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Using Smart Data Insights to Create Better Customer Experiences

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Jul 21 2022

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Leveraging Data for A Better Customer Experience

Andy Grove, the former CEO of Intel and the Father of OKRs, said, "In the digital age, only the paranoid survive."

While Andy's likely correct, I take a more optimistic viewpoint and like to think it is passionate who thrive in the digital age - for the passionate are constantly learning, analyzing, and seeking out the better.

Everywhere you read about digital customer experience transformation, you read about data. And because the cost of data has rapidly decreased over the years, today, there are more easy-to-access data than ever before. The entire marketing technology industry has proven itself to be as much science as art because we now use data and analytics to confirm the direct impact on revenue; it's no longer seen as a dispensable luxury in times of crisis.

While marketing has become complex and possibly more challenging to execute, the returns will be plentiful if you nail the customer experience optimization.

According to David Rogers, author of "The Digital Transformation Playbook", there are five areas that digital transformation focuses on value, customers, data, competition, and innovation.

This is an excellent framework for understanding how to create Customer Experiences. Let's unpack this framework a bit: 

The Optimal Value Proposition

It's critical to understand the needs of the various stakeholders impacted by your business model. This includes internal stakeholders & end customers but also extends to external stakeholders such as distributors, suppliers, partners, etc. Understanding the challenges and opportunities of all stakeholders involved in delivering to your end customers can help you understand your Optimal Value Proposition (OPV), the area of impact where all involved parties see the most gain. 

The OPV is different from the Customer Value Proposition because it also considers the value you create through your network or ecosystem of stakeholders.

Here's A Simple Example:

GrillMarks is a drop-shipper that primarily sells residential outdoor appliances such as grills, smokers & accessories. They've recently received more customer complaints around delayed shipments of one of their grilling brands, Char-Cool, which has negatively affected their overall customer experience optimization. To mitigate, GrillMarks is concentrating its efforts on augmenting its mobile app to provide better order tracking visibility & running brand campaigns to change customer perception around this service bottleneck. But further research indicates that GrillMarks' suppliers are still frustrated because these efforts don't solve the supply chain challenges in getting Char-Cool inventory - they're exacerbating the problem through knock-on effects elsewhere. For GrillMarks' suppliers, the shift in customer perception isn't resolving the negative impacts on their business. GrillMarks' plan is flawed because it isn't operating in the interest of the Optimal Value Proposition.

Seeing continued supplier dissatisfaction led to a deeper investigation by GrillMarks. They eventually saw that customers who buy Char-Cool were typically bargain-hunting, one-time buyers. Upon realizing this, GrillMarks removed the ability for Char-Cool buyers to get 2-day or expedited shipping from their E-commerce site to manage customer expectations better. While this move dissatisfied a subset of buyers, it resulted in easing supplier pressure and created much more long-term predictability in delivery schedules for customers of GrillMarks, increasing the overall health of their business.

Where Data Fits In

Identifying the interplay between Customers and Value lets you focus on capturing the correct data. No one business can be all things to all people and not all people. Internal staff perceptions often fail to recognize that and consequently struggle. More advanced companies realize this nuance and use data to best fit their customer profiles to the right products and services they offer. This ultimately comes down to developing the right data practices, trusting the quantitative trends, and avoiding hearsay-based decision making. But, transparently, this is easier said than done; capturing customer data is by no means a guarantee to effectively acting upon it. So what solves this? 

Multiple tools claim they solve turning unstructured information into meaning. Still, the most relevant rising star technology in the world of Customer Experience is the Customer Data Platform (aka, the CDP). Unfortunately, though, CDPs suffer from significant market confusion. Even today, many marketers that consult with me ask valid, yet baseline questions like:

  • "What is the difference between CDP and CRM data" or
  • "What insight does CDP provide that my analytics tool doesn't?"
  • "Doesn't CDP duplicate many capabilities that I already have in my Marketing Automation stack?" 

These questions all have merit. CDP, much like personalization tech, came to market just as a massive need was growing in the industry. For years CRM, MarTech & Commerce tools all made promises to unify business data and help businesses have the following best conversation with their customers. This big (unfulfilled) promise eventually led to the growth of a new class of tool - the CDP. The quick rise of CDPs led to feature sprawl - CDPs from different vendors were often vastly different, creating more confusion about what value they provided.

To start, CDPs are not replacements for Customer Relationship Management systems. They work together, and while they both manage customer data, they do so in vastly different ways. CRMs manage contact interactions between sales, customer service, and marketing, typically defining how customers and prospects have interacted. Much of the information in CRM is static or historical. On the other hand, Customer Data Platforms are focused on behaviors and take data from all different sources (both online and offline) and stitch it together to create more complete profiles of customers, segments, & audiences. Data comes from a business' CRM, e-commerce platform, POS systems, ABM marketing systems, marketing automation systems, social media platforms, analytics platforms, NPS scores, live chat, mobile app, etc. CDPs create unified customer profiles giving a 360-degree view of a person to enable more targeted engagement for customer experience optimization. And unlike Data Management Platforms (DMP), which rely heavily on 3rd-party data, CDPs focus on the utilization of first-party data.

Why Are CDPs Powerful?

Part of the human experience is that we are all individuals. We may share many similarities and have vastly different likes and dislikes. Just as digital has enabled us to more easily connect with people that share our views, likes & dislikes - it has also expanded our ability to access a more comprehensive array of products and services. That means understanding people is more essential than ever to business success & customer experience optimization. It's these human intricacies and quirks that CDPs simplify the capture of. Today, they drive more efficient spending of marketing and technology budgets while maintaining data & privacy compliance regulations.

Coming back to our earlier example - how could a CDP have helped GrillMarks reach its OVP faster?

1. First, they could have understood more about the customers using a CDP's segmentation tools. This would have helped them classify customers by revenue and buying trends but also by other attributes, such as their interests & hobbies.

2. They could have automatically reduced website advertising by around 2-day and expedited shipping to customers with a low-spending propensity to avoid increased Char-Cool purchases.

3. They could have driven display advertising to Char-Cool substitute brands, capturing customers while not causing supplier issues in sourcing & shipping. Decisioning engine to deliver 'next best actions' to travelers when bottlenecks exist depending on location. And they could have used this data to work with their partners and suppliers to find more mutually beneficial resolutions.

4. And longer-term, GrillMarks might have used this to institute more dramatic change, such as a new membership class, more focused on value-buyers that are fine with longer shipping times in trade for buying cheaper, lower-margin brands.

Recapping

Let's review the five domains of digital transformation mentioned earlier: value, customers, data, competition, and innovation.

Value - we need to understand our business's Optimal Value Proposition to understand the foundational ways our business model and goals impact stakeholders throughout our ecosystem of vendors, suppliers, and customers.

Customers - we need to understand what customers want and why and have the ability to quickly react to their behaviors, which signal the next best action to continue defining to deliver the ideal customer experience.

Data - we need a source of truth to bring together all the data you have from offline and online sources to understand better and segment customers and to do so while respecting privacy concerns and maintaining compliance with privacy legislation.

Competition - Blue oceans can simply be found by creating the right experience based on understanding OVP, having a deep understanding of customers, and responding to their behaviors and signals in a way that resonates with them.

Innovation - The baseline of successful innovation is delivering the first four domains of value, customer, data, and competition. Innovation fails when innovation is in a silo, and not as an output of focusing on the four factors above.

With this overview of Data and digital Customer Experience, there's a lot to consider. How do you move forward? Look at critical challenges or opportunities that you have in your company. Are you confident that you currently have enough knowledge about the following? How deeply do you understand the value you need to create across your ecosystem? Do you have the ability to understand and segment customers to target them with precision? Are you confident the digital customer experiences you create will fend off competition? 

As a digital growth agency and Sitecore Platinum partner, Icreon is helping global industry leaders and brands drive digital experiences and profitability. Get in touch with us to accelerate your digital growth and digital customer experience transformation.

By: Kimberly McCabe, Senior Director, Solutions and Sitecore Ambassador MVP 2020-2022