Before the age of the Internet, marketers’ option for advertising were very limited, centred largely around mass marketing to reach as many people as possible in the hopes that someone would be interested in purchasing. Think about radio, TV, direct mail – none of these advertising channels speak to an individual. Advertisers are faced with the challenge of cutting through the advertising clutter to get their voice heard.
Data has signalled the death of mass marketing
Why has mass marketing died a slow death? It’s simple. Mass marketing doesn’t work because there is no such thing as a mass market any more. Consumers are unique, and have unique needs and desires. What drives one person to visit a business is likely very different to what drives another person.
Businesses now have access to vast amounts of data that they didn’t previously have – data that is either provided directly by the consumer, or that is implied by behaviours such as past purchases.
Every time to make a transaction it’s likely that you are put into some kind of assumed demographic group based on that behaviour. Businesses use these groupings for their own benefit or can sell or trade the data to other companies. For example, when someone buys an Audi, it’s assumed they have a certain level of income, so they are grouped with other affluent purchasers. The Audi dealership will use this data (their first-party data) to continue to communicate with customers and attempt to upsell etc. A local boat dealership can exchange the data lists with the Audi dealership. Why? Because affluent people buy boats. So the boat dealership can market their boats to the audi purchasers, knowing already that, because of their financial situation, there is a higher probability that are more likely to become customers, and vice versa This second-party data is traded all the time between partners such as advertisers or online publishers where there is no direct competition in services provided as it’s far more effective than mass marketing.
In-store loyalty cards (e.g. Save-on-more cards) collect huge amounts of first-party data on customers in order to be able to send out personalized offers and coupons. Research has shown that consumers are willing to share data to get personalized experiences. But loyalty programs work on more than just customer provided data – they look at past behaviour and buying patterns. If you regularly buy diapers, it’s going to be assumed you are a parent, and therefore you’re likely to receive more offers relating to baby products. Targeting exactly who you know is going to be interested with personalized offers and marketing drive more sales. Brands can make personalized recommendations, offer relevant promotions and upsell and cross-sell relevant products or services to consumers.
In the UK, retailer Tesco was one of the pioneers to leverage loyalty cards to enhance industry performance using data – before data was even a consideration for most other companies. Former CEO states “It was absolutely transformational for the business. We could treat customers as individuals. And we could learn what they were interested in, what their behaviours were, and we could tailor and target all of their marketing so that it was relevant to that individual consumer.” Tesco also used the data collected to monitor changing consumer trends and used the data to make some decisions which appeared to be counter to conventional thinking.
Social media platforms also collect vast amounts of data. Advertising on Facebook is successful for many businesses because of the ability a) to target people based on the details they have provided to Facebook and b) because of Facebook’s ability to retarget Internet browsers. After you look up a hotel room on Expedia but don’t book, it’s highly probable that you’ll see ads on the social media platform (and around the web) as you browse other sites. These ads are targeted to YOU, and are going to be noticed more, and push you to act more than a generic ad about a product you have never heard of.
Brands must remember that they are advertising to humans – humans who are bombarded with advertising all day, every day. In fact, the average person is exposed to over 4,000 brands a day. We have learned to tune out messages that are simply not relevant to us. We demand personalization.
Businesses have been collecting data on consumers for years in order to create personalized shopping experiences, and research shows that there is a significant correlation between personalization and customer satisfaction.This has created an audience of consumers who demand that same level of personalization in other interactions with brands. Segmenting customers to create personalized communication is just scratching the surface of what is possible, but many businesses struggle with how to use the data available to them to create meaningful engagements with customers that drive more revenue.
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