Big data and analytics are leading to some great opportunities for marketers.
Being able to figure out who buys a product and how much they pay are valuable tools to a marketer. Big data can answer those questions, potentially, for an entire market segment. What’s as important is leveraging what customers consume – what they’re listening to, reading, and watching – to what they will buy.
Today’s marketers that are leveraging big data are focusing in on what the consumer is buying next. Big data helps marketers get to know consumers at an individual level – media preferences, shopping habits, interests, and more. Take all of this information into account and analyze quickly enough and it will allow you to predict what’s coming next on the bank statement.
According to Niraj Dawar in a recent article for the Harvard Business Review, this strategy is short-term:
… in the rush to uncover and target the next transaction, many industries are quickly coming up against a disquieting reality: Winning the next transaction eventually yields only short term tactical advantage, and it overlooks one big and inevitable outcome. When every competitor becomes equally good at predicting each customer’s next purchase, marketers will inevitably compete away their profits from that marginal transaction. This unwinnable short-term arms race ultimately leads to an equalization of competitors in the medium to long term. There is no sustainable competitive advantage in chasing the next buy.
Unless your competition has yet to utilize big data as well as you have (and eventually, all serious competitors will be using the same strategies as you), marketers are locked into a stalemate, competing over the same customer using the same information and wasting more money than they would get with the purchase.
The strategy then becomes not getting a customer to buy the next product, but getting a customer to become loyal to your products moving forward. By winning over a customer for a lifetime, you’ll see a lifetime’s worth of ROI from marketing to that customer. Get a man to buy an iPhone and you’ll eat for a day, get a man to worship Apple products and you’ll never go hungry.
How? We stop worrying about how we can use big data to target customers, and worry about how we can use big data to bring value to customers. That will ultimately win them over. Some strategies that Dawar points out:
- Recommendation engines that reduce search an evaluation costs (ex. Amazon, Netflix)
- Providing customized usage information (ex. Opower)
- Crowd-source data that delivers answers to customers about important questions (ex. Zillow)
- Provide real time information (ex. INRIX)
To help figure out how to reach your customers, provide valuable information, and win them over as a long term client, Dawar poses three questions to ask yourself:
- What types of information will help my customers reduce their costs or risks?
- What type of information is currently widely dispersed, but would yield new insight if aggregated?
- Is there diversity and variance among my customers such that they will benefit from aggregating others’ data with theirs?
To learn more about Dawar’s theories on utilization of big data in marketing, read the full articleat Harvard Business Review.