Data-driven empathy- How to better understand your customers

Organisations should look beyond transactional history and demographic data to ensure they are providing their customers with the products and services they desire. Daniel Aunvig offers three important steps to improve your knowledge about customers. 

 

An article in the Harvard Business Review last year claimed that while USD$11 billion is spent annually on CRM software, too many marketers don’t really understand their customer relationships at all. That’s a bold statement and some would argue too bold, but there’s a certain level of truth in it. Let me explain why I believe that is the case.

Many of the data and analytics projects in Marketing, that I’m a first-hand witness to, seek to predict what products or offers individual customers are likely to respond positively to next, and what is the likelihood of customer attrition. This seeking is mostly based on transactional history and demographic data and while that’s certainly a smart way of creating more efficient campaign processes, it leaves much to be desired. It isn’t actually creating a deeper understanding of the context, underpinning the relationship with an individual customer and the actual reasons and drivers behind the customer behaving in a certain way.

So what can organisations do to improve next level customer centricity and get deeper into the understanding of their relationships with customers – to develop what I call ‘Data-driven empathy’? Here are three important steps:

  1. Add communication and response data. Understanding the treatments that were previously communicated to each customer and how those customers responded will give you a basic understanding of behavioural patterns. This step is important as it will close the marketing loop and empower the organisation’s ongoing learning process once you start experimenting with new triggers, communication and offers,
  2. having taken step one – and unlike the majority of organisations which still largely run surveys in a separate eco-system – integrate your survey processes into your closed loop communication program. This will result in a situation where it’s possible to understand what customer interactions have led up to and influenced a specific survey response. Also, of course, what attitude that survey response implies for that individual and how attitudes change over time. Integrating your survey processes and being able to link them back to a unique customer ID is the next logical step in the process of understanding the nature of relationships, and
  3. analyse text. Whether it is search information from your website, free text forms in surveys, social media posts, call centre notes or voice to text data, this will be your future breakthrough source of information for getting the R back into the CRM equation. This step holds the potential of unlocking valuable information about the relationship you have with an individual customer and the motivational drivers. Additionally, it will also allow you to tap into an always-on focus group and understand how your customers/prospects view the category, and the basic needs your products are serving – thereby driving a vital longer term source of innovation and competitive advantage.

Since the downfall of Tesco, one of the global poster children for data-driven marketing, a number of bloggers and journalists have questioned the usefulness of data and analytics as a competitive differentiator.

One could argue that it’s not a matter of abandoning customer insights as a discipline, however, because the strategic potential is much greater if the analytical processes are expanded to cover these additional aspects of the nature of the customer relationship and the needs being served. It really is very short-sighted to focus solely on transaction and demographical data when the likelihood to purchase and the possibility of attrition are being analysed. A contextual understanding – empathy – calls for the complete picture.

Daniel Aunvig
BY Daniel Aunvig ON 22 January 2015
Daniel Aunvig is head of customer intelligence for SAS.