From The Field/ Market Research

When Big Data Is Dumb


by Michael Allenson
Senior Director Global Product Implementation
Maritz Research

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Article Highlights:

  • To drive incremental/repeat sales--and referrals, for that matter--marketers need customers to feel valued by the company.
  • Many customers feel ignored.
  • Big data is dumb if the company using it doesn’t know why customers behave the way they do.

When it comes to customer experiences that leave customers feeling like they are just a number, few industries can top automotive dealerships and retail banks.

Just about anyone who has ever bought or leased a car or opened a checking account can relate to feelings of dismissal once the papers are signed.

For example, many “personalized” mailers miss their mark completely:

• Dealership: “We are interested in buying vehicles like your 2006 Blankety Blank (you mean the one I stopped bringing to you for service two years ago when I traded it in for another brand?) to increase our preowned inventory (so you’ll buy my car even if I don’t purchase a new one from you?), and if you complete your trade-in this month, we can offer valued customers like you 0.9% financing on purchase of a new vehicle (valued? other than this mailing, I haven’t heard from you since I bought the car).

• Bank, via email: We at Generic Bank understand that you are interested in refinancing your home (but I rent). Because of your excellent credit rating (my score is 615), we are able to offer you and your family (I’m single, unless you count my cat) an excellent APR!

To drive incremental/repeat sales--and referrals, for that matter--marketers need customers to feel valued by the company. Those who do not feel completely valued by companies with which they do business are, at best, indifferent to repurchasing from those companies, and not likely at all to refer family or friends. Unfortunately, within the automotive and banking industries, a vast majority of customers do not feel completely valued by the companies they have patronized, according to two recent Maritz Research studies that surveyed more than 1,000 bank (PDF) and auto (PDF) customers, respectively.

In a surprising twist, our research found that most consumers (75 percent) actually want companies from these industries to engage with them, but only if they get to really know and understand them first.

However, what many of these companies are not doing well is effectively using the vast amount of personal data they already collect from and about their customers to create a communication framework that benefits the customer and builds a positive relationship. In fact, most of the communication that customers receive today is seen as unhelpful and irrelevant.

According to the customer surveys:

• Many customers feel ignored. Nearly half (47 percent) of customers said they have “never” been contacted by their banks or dealerships simply “to see how things were going.”

• Customers say that the vast majority of the communication they get from automakers and banks (72 percent, on average) is irrelevant.

• Of those few customers (22 percent) who said they feel “completely valued” by their banks or dealerships, three-fifths (63 percent) indicated they would “definitely” repeat their business with the same company.

• In comparison, only about 4 percent of those who said they did not feel valued at all (16 percent of total respondents) said they would repeat business.

Big data is dumb if the company using it doesn’t know why customers behave the way they do. Marketing that is personalized without any previous direct engagement to get to know the customer is frequently seen as creepy. It repels, rather than attracts, customers.

So how do you make your big data smarter? It’s fairly straightforward: You need to directly engage with your customers to better understand them and why they do the things they do. Use the information from big data as part of the conversation, but do so to gain context. Learn about the experience they are having using your products and services throughout their relationship with you.

Customers want companies to use their information to benefit them throughout their journey, as long as it is used properly and in a clearly helpful approach. Customers want to remain--or, at least, feel--in control. A thoughtful mingling of big data and direct engagement is a powerful combination that helps companies build greater customer intimacy and a stronger connection to the customer.

According to both industry surveys, even slight improvements to the communication experience would drive customer behavior in favor of the companies.

It’s time to take the long view when it comes to customer relationships. It’s clear that customers do not feel companies are making sufficient efforts to engage with them in the way they want. They do not feel sufficiently valued. Among those who do feel highly valued, loyalty is quite high. Therefore, a different approach to engaging customers and building relationships has significant promise for driving business growth.

It’s time to stop stalking customers and start talking to them.

About Michael Allenson

Michael Allenson is senior director global product implementation at Maritz Research. He consults with companies across a variety of industries on next-generation customer experience solutions.