With personal and consumer data widely being recognized as a growing commodity, businesses are finding new and innovative ways to use the data they collect. Some of this data is used to help mold a company brand. Who they are, what they do, and what they represent. Other times this data is used to get into the mind of a consumer. This helps companies better predict what you will buy, deliver a personalized message to every consumer, and hopefully convert you into a paying customer to achieve the ultimate goal of greater profitability.
The process sounds pretty simple, but there are some common guidelines that marketers should consider in order to get the most helpful information out of their data. To learn more about these guidelines, I sat down with Stephen Murphy former Director of Marketing at NetEilixer and current Sr. Manager, Marketing & Communications at PayNearMe.
If you put a bunch of garbage data into a system, no matter how you spin it, it’s not going to produce accurate results.
Using data to predict consumer behavior or personalize a message all starts with the quality of data you are collecting.
Stephen Murphy: It comes down to some of the inputs being correct. So, for example, is the original data high quality? If you put a bunch of garbage data into a system, no matter how you spin it, it’s not going to produce accurate results. Garbage in is garbage out. Second is in your assumptions. It doesn’t matter what you decide with algorithms, you decide what you put into play or what data you’re analyzing if you’re assumptions and parameters are completely off. For example, in the case of digital advertising, we now have the ability to use Google ads and other services to run hundreds of thousands, if not millions, of different iterations on all sorts of data pieces. We can test different messages, different people in different locations, and in different time zones. But what if our creative sucks. What if we’re just retesting bad creative over, and over, and over again? Sure, it may find the best combination of that bad creative, but it’s not going to be good creative.
You have to look at historical numbers. You have to see what you’ve achieved because often times you’ll want things that may be unrealistic so you always have to look at the historical information and at the boundaries of what’s possible.
It’s also very important to make sure a company is being realistic when creating KPIs.
Stephen Murphy: You have to look at historical numbers. You have to see what you’ve achieved because often times you’ll want things that may be unrealistic so you always have to look at the historical information and at the boundaries of what’s possible. For example, if the cost of goods sold is 30% of the total product, that greatly restricts how much you’re willing to spend to acquire a customer. Versus, if your customer value is much higher, say you run a service, and your typical customer will stay with you for four to five years, well then we might be able to set more aggressive goals and spend more money to acquire a customer, because even though we’re going to lose money in the first six months, we know that over the long haul, the lifetime value of the customer is going to make up for it in spades.
As a brand, you obviously have to mitigate the risks and watch closely for what customers are saying, but you also have to adhere to a set of principles and be a responsible brand.
We then discussed how building a brand has changed due to the availability of instant data created by Social Media.
Stephen Murphy: I think it’s just a more complex time for branding. On one side, a tweet can reach millions and millions of people. At United Airlines, for example, one incident on one of their planes can instantly reach millions of people. Then on the other side, you have brands that are manipulating social media. Look at the recent Fyre Festival documentary. You have brands that are completely manipulating these social channels because there are no controls in place. It’s not like they have to go through trusted news sources anymore. Places like Consumer Reports, or autos that are going to easily vet the ideas that are being put out. They now have a voice to speak directly to the customer, and they can say whatever they want and get away with it. There are two sides to that coin. As a brand, you obviously have to mitigate the risks and watch closely for what customers are saying, but you also have to adhere to a set of principles and be a responsible brand. Otherwise, you can get yourself in trouble by taking advantage of customers, and that’s going to come back to haunt you.
One person takes advantage, and all of a sudden it’s a race to the bottom, because everyone else now needs to lower their gain and their standards.
While Social Media can be a powerful tool to build a brand, companies have the ethical duty to not abuse it, or risk bringing down their entire industry.
Stephen Murphy: It’s something that we couldn’t dream of doing years ago. It can be an extremely valuable tool if used responsibly. One bad apple, that you’ve heard before, can spoil the entire bunch. One person takes advantage, and all of a sudden it’s a race to the bottom because everyone else now needs to lower their gain and their standards.
Ultimately data is a very powerful tool that can help companies shape their brand. If companies aren’t using the right indicators, setting up the right creative, and being realistic about KPIs utilizing available “bad” data could be very detrimental. This also affects companies brands, as the majority of the data a company collects is about its customers to deliver the right brand message. Some of that data is direct feedback from the customers via outlets like Social Media. If the right questions are being asked, the resulting information and knowledge can be very powerful. Businesses need to be able to harness this knowledge ethically or risk lowering the bar for everyone.
Which begs the question, if these companies can yield such great power through data, what prevents unethical competitors from lowering the bar for the sake of winning over business? When is it time for regulations to be put in place to prevent such actions?