Delivering seamless, consistent, and engaging experiences starts with a customer-centered digital strategy. This ongoing series explores the characteristics that make up a great digital strategy and how to deliver powerful brand moments that solidify customer loyalty and drive differentiation for your organization.
Great digital experiences depend on how well organizations understand customers’ needs. Site analytics, shopping history, and account profile information are a great start. However, your brand-owned data loop should also include any imprint a customer makes with your brand such as customer service logs, store feedback cards, customer surveys, and keyword research.
While customers are more educated and aware of data passively collected by companies, they are still open to sharing their information with brands they trust in exchange for the best experience.
Brands that are able to maximize the use of their customer data ultimately reap the business value of gathering reliable information in a cost-effective way. Kevin Bauer, Digital Marketing Practice Director at Perficient Digital, shares his perspective on the importance of brand-owned data loops for transforming your digital experience.
How do we define a brand-owned data loop?
Kevin Bauer: Just like the human central nervous system sends out signals to the body, you can think of a brand-owned data loop as the nervous system for the customer experience. It’s the system that delivers signals to the various touch points that consumers have with a brand.
The “brand-owned” aspect refers to how a brand makes the most of the customer data it collects firsthand, as opposed to data acquired from a third party. Brands are shifting their focus to rely more heavily on this first-party data. We’re seeing active discussions around this topic with our clients, especially as it relates to upcoming regulations. (We’ll explore that topic further when we address customer privacy.)
What are the components?
KB: Brand-owned data loops are comprised of:
- The data or signals
- The connections between the data and endpoints
- The processes/teams that deliver the customer experience
From a data perspective, brands have two goals. First, they want to create a single source of truth – one system of record that every system, team, and process will be able to access. And second, they want to make sure the single source of truth has a complete, 360-degree view of the customer’s brand experience and history.
From the connection side, brands must make sure the single source of truth can seamlessly – and in real time – pass that information to any system that may need it. In the past, data was typically processed overnight in a batch format. A given system might not have updates to a customer record for 24-hours or even longer.
In today’s world, a whole ecosystem of data platforms and data connectors have developed to solve this challenge. From customer data platforms and data management platforms to analytics suites and other data collection tools, all are connected and enabled by real-time connections powered by APIs, or microservices.
It is the microservice that allows brands to move from legacy batch and ETL processing, which typically lag behind by hours or days, to the instantaneous transmission and updating of data records when new data is created. Brands will not only have knowledge of customers’ history in real time, but also every other process and system will immediately know if customers take a specific action.
Which department(s) primarily owns this data loop?
KB: Brand-owned data loops are generally shared across teams. An interesting point to note – as marketing budgets grow, more of the budget will be allocated for marketing technology expenses. In fact, a recent blog from Gartner stated that 30 percent of marketing budgets in 2019 will be spent on marketing technologies as opposed to media and messaging. The vast majority of that 30 percent will go towards technologies that enable data loops.
Making a data loop work effectively [requires] marketing to partner with engineering and business intelligence (BI) teams to get data clean, organized, add a layer of governance, make it scalable, and build those microservice connections.
What we’ll see is more marketing departments in charge of the platforms and toolsets that power and use data from the brand-owned data loop. This shift puts marketing teams in the driver’s seat as they partner with IT and data teams to populate the tools.
For building and executing an effective brand-owned data loop, you absolutely have to be hand-in-hand, equal partners with equal buy-in.
What risks do companies face by not establishing a brand-owned data loop?
KB: The biggest risk is the ability for brands to be compliant with recent and upcoming regulations surrounding customer privacy.
With GDPR entering its first full year of enforcement, brands need to ensure they are positioned to comply with consumers’ requests for identifying and managing their customer data.
And GDPR is only the beginning. In 2020, brands will have to comply with the California Consumer Protection Act (CCPA), which in many ways may be more onerous than GDPR.
In either case, compliance requires brands to give consumers easy accessibility to obtain a copy of all their data a company possesses. Consumers can also request where and with whom the company shares their data on a piece-of-data basis. Finally, it gives consumers the right to tell companies to stop sharing their information and delete their data and the relationship. The company must then prove to the consumer that they’ve done this.
If you don’t have a brand-owned data loop, complying with the law will be nearly impossible. Consider this: the average consumer has eight internet-connected devices. By 2021, that’s expected to increase to 13 internet-connected devices on average.
For example, most brands recognize the individual IDs of my internet-connected devices but don’t necessarily associate all of them with “Kevin Bauer.” If companies don’t have a brand-owned data loop that links those identifiers to the same person, then complying with the specifics of CCPA will be extremely difficult.
The risk – or penalties – a company faces for not following the law are extremely high. Companies will definitely take notice.
The CCPA gives citizens the right to bring a civil action against companies that violate the law and stipulates that damages will be between $100 and $750 — or higher, if more damage can be proven. Plus, the state can bring charges against a company directly, levying a $7,500 fine for each alleged violation that isn’t addressed within 30 days.
How do companies get started on creating brand-owned data loops?
KB: To get started, we encourage brands to think about taking three core actions. Your brand will need to validate, orchestrate, and activate customer data. Validating is all about your data – having access to it, making sure it’s clean, and having it aligned. Orchestrating is about pushing that data into the various systems and tools you use and having it available in real time. Activating is about the delivery of insights and decisions made from that data into your brand’s marketing and consumer experiences.
From a strategy perspective, there are three things to think about for creating and delivering a holistic customer experience. First, you have to consider the customer journey, and step back to understand how it can be optimized across 13 different devices and potential touch points for any given customer. Then, you must think about the implications of the power to be real-time with your delivery. And finally, consider how you will make the right decisions to find the right balance so that you’re relevant but not creepy to your customers.
Also inherent with strategy is the business value. Maximizing business value allows marketing executives to get leverage from a brand-owned data loop. You can understand how to make better decisions on marketing spend and grow market share with less associated costs, or influence marketing spend efficiency across the entire P&L. Answering questions such as, “How do we grow 10 percent next year with a smaller marketing budget,” is possible when you unlock the business value from your brand-owned data loop.
Additionally, we encourage brands to consider adapting business processes and organizational structures to maximize their brand-owned data loop. For example, more brands are organizing pods of people (i.e., creating centers of excellence) and aligning those groups around a common goal assigned to a unique audience. This approach allows you to rethink all of your content, delivery strategy, and spend decisions based on what’s optimal for the audience.
How do you unlock actual business value from a brand-owned data loop?
KB: In the absence of brand-owned data loops, companies have typically optimized marketing budgets based on channels. For example, paid search teams optimize budgets based on return on ad spend, or ROAS. But those teams are measured against the value gained from paid search. Similarly, email teams optimize for email, and social media teams optimize spending based on metrics for social channels.
This is a challenge for marketing executives because channel metrics provide limited value. Marketing executives look at the overall business. They need to understand key trends like the health of their customer file. What is their growth rate? What is their market share? Can they profitably take on more market share? And if so, how should they do that? Individual marketing channels will rarely answer those questions. Marketing executives have to think more holistically.
The benefit of a brand-owned data loop is all your data becomes associated with an individual person, not a channel. This can be truly transformative. Your executive team and all the marketing teams can now start to align with audiences and people instead of channels. That alignment can revolutionize thinking about gaining leverage out of your marketing spend and drive profitability.
For example, with a brand-owned data loop, you can start looking at incremental lifetime value. When reviewing all of your marketing programs, you want to understand how you’re driving incremental lifetime value, which is a metric at the heart your ability to generate value. This perspective allows you to evaluate every marketing dollar spent, and answers the question of where to spend your next and last available dollar to maximize incremental profit and do this on a per customer basis.
Once you align around that, all of your goals and team structure can begin to change and align to where your ultimate business value is created – with your customer.
While this can sound big and even overwhelming, a very real and pragmatic use case pursued by many brands today is media suppression. Instead of figuring out how to get more impressions in front of the customer, marketing leaders are saying, “Can we eliminate any of our marketing messages without losing profitable market share?” Media suppression saves money that you can reallocate to more effective marketing messages or new audiences that you haven’t previously been able to afford to target.
Less is more once you start looking at marketing from a customer level instead of a channel level.
Based on your observation, which brands innately understand the importance of brand-owned data loops?
KB: One of the best examples that comes to mind is Amazon. Consider how Amazon has integrated its website, its mobile app, and Amazon Echo devices. Then, there’s Alexa in the car, and Amazon on your television. If you’re an Amazon Prime customer and you interact with any of those options, all of those devices know your history. You can order your entire grocery list from Amazon while sitting at a red light because they know how to connect all your data from any past experience in any context. This simplifies your buying journey to the point that you can literally place an order before the traffic light turns green.
Now, I’m not advocating ordering groceries while sitting in traffic, but I do it all the time! I can do it before the light turns green and that’s because of a brand-owned data loop. Amazon has fundamentally rethought what it means for customers to engage and transact with the brand. The company understood that and by connecting data through its systems, it’s allowed me as a consumer to move through my experience in any way, in any direction, over any time period and have a consistent, connected experience.
With many other brands, those six touch points wouldn’t connect, and I would have to start from scratch on each device. That’s the difference.
What else do CMOs need to think about regarding brand-owned data loops?
KB: Let’s revisit the issue of privacy regulations. This is a classic case of making lemonade from lemons. Complying with these regulations, particularly CCPA starting in 2020, is among the largest projects that most brands will undertake in 2019.
However, as a marketer, I’m really excited about CCPA. The same foundation, underpinnings, technology, and processes that it takes to be in compliance with GDPR and CCPA are exactly the same things you need to execute strong, relevant, real-time personalized customer experiences.
By becoming compliant, marketers are in a better position to transform their businesses and deal with this hyper-connected consumer world. That’s an exciting thing. This is an opportunity to make a huge leap forward in a short period of time, and we’re excited that we can help brands take advantage of this.
Our team helps clients envision and create a holistic, data-driven strategy for their business. We also have the technical expertise to stand up and integrate the various data platforms and data flows that unlock the potential of the brand-owned data loop. Finally, the work we’re doing with clients to develop and execute marketing programs, messages, and customer experiences informed by insights from their data loops is an exciting place for Perficient Digital and our clients to be right now.
What’s one key takeaway you would share with a CMO?
KB: You still have to be a great marketer. No matter the technology or data, you must provide compelling content.
Brand-owned data loops aren’t an excuse to bombard customers with over-information. They are a tool that allows you, for the first time, to realize the potential of exactly the right message, at the right time, right location, and right format. Brand-owned data loops should remove the complication and allow you to focus on great messaging.
Creating a stand-out digital customer experience that attracts, engages, and retains customers is a tall order. Perhaps you’ve already done some of the foundational work, and you need help with the next step.
When working with clients, we take on the responsibility to make sure you know your customers and understand their journeys. Through design-thinking tools, industry research, and pragmatic ideation to execute from end-to-end, you will have what it takes to deliver a CX that surprises and delights your customers.
Ready to get started with your digital strategy? Dive in for more resources.