A broad-brush approach to marketing and customer engagement, characterised by basic segmentation, is no longer an effective way of connecting with a new generation of consumers. Customer expectations have grown considerably, meaning that marketers must innovate as they find new ways of understanding and engaging their customers.
Our Connected Customer research reveals that long-term relationships occur when a business becomes a meaningful part of a customer’s everyday life. By making their life easier and delivering what is promised, a business can convince the customer of their value, and find a place in their emotions. The research suggests that when someone senses a company cares about or understands their problems, they begin to move along the engagement journey from interest to loyalty. Connecting with customers over something that really matters to them will help marketers to engage in a meaningful way.
To achieve this, businesses must understand their customers as a ‘segment of one’, rather than allocating them to generic demographic categories. Basic segmentation no longer goes far enough, as customers have begun to expect a deeper connection with their brands.
A new level of insight
‘Segment of one’ marketing or smart segmentation is now possible because of the rise of sophisticated data-driven marketing over the last twenty years. There has been a proliferation of new channels that businesses are using to collect data across multiple touchpoints, giving them a previously unattainable level of insight into a customer’s behaviour, preferences and expectations.
The rate of data creation is only increasing; by 2020 an estimated 1.7MB of new data will be created every second, per person. While this is an incredible amount of data, complex algorithms and predictive models are able to analyse it to provide significant insight for businesses that can then be harnessed to develop products, services and marketing which is timely and personalised. Compared to the old practice of sending generic mass marketing e-mails, a sophisticated and targeted campaign is much more likely to make an impact on a customer, and carrying this out successfully is now crucial for marketers.
Personalisation in action
Some of the world’s biggest companies such as Amazon and Netflix are leading the way when it comes to personalisation, because they ensure that targeted offers or recommendations are truly relevant to the customer. An Experian report suggested that 87% of customers find it acceptable for brands to use their data to personalise interactions, as long as it is relevant to them. Clearly it works; using data based on search and purchase history, Amazon personalises every user’s homepage and its product recommendations are said to generate an additional 10 to 30 per cent in revenue for the company. Netflix, meanwhile, is taking personalisation a step further, adapting film covers so that a customer sees the actor or actress they are most familiar with.
A balancing act
Cadbury’s personalised video campaign demonstrated how brands can use a ‘segment of one’ approach to engage with their customers. They matched a Dairy Milk flavour to Facebook users based on details from their profile, including age, interest and location. If a user agreed to connect with the brand, it would generate a video using photos and personal information from their Facebook account. It can be difficult to get it right, but Cadbury did not come across as intrusive. Instead, with the customer’s consent, it created a genuine connection between the brand and the individual. This personal touch is so important for brands – the campaign obtained a 65 per cent click-through rate and a 34 per cent conversation rate, showing that customers were truly engaged.
While incredibly successful, the Amazon and Netflix approach uses algorithms based on past behaviour, meaning that although their recommendations are usually helpful, the ideas are not new for the customer. The next step for marketers is to attract new customers to products that are outside their typical interests. If marketing strategies can encourage customers to try something new that is outside of their normal behaviour, they can convince them that they are actively making their lives better.
‘Segment of one’ marketing is transforming the way in which businesses communicate with, attract and retain their customers. It offers them another way to create a genuine bond with their customers, showing that they truly understand them and can enhance their lives. It’s becoming apparent that customers are willing for brands to take a more active role in their lives if this can genuinely benefit them. To connect with the next generation of customers, marketers must think about the next generation of customer engagement and what that means in practice. The abundance of data available to businesses now makes hyper-personalisation possible and also enables them to better understand their customers and behaviours. The ball is firmly in the marketers’ court – they have the opportunity to take advantage of the data available to them or risk being left behind by market leaders.