Harnessing the Power of Digital Customer Data

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Erickson, the NHL, and The Sacramento Bee discuss the challenges and rewards of transforming today's deluge of customer data into profitable insight.

"Education is not the piling on of learning, information, data, facts, skills, or abilities -- that's training or instruction -- but is rather making visible what is hidden as a seed." -Thomas More

In 1996 a computer engineer named Brewster Kahle started a nonprofit venture that aimed to record all the content on the Web. Named the "Internet Archive," Kahle's project today has logged more than 2 petabytes (1,000 terabytes) of data compressed, or 150+ billion Web captures, including content from every top-level domain and more than 200 million websites, in 40 languages.

Fourteen years later Kahle's experiment is evidence that the volume of data is exploding. So is the number of channels, and the traffic that produces. According to Cisco, by 2013 the amount of traffic flowing over the Internet annually will reach 667 exabytes, with mobile data traffic alone doubling every year through 2014. "Personally, I think it's accelerating," says Andrew Hally, vice president of product strategy and marketing, on-demand, at Unica. "I think more channels have been added in the past three years than in previous years."

Mining the vast data available in the digital world offers an unprecedented opportunity to identify and understand the commercial intent of consumers. In this environment, however, a "one-size-fits-all" database marketing solution rarely meets the needs of diverse organizations that must extract maximum value from customers.

"When you look at the proliferation of data, the value is the ability to harness it, and more important, how to take that data and turn it into information," says Farhana Alarakhiya, business unit executive of analytic applications at IBM, who says society generates one terabyte of data per day. "The companies that are going to survive are the companies that are going to harness this data and turn it into information for the right business outcome."

Ted Shergalis, founder and chief strategy officer at x+1, says most organizations have databases that are not ready to accept the onslaught of terabytes generated by the digital channels. "They didn't have the capacity to take hundreds of millions of recordsand somehow fit it into the structure that they had," Shergalis says. "[In the past,] if you had a database and you had 120 million households, it allowed you to get a sizing for the database. Enter the digital database and that sizing goes out the window."

New data, new challenges
The data explosion has created challenges similar to traditional ones: siloed internal data and lack of internal organization. Additionally, there's uncertainty regarding how to leverage customer information from mobile and social media, which data to analyze, and an inability to accurately track customers and prospects who visit websites.

IBM Cognos' Alarakhiya says most industries, with the exception of banking, still primarily struggle with two areas: how to get a handle on what types of data to bring in and the elements they need to map to. She says companies should start with a defined data model, as well customer analysis. "If you don't have that starting point, you're starting from nowhere," she says.

Mike Moore, director of analytics at West Interactive, says he still sees data siloed within sections of a company. Web data, for instance, is often contained in marketing, and call center data is siloed in the analytics side of the business. As a result, he says these siloed companies have to re-authenticate customers when move between interaction channels. "To help solve some of those issues, we've tried to identify what is happening in one channel and how that behavior has impacted [behaviors] in another channel," Moore says.

x+1's Shergalis says some organizations are breaking through these walls by reorganizing, or by giving incentives for sharing data, like sharing credit or attribution for performance improvements, sales, and the like. Delta, Shergalis explains, has a robust database for its Skymiles program, but the Skymiles team and the website group weren't integrated. After an internal reorganization, the website team now makes unique offers based on Skymiles from the shared data. "They really see that you can do more when you share data," he says. "It's not a one-way street."

In addition, Shergalis sees advanced multichannel marketers like Allstate and Geico seeking common platforms and common sets of models to conquer the data divide. "They may have to work with different partners to do the execution, but they want to have a common data platformthat will let them understand their audiences and how to interact with them," Shergalis says.

While organizations are working to decipher which data to analyze, many still don't have a means to track customers and prospects who visit their sites. Jim Kabakow, CEO of Media Horizons, says attribution was easier to measure in the old days when direct mail pointed customers to a toll-free number for response. Now when prospects come to a website, there are numerous entry points. "While the Web has created a wonderful marketing channel, the biggest challenge is attribution, followed by conversion," Kabakow says.

Kabakow suggests that marketers conduct "match-backs" -- taking a direct mail piece or insert sent to a prospect or customer and matching it against people who have purchased or visited a website. This process creates attribution.

Unica's Hally says the digital channels have really changed the way companies communicate with prospects. Now companies can closely track prospects when they come to their websites, assigning cookies to their movements to track behavior and matching relevant content and imagery to what they searched for on the site, as well as to keywords they are searching for online.

Hally says that while this functionality is available to marketers, most still aren't tracking online behavior to personalize their websites. "These new things are coming out a lot faster than they can assimilate," he says. He suggests that firms start by deploying basic solutions like a Facebook widget to obtain some "social-graphic" data, and then companies can run that information against their database to determine who resides in their networks. "Companies will learn to look at people's social graph and their social behavior will be another element in their customer profiles," he says. "But it will take a while."

While many companies are figuring out how to harness customer data, the NHL, Erickson, and The Sacramento Bee have implemented effective digital data initiatives. Their approaches are as varied as their industries. Here, they discuss their challenges and strategies.

The NHL reaches displaced fans
Fans of the National Hockey League are tribal, according to Perry Cooper, senior vice president of NHL Digital Media. In other words, they are highly engaged with their favorite teams, but are often unable to attend games to see their team play because they live in a different area. In fact, recent internal research suggests that 50 percent of NHL fans don't live in the same market as their favorite team."It's our job to expose them to more hockey in a more diversified experience," Cooper says.

In an effort to better market to these anonymous fans and increase share of wallet, the NHL recently took a data-driven approach to targeting marketing and communications.

Now when fans come to the website, a box appears that asks them to list their favorite team. The NHL then associates their physical address and email address with their favorite team. "We use it in some instances to do matching with strategic partners to look where there is overlap as a means to focus better on known hockey fans," he says.

From that information, the NHL can send fans targeted direct mail and catalogs with offers and merchandise that pertain to their teams. "Right now we're able to get a deep view of our customer base. That for us is driving a solid upside across our marketing endeavors," Cooper says.

Cooper says the relational database that has been in place since January 2008 has grown by 25 percent year over year. "It's critical to marketing new products and having a real matriculation strategy," he says. "We can attribute a lot of profitable growth because of targeting, being relevant, and having the right message and business models in place."

The organization now has enough data to start developing personas around segments by overlaying existing data with behavioral and demographic information. He explains that the in-depth information will give the NHL the opportunity to tailor the messaging even more and will be helpful in showing partners how and when the fans use their products. "It will help in describing the NHL fan as a premium fan when it comes to cultivating sponsorships," he says.

Erickson matches content to customer needs
Erickson, a national assisted living facility, set out in 2009 on an initiative that would help the company understand its consumers and provide them with content that is geared toward their interests.

Jon Gold, webmaster at Erickson, says a year and a half ago, the company started searching for an email marketing vendor who could provide deeper data about its customers. Working with Unica's Interactive Marketing OnDemand, Erickson has gained a rich level of customer data by understanding customers' areas of interest through what they click on when they reach a landing page, as well as in their profiles, where they identify key areas about which they would like to receive information.

That knowledge helps Erickson to send emails and direct mail geared toward customers' interests. Landing pages are also adjusted with content and creative directed to consumers' interests. "For the first time we are doing cross-channel marketing and we're able to understand what consumers are looking at," Gold says.

Gold explains that Erickson collects information related to what types of information prospects are interested in, like floor plans and health information. "If they're looking to come in for an appointment, we want to make sure our sales counselors understand that. Our biggest goal is to shorten our sales cycle and to be able to provide sales colleagues more information with our Web leads," Gold says. "We hope to gain more knowledge about [Web leads] to get a more complete picture."

The Sacramento Bee optimizes customer profiles
Newspapers have seen a dramatic change over the past few years. With readers moving to digital formats, newspapers have had to adapt to their changing behaviors. But the online format presents opportunities to leverage more in-depth data. "The newspaper industry has seen its classified sections migrate to digital and has seen print subscriptions deteriorate. It's a matter of survival for them. They need to deliver solutions to advertisers and they need to capture market share," says Tom Ratkovich, president of SmartFocus Astech.

Frank Wofford, senior research analyst, The Sacramento Bee, adds that the paper's business model had to change and the company needed to evolve how it talks to consumers and advertising clients. The Sacramento Bee has found a solution that helps advertising clients optimize channels to reach its audience.

The newspaper has integrated its customer profiles with SmartFocus Astech's solution, as well as with Neilsen Claritas' household information and Equifax's integrated register information to gain a holistic view of customers. The newspapers' advertisers now see the complete customer profile and use that knowledge to make decisions about where to find audience targets important to their business.

Wofford explains that the advertisers' revised media plans have had a positive impact on clients' businesses. One local retailer, for instance, increased impressions, frequency, and reach and had the most successful weekend ever after running targeted ads. "It's not so much about selling a product and service, it's about driving that partnership," Wofford says.

He says that next the paper will look at how to leverage the customer profiles to affect its own marketing efforts. "Newspapers are uniquely positioned because we have so many insights. Being able to leverage that type of information can pay dividends down the road."

Moving the dialogue forward
The real value in the diverse and ever-increasing bounty of information will be created by the analysis of that data. With that will come the promise of greater relevancy and value for customers.

X+1's Shergalis predicts that companies will adopt a value exchange for information that will invoke a sense of communication and interaction with brands. And Unica's Hally adds it's not just about bringing data from across channels together, but harnessing it in way that creates dialogue.

According to IBM Cognos' Alarakhiya, the emerging data platforms will drive foresight and insight. "The expansion of external sources and internal data need to be brought in together," she says. "You can't start doing any type of analysis and strategy if you don't have a strong foundation."


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