I recently gave a talk on big data, social media and marketing. Here is what I said:
I am a consumer. You are a consumer. We are all consumers. Why do retailers want to know about me? To sell me more stuff. They can always say they are trying to improve the customer experience, but in the end it is cheaper to sell more stuff to your existing customers than it is to get new customers.
If I shop at Amazon, it’s easy. I visit their website and they track my activity. If I buy something, they track my purchases. If I leave a review or comment on one, it’s connected to my profile. Amazon even has wish lists where I can tell them explicitly what I want. So when they market to me, through email or on-site recommendations, they know lots of things about me. And it’s mostly easy because it’s a closed system. Amazon builds their technology to manage all those pieces. But what happens when they want to know what I really think about my Amazon purchases? Or the customer experience? It’s certainly hard to know what I tell my friends in person, but if I share it on Facebook, Amazon can generally get access to it. But they have to figure out what to do with it.
But what if I buy a pair of jeans at Old Navy? Or new headphones at Best Buy? Or a gift at Victoria Secret? How can they ever connect that purchase to me? I have to give them my email address. “Would you like us to email your receipt to you?” A simple request, but the implications are huge. First, they can now identify retail purchases to me. If I sometimes buy online, these things can now be part of the same record. And they can begin marketing to me through email. This is not quite in keeping with the spam laws, but many brands do this anyway.
This is called a 360 degree view of the customer. And it involves combining massive datasets to create one to one relationships with customers.
But there’s another piece of data. Another batch of data. Another batch of big data. Most people use one primary email address for everything. That means that the email address I just gave the retail store is the same one attached to my Facebook profile. And why is that important? Because there are tools that connect email addresses with social profiles. So I don’t even have to like a brand’s Facebook page for them to know who I am. And once they have access to my social profiles, they know a lot about me. What I like. What other brands I’m interested in. Who my friends are. And if I’m not even that active on social media they can use my friends’ activities as a proxy for me.
Facebook has 1.3 billion monthly active users. That means they visit the site or take some Facebook action (click a Facebook like or share button on Facebook or another site). 64% of US Adult Facebook users visit the site on a daily basis, but only 10% update their status on a daily basis. 25% never have. Even so, there are 30 billion pieces of content shared on Facebook every month. And some of it drives business. Or at least indicates a propensity for business.
We all go grocery shopping. You know those supermarket loyalty cards we all carry around. We save money by using them. But stores are tracking every single purchase we make. They give us coupons when we check out. They try to get us to sign up online and share our email address. We know why they do that, but they don’t seem to push hard to get us to connect with them on Facebook. That’s interesting because there was a study that compared active Facebook users on a grocery store’s page with regular customers. The study found that if a fan posted to the Facebook page at least 10 times, they spent $1000 more per year than the typical customer, and they visited the store 40 more times. Customers engaged on social media are better customers.
Big data and business analytics really has changed the face of marketing. The interesting thing is that you can aggregate the data and spot trends to make business decisions, but you can also learn enough about an individual customer that the elusive one to one marketing that we have heard so much about can finally be a reality. You can communicate the right message to a person, in the way they want to receive it, based on their previous behavior.
As Scott Brinker, CTO of Ion Interactive puts it, “big data makes it cheaper and easier to test concepts, but marketing is still about coming up with the big idea. Algorithms are great at optimization, but terrible at imagination.”