds, but the wine merchant is not getting the full view of their total activity. You need to get broader market information.
To understand a consumer’s different personas, you have also got to pull in other data sources. That becomes more complicated. So transactional data is a good place to start, but you also need to know who the consumer is.
DS: What does marketing need to do in order to provide a consistent experience of the brand through both push channels and pull touchpoints?
AW: Brands must be open and transparent with the data they collect explaining what it will be used for. They should barter information that gives consumers a better service today, but enables brands to provide a better customer experience in the long term at every interaction and touchpoint.
AG: This is a real live issue for us. How do people want to communicate with us and how does that differ from the way they interact transactionally? We have our website, email, disk mailings, affiliate networks – there are large numbers of contact points. Understanding how to co-ordinate everything takes a lot of thinking through.
The other interesting thing is knowing which will be the most effective. Some people are not responsive to email, others don’t visit the website very often. Each channel has its strengths and weaknesses depending on the message and individual preferences and to some extent where a customer is in their lifecycle.
CB: The brand is still the brand. It can’t be all things to all people – it just needs to be honest and tell the truth. That will mean different things to people at different times, but there is always a brand essence. You can now get to know your customers by listening, not telling. And there are lots of ways of joining that all up into a brand experience through omni-channel marketing. It is about building a community around the brand.