Customer insight: how much is too much?
This month, customer insight - the holy grail of retail and consumer marketing – has been a “red thread” through a number of our client discussions. Indisputably, we live in an age where personal data is king: snippets of customer information are gathered at each transaction by retailers increasingly seeking to personalise your shopping experience. At its simplest, this might be a site which requests your date of birth to surprise you with a treat on your birthday; or one which uses sophisticated AI to analyse your consumption habits to offer vouchers or promote products specifically designed to catch your eye – thanks to geospatial targeting this may even be whilst you are within a certain vicinity of the store.
On the surface at least, this is a win-win scenario; consumers are getting a personalised experience, being directed to products which match their needs more quickly, and getting the odd freebie/discount out of it. Meanwhile retailers are developing deep, authentic relationships with their customers, increasing brand loyalty and driving sales - research from McKinsey suggests personalisation can deliver five to eight times the ROI on marketing spend, and can lift sales by 10% or more.
(link to https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/personalizing-at-scale)
Yet clumsy efforts at personalisation can be more toxic to a brand’s relationship with their customers than using no insight at all. It is a tricky balancing act. Consumers have come to expect a certain degree of personalisation in their interactions, whilst also becoming increasingly protective of their personal data. No one wants to feel that they are being stalked, or that every step they take online is being tracked, logged and added to an algorithm. There is evidence that consumers are just as unhappy with perfect personalisation as with clumsier efforts. In 2012 the US chain store, Target began crunching their data on pregnant shoppers, and discovered that by tracking their purchases back, a pattern emerged. They developed a list of products which, taken together provided a ‘pregnancy prediction score’. They could even predict customers’ due dates. This resulted in the infamous ‘outing’ of a teenage girl who received one of their personalised coupon books for products she would later need in her pregnancy, much to her father’s shock – but the key finding for Target was that their customers were not using the vouchers. They were uncomfortable with Target’s blatant display of their insight. They continued to create tailored coupon books – but mixed in a number of randomly selected offers alongside the targeted vouchers. Consumers were happier to use the vouchers now they felt they had received them by lucky chance, rather than the use of insight.
Amazon are the undisputed leaders when it comes to getting consumer insight right – log on to your Amazon home page and you will be confronted with items you have previously viewed; items recommended for you and items similar to things you have already purchased. They email you to tell you when a new book is out by an author you have read previously; or a new series similar to something else you have watched is released. Despite collecting vast quantities of data (particularly since the launch of the Amazon Echo, which has offered it a previously unthinkable level of access to personal data), it effortlessly guides consumers to what they want, without making them uncomfortable. However, they must continue to use this access wisely, or risk eroding their standing with customers.
If using insight is all about strengthening the trust your customers have in your brand, it should be easier for smaller brands who often have distinct and personable identities already. Andrew Smith, Director at Norman Broadbent recalls an email from high-end menswear retailer Charles Tyrwhitt asking for his input to a marketing campaign. “I really felt empowered, and wanted to engage with them,” he recalls, “it made me feel part of a community, connected with the brand.” Conversely, I continue to receive emails from one of their competitors, who shall not be named, but who have bombarded me for years with emails for menswear – despite the fact that, as a woman, I have only ever bought their womenswear. I now don’t shop there on principle.
In our interconnected digital world, consumers are becoming more alert to the use of personal data – for leaders, the protection of, and proper approach to, their customers’ data is increasingly crucial. An EY survey suggests we are less willing to share data than ever before (https://www.ey.com/uk/en/services/specialty-services/the-data-revolt---ey-survey-reveals-consumers-are-not-willing-to-share-data), while InMoment, an international customer feedback management specialist, recently released survey results suggesting that more than one fifth of consumers would not only leave a brand after a ‘creepy’ personalisation experience, but would also tell friends and family of it. [http://info.inmoment.com/rs/463-JAW-587/images/2018_CX_Trends_Report.pdf] We will never be able to block retailers’ access to it, but our increasingly sophisticated understanding of personalisation and its links to personal data mean that businesses must use their insight carefully. Poor insight – poorly targeted, clumsy, based on third party data, or part of a mass campaign - will do more harm than good, alienating consumers on a personal level. Good insight – discreet, useful, serving both consumer and brand needs - drives an authentic and loyal relationship between consumer and brand.
If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact James Peskett via james.peskett@normanbroadbent.com for an initial confidential discussion.