Category Archives: Strategy

How Big Data will change marketing (part 2)

Big Data imageBig Data is coming. It will change Marketing, but not necessarily in the ways we might expect.

In an earlier post (How Big Data will change marketing (part 1)) I wanted to introduce the idea of Big Data in practical terms. My take on Big Data is not in terms of volume, velocity or variety, (as coined by Gartner analyst Doug Laney) but in terms of what it is in practice and how it might encourage action.

In my view, Big Data has seven characteristics:

  1. Big Data is not (just) big data.  Big Data is more than data warehouses and structured data repositories.
  2. Big Data is unstructured data. Big Data is messy, error-strewn and has fuzzy edges.
  3. Big Data is behavioural, not attitudinal.  Big Data is about what people do, not what they think
  4. Big Data is about small interactions. Big Data comes from the simple stuff we do, often without realising it
  5. Big Data changes.  All the time.  Big Data is never still. It is always being added to.
  6. Big Data is online, mobile and the real world.   Big Data is coming from all kinds of activity, on- and offline.
  7. Big Data is informational debris. Big Data is a side-effect of other activity – it is mainly not the information we as customers enter consciously when we think we are sharing personal data.

For marketers, the looming presence of Big Data is likely to change many things, including these:

Scientific method  The scale and nature of Big Data are making marketing a rigorous, experimental discipline.  We are getting the means to interrogate very complex data sets very quickly to decide which marketing idea works best.  This is already happening online.   Disciplines such as A/B testing and the thinking embodied by Eric Ries’ excellent Lean Start-up are already in action in many places. Examples include Amazon offering A/B testing as a free service to android developers and Barack Obama using it to raise $60m.  (See also my post, ‘Let’s go hippo hunting‘). This thinking is rapidly moving offline.   Marketers will have to master strict, efficient scientific method to succeed in this new world.

Attitudinal marketing is dead  Well, if not dead, then it’s about to enter life-support.  The  quantity and predictive value of behavioural and activity data means that what people think or feel about a product or brand will become increasingly irrelevant.  We are already finding this on the web.  If A/B testing shows us that consumers prefer to press a red button, and not a blue one, then we are better served by changing all our buttons to red than spending a fortune trying to understand why. This thinking will soon apply everywhere.

Prepare for the segment of one   Big Data will enable us to direct contextual, customised marketing directly at individuals based on such things as (say) their mobile GPS history, online and social media activity, and offline behaviour.  In effect, a marketing campaign for one person.  One implication of the segment of one is that a consumer marketing operation may well need to deliver a million tailored campaigns a year.

This is not just an automation problem.

To run at this level, with minimal errors, cost-efficiently, means the winning marketing operations will be those which adopt and implement the Lean manufacturing disciplines which enabled car manufacturers to deliver a batch size of one, with a cycle time approaching zero. (See my earlier post – SMED: The secret sauce of customer experience, for a related discussion).

We are all going to become Lean, people.

Create platforms, not campaigns  The role of the creative will change. Increasingly, we will need our creatives to design communications platforms, rather than individual campaigns. These platforms will have to flex in innumerable ways to meet the contextual demands of the segment of one.

Brand as algorithm   Brands will be formulated into heuristics – rules which can drive real-time decisions to enable real-time marketing.  The automated brand is coming.

Source, don’t build, your data  By definition, Big Data is a mix of different data sources.  Very few organisations have the capability to assemble, structure and support such heterogeneous sets of data and stay sane (and profitable).  Ignore the Big Data hype about the need to build Hadoop clusters and recruiting data scientists. This isn’t how it is going to go.

Here is how it might.  Companies are going to realise soon that they will be better off working with trusted data intermediaries rather than trying to build their own Big Data. They will pose questions to these intermediaries, such as “….what is the best way to segment the market to identify the people most likely to buy our stuff?…”, or “…when in the customer’s day are we most likely to get positive attention for our proposition…?”  or “…who could be our next customers….?”

These intermediaries will orchestrate data sources quickly to get the best answers to these questions. They may already own some data, some data they may rent, some they may commission and some will come from their clients – but such tasks are best left to specialists.  There is no need to build your own data engine. Spend your time instead trying to understand the questions you need to answer to get to market most effectively.

Of course, for companies which specialise in data harvesting, brokerage, mashup and orchestration, this intermediary role will be a lucrative opportunity. For the rest of us, being able to use such services intelligently will become an increasingly important skill.

Big Data is going to change marketing. But those marketers who do embrace this change will become hugely more effective, productive and  influential.

It will be marketing, Jim, but not as we know it.

Ryanair’s customer experience revisited

Ryanair passenger numbers
Ryanair passenger number growth, CAPA Centre for Aviation

I wrote Ryanair: Kings of the Customer Experience to challenge the blind orthodoxy that offering a perfect customer experience should be the aspiration of every business.

This may be true if you run a seven-star hotel complete with customer butlers, but it does not apply, I believe, for most companies. Most of us need to trim our ambitions to focus on things which cause customers most pain or friction and on those things which customers most value.

An excellent response

Jim Lucas of Lucavia read my post about Ryanair, the Irish-based European budget airline,  and wrote an excellent article in response: The Real Ryanair, Please Stand Up.

Jim and I violently agree that Ryanair have set out strategically to offer a service based on the core things which their customers value: “…Low cost, on time, with bags, that’s it.”

Jim, however, then goes on to say:

‘…To me, Ryanair hasn’t, “…Designed a customer experience to compete strategically.” Their customers don’t care about it and they know it. Instead, Ryanair has chosen a low-cost, high-efficiency strategy vis-à-vis their competition to meet the needs of the utilitarian traveler. (Jim’s emphasis)  In that space customer “service” is all that is required and an experience isn’t a consideration.’

I think Jim’s view is one that many customer experience practitioners share: that customer experience is something separate from the service a company designs and offers.

The whole of the experience

I don’t share this view. I believe that everything that we do which affects the customer is part of the customer experience.  This includes offering the service, yes, but also the things we do which affect how this service is perceived: (I refer to this in another post when I refer to the qualia of customer experience).

Hence my use of Ryanair as an example. What they seem to do, explicitly and intentionally, is manage the customer experience to diminish expectations around anything which lies outside of their core offering.

Get you there on time? Sure.

Cheaply? Yes.

Refunds? Don’t bother.

This setting of expectations is, I believe an absolute part of the customer experience, which Ryanair actively manage in order to support their highly successful business model. This is a strategic choice which, judging by Ryanair’s business success, seems to be working very well.

Good is better than nice

From this choice came the other point of my earlier Ryanair article: “Customer experience is not about being nice, it is about meeting strategic goals.”

Talking to some marketing folk the other day at the IQPC CMO Customer Exchange Event a couple of weeks ago, I found myself reframing this statement so that it became:

Customer experience is not about being nice; it’s about being good.

I think this is profoundly true. Customer experience is not simply an offshoot of the customer service skills industry, as many people seem to believe.

As an air passenger, for example, I value getting to my destination on time, with my bags, more than I value a customer agent’s smile if my bags have been lost.

Yet many organisations, judging by the way they run their services and where they direct their investment, seem to put this the other way round. Yes, being nice is, well, nice – but it is less important than being good at the things for which the customer is paying.

What Ryanair do, better than any other organisation of which I am aware, is to deliver on the stuff that matters to their customers while at the same time actively managing down customer expectations – and delivery – of other stuff.

They are, I believe, managing the customer experience, and doing so very well.

Which is why, while I may not like Ryanair,  I have to admire them.

(My thanks again to Jim for his cogent and considerate response to the original article. His blog is well worth a read).

Image credit: Ryanair passenger growth numbers: CAPA – Centre for Aviation

Big Data is already here

vorratsdatenspeicherung-540x304In my earlier post, How Big Data will Change Marketing (part 1),  I offered a definition of Big Data.  Here is a brilliant example of what it looks like.

A life revealed

Malte Spitz is a member of the Bundestag, the German parliament.  He sued mobile operator T-Mobile to get their records of his cell phone activity for a six month period in 2009.  It came in an Excel spreadsheet with 35,851 rows.

Zeit Online, the digital imprint of Germany’s top-selling weekly newspaper, Die Zeit, combined this data with other information about Hr. Spitz’s life which they gleaned from social media and publicly available online sources.

The result was illuminating.

To quote Die Zeit:

“Each of the 35.831 rows of the spreadsheet represents an instance when Spitz’s mobile phone transferred information over a half-year period. Seen individually, the pieces of data are mostly inconsequential and harmless. But taken together, they provide what investigators call a profile – a clear picture of a person’s habits and preferences, and indeed, of his or her life.

This profile reveals when Spitz walked down the street, when he took a train, when he was in an airplane. It shows where he was in the cities he visited. It shows when he worked and when he slept, when he could be reached by phone and when was unavailable. It shows when he preferred to talk on his phone and when he preferred to send a text message. It shows which beer gardens he liked to visit in his free time. All in all, it reveals an entire life.”

To model what they mean, Zeit Online produced this interactive map.

This is Big Data in practice.

I will leave it to other commentators to discuss the political, legal and ethical issues raised by Big Data.  I am going to assume, instead, that it is here to stay and that it will increasingly affect our lives.

In my next post, I will develop further some ideas about how Big Data will affect Marketing.

Tip of hat to Roland Harwood of 100% Open for the original Die Zeit article.

Image credit: Zeit Online

How Big Data will change Marketing (part 1)

Big data imageIf Big Data delivers what it promises, then the implications for Marketing – and indeed, all of business – will be profound. Before we can understand what these implications might be, we first need to understand what Big Data actually is.

The promise of the new oil

Big Data, we hear, is “…the new oil”. It is the next big thing, the new realm of business opportunity, the them thar hills in which gold can be found. With Big Data, we are told, we can see flu outbreaks before they happen, tell how the stock market is going to move today and discover that you are pregnant before your family does.

Big Data makes big promises. But many of these promises have been made before, with, for example, data warehousing (and the famous beer and diapers story). What is different this time, and what difference will it make?

Consultants and technology companies have been beating the Big Data drum for some time, but there is little consensus of what the term really means.  If, for example, I am trying to build a data centre to handle big data, then naturally my definition will reflect the size and complexity of the data to be handled.

I believe, however, that most of us with a business perspective need a definition which enables us to think about the value and uses to which Big Data might be put.  My stab at doing so is below, borrowing freely from excellent recent articles by Hung Lee (Big Data is Not ‘Lots of Data’) and Alex Cocotas of Business Insider.

Big Data is not (just) big data

What makes Big Data interesting is not the the size of the data sets (although these can be mind-bogglingly big). The value of Big Data is much more about the kinds of data which it embodies, and (particularly) the uses to which it can be put.

Big Data is unstructured data.

Big Data is not that which fits neatly into a relationship database or which can be categorised by tags (although it may well contain data of this type).  Big Data is a hybrid mashup of different kinds of data such as geolocation, contextual data, telemetry, life events, video, demography, social media and more.  It’s messy, complex and has fuzzy boundaries.

Big Data is behavioural, not attitudinal.

It is about what people do, not what they think. Big Data is not, for example, about focus group findings or survey results.

Big Data is about small interactions.

Big Data might include transaction information, such as what is in our shopping trolleys – but this is a known game and is only an adjunct to the important stuff. Important stuff?  What we do before we put things into our trolleys.  Where we have walked. Whom we have met.  What we do for fun. What the weather is like.  What we are wearing. What everyone else is doing. The TV channels we watch. You know: the small stuff we do all the time.

Big Data changes.  All the time.

Big Data is gathered continuously, in real-time, often from millions of dynamic sources. This means that at any time, we can only have a snap-shot of this continuing river of data. By the time we look at it, it’s already changed.

Big Data is online,  mobile and the real world.  

Big Data is credible because Google and Amazon and (a very few) others have been able to farm and use complex online customer behaviour data to make serious money. Now mobile is changing the game. Those of us with smart phones use them everywhere.  We use apps to help us in the physical world.  We use services like GPS and geolocation which note everywhere we go.   Now when we turn on our mobile phones, we create data about our behaviour in the physical world in ways comparable with the data we create online. What do we call this melange of online, mobile and physical information?  Big Data.

Big Data is informational debris.

Big Data is what we throw off when we do other things.  When we stop what we are doing to fill in a form, or have our picture taken or scan some stuff to get ourselves registered or updated – that is not Big Data. Or if it is, it is only a small part of it.  Big Data is what we leave behind us when we play games, or take pictures, or move house, or phone someone up, or browse around a shop, or go for a run or change the channel. It is a side effect.

That’s my shot at defining it.  Does this work for you? What have I missed or got wrong? Let me know.

If Big Data keeps its promises, the implications for all of business – but especially Marketing – are profound.  I will explore some of these implications in my next post.

This series of posts arose as a result of a panel discussion earlier this week at IQPC’s CMO Exchange event at St Albans.  I had the pleasure of sharing the platform with Paul Blacker of BT and Michael Woodburn of Capital One, and it was admirably chaired by my old chum Vincent Rousselet, CEO of the Strategic Planning Society.   Our conversation offered a good range of views on these questions. These opinions I express here, however, are entirely my own.

Ryanair: kings of the customer experience.

Image of Michael O'Leary 2/06/2011Silver tongued charmer

“You’re not getting a refund, so **** off. We don’t want to hear your sob stories. What part of ‘no refund’ don’t you understand?”

“People say the customer is always right, but you know what – they’re not. Sometimes they are wrong and they need to be told so.”

“Mother pays £200 for being an idiot and failing to comply with her agreement at the time of booking. We think Mrs. McLeod should pay €60 [just] for being so stupid… Thank you, Mrs. McLeod, but it was your ****-up. We’re not changing our policy.”

“We already bombard you with as many in-flight announcements and trolleys as we can. Anyone who looks like sleeping, we wake them up to sell them things.”

Michael O’Leary is the CEO of Ryanair, a European budget airline headquartered in Ireland. The quotes above are some of the things he has said at press conferences and results announcements over the years; this thinking is reflected in the uncompromising ways in which the company operates. In many ways, he is the antichrist of orthodox customer experience thinking.

The Ryanair Customer Experience Paradox

According to much customer experience orthodoxy, Ryanair should be in serious trouble. Poor customer experience should result in customer dissatisfaction, disloyalty, social media backlash and poor brand reputation.

And it does.

In spades.

But here’s the thing.  The customer experience Ryanair offers does not  affect the bottom line. In fact, one might argue that it is a major reason for Ryanair’s consistent, spectacular bottom line growth.

Ryanair has just announced yet another set of stellar annual profits. To March 2013, the airline made  operating profits of €718m ($924m) on revenues of €4.88bn ($6.28bn), up 11% from last year.  And this is no flash in the pan: Ryanair consistently grows revenues and profits every year. Ryanair is a company that likes recessions.

Something is amiss.  And on the basis of the company’s sustained growth and returns, it doesn’t look like it’s Ryanair. So is received customer experience wisdom mistaken?

And if so, does this mean that we should abandon our efforts to improve the customer experience?

Just the opposite.  Ryanair succeeds (and its CEO is noteworthy) precisely because it is one of the few companies to have understood exactly the customer experience that it needs to compete strategically – and then makes sure this is what it delivers.

Ryanair proves the strategic case for customer experience

Ryanair is a lean, low cost airline.  It sets expectations for customers about how it works and what it will and (and particularly) won’t do.

It does not burden itself with the very high costs associated with exceptional customer service, because it offers very little by way of customer service.  This is why O’Leary is so uncompromising about refunds – because if Ryanair compromise on this once, they will have to do it again.  And then they will need to employ people to manage refunds. And they will get more complaints, because customers will think that they might get something by complaining.

So Ryanair will have to staff a complaints department.  And this will lead to escalations, and reporting, and budgets, and bureaucracy, and management’s attention will get distracted by customer issues, and this will take their eye off the ball of running things very cheaply and efficiently.

And at that point, their cost base will have ballooned and they will no longer be competing on cost.  (And then their competitors will kill them by competing on service).

Instead, Ryanair are very explicit about the customer experience they offer.  They are low-cost. They will get you there, on time. With your bags.  That’s it.  No other promises. They deliberately limit the customer experience and manage it tightly because doing so is essential to their strategic success.

And against these things – the things which, because they really understand their customers, they know are most important to them – Ryanair are among the best in Europe.

And this is the lesson Ryanair teaches all of us about the customer experience.

Customer experience is not about being nice,
it’s about meeting strategic goals

We must not fall into the trap of blindly accepting that our goal is to make things a great as we can for customers. This is not the purpose of customer experience transformation.

Our purpose is instead to specify, build and deliver the customer experience we need in order to meet our organisations’ strategic goals.  And then we must drive this experience as ruthlessly and singlemindedly as Michael O’Leary drives Ryanair to succeed.

Ryanair and Michael O’Leary are, in effect, posing each of us a very challenging question:  what is the customer experience our companies need to offer so that we can best meet our strategic goals?

PS I hate flying by Ryanair, but I do so when I have to. 

(Image credit: ilovemyirishculture.com under a Free Art License)

The customer experience is about more than fixing things.

Perusing books at Selfridges 1942It’s about employees

At the start of the year, Forrester Research‘s Kerry Bodine and colleagues made some predictions about the areas which will grab attention in the customer experience space this year.  One prediction was that employee engagement will be “…white-hot…” in 2013.

They may be right.  The good folks at HCL have been making this point for some time and attribute their startling growth to an “Employee First, Customer Second…” approach.  In 2010, their CEO, Vineet Nayar, even wrote a book about it in 2010.

Unusually for a CEO these days, at the time of writing some three years later, Mr Nayar is still in post and the HCL stock price appears to be doing very well. Perhaps there is something in what he says.

The core idea, I think, is this: employees are the company.  They make the difference for customers.  If they are happy, motivated and enabled to succeed, then a good customer experience may be possible.  If employees are unhappy, unmotivated or not equipped to succeed, then nothing we try for the customer will really make much difference.

It is in our control

For those of us interested in customer experience transformation, this perspective offers another potential bonus: while we cannot manage our customers, we can and should manage our people. The challenge of working with our people to make things better for customers is in our hands, no-one else’s.

I believe that how company drives its people to make things better for customers indicates whether a company regards the customer experience as an overlay on their “core business’ of selling, shipping and service – or if their approach to customers reflects serious strategic intent.

As Jeff Bezos, CEO of Amazon, said in his letter to stockholders a couple of months ago:

“One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to.”

Proactive customer experience is a strategic choice

This idea of proactivity is the whole game, right there.  Organisations which are serious about the customer experience proactively drive their people to seek to make things better before customers see reasons to complain.

Sure, there are companies which are doing good things by listening to customers and putting in improvements to fix things which customers don’t like.  This work is valuable, and good, but it does not address the real challenge.  If we simply fix things about which customers complain, then we are  playing catch-up. We are saying, in effect: “we aspire not to make customers unhappy.”

The difference is in the bottom line. Jeff Bezos again:

“Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.”

Customer experience is much more than fixing things for customers. It is about making a strategic choice to be proactive in making things better for customers, it is about reflecting this choice in the ways we guide and enable our people to make things better for customers – and it is about doing so because it is the most effective way to grow and sustain the bottom line.

How do our companies measure up?

(Image credit: Ministry of Information Photo Division Photographer [Public domain or Public domain], via Wikimedia Commons)

CRM can be fun. No, really.

Finish line.Thinking about CRM (Customer Relationship Management) from the sales team’s point of view has stimulated some interesting new possibilities.

I once oversaw the transition of a B2B CRM system from a locally installed brand name system to a market-leading cloud-based competitor.  The old system had limped along with inaccurate data, incomplete records and resentment by the sales team.  People saw it as something that could not be trusted, an overhead that  got in the way of sales and marketing.

We were not alone, as Ben Meredith points out in a recent post.

When we came to implement the  new system we had one primary principle: it had to work for the sales team.  This meant that it had to be exceptionally easy and attractive to use, relevant to their roles, with clear triggers for when and how it was to be updated. All other requirements were secondary.

The outcome? An almost seamless transition within six weeks and excellent adoption.

Results? Better accuracy of data, trustworthy analytics and sales forecasting. Better marketing, easier sales, improved customer relationships. Everything we wanted our CRM system to deliver.

These results happened only because we paid attention to the core challenge: whose job are we trying to make better?  For most CRM implementations, this will be the sales team. Get it right for them, and things will get better for the customer too.

Which is why I like the thinking of app developer LevelEleven. Their newly rebranded Compete app adds game elements to Salesforce.com to help drive sales team performance. Their real trick, of course, isn’t the app, but the psychology: good sales teams thrive on competition.

CRM as fun? That can’t be bad.