Gaining a better understanding of customers through marketing data.
By Ron Burgess 8/13/15Every business owner would like to have a better understanding of customers, but few really have solid up-to-date data at their fingertips. Smaller companies are having trouble gathering and analyzing data, while large companies are struggling with massive quantities of data and how to connect the dots.
In a recent survey on customer data collection 57% of businesses said they are collecting data, but 50% also say they are having trouble connecting data to customer profiles.
Smaller companies are in worse shape; many do not have any customer data other than sales receipts (perhaps sales by department etc.).
In a second study just 14% of marketers said they felt competent in their ability to see all customer data in one place. Yet my experience indicates that even these people have just a fair ability to do so. They don’t really have many successful examples to model after.
Collecting customer data is difficult. The number of touches from target to prospect to customer and so forth is complex. It starts with the marketing action plan and a good targeting strategy, then the capturing of each touch point along the way to prospect. The communication stream should be constantly adjusted to the type of response, (but that’s another discussion). Then, when the customer buys, all of the accounting and communications data needs to link with the customer.
Traditionally, the sales prospecting information was disconnected from customer information. Customer service was simply to support the customer, but it was not really connected with transactions or the accounting side. Companies with very large unit sales and good sales people have an easier time gathering customer data, but it is usually still manual and/or requires the sales person to create their own information from several data systems.
Getting the total picture across many sales people is still a huge chore. Currently, this very important movement toward integrated customer information is far from complete for most businesses. Small businesses lack sophistication, while large companies are buried in too much data to manage well.
Online activity is easier to collect through good systems such as Hubspot. But, depending on the system, it is still difficult to join the billing and financial data with customer data.
In Finding Your Crack in the Market, I explore the starting place for aggregate customer analysis. By understanding the composition of overall revenue by department, product or general customer profile, at least strategic decisions can be made concerning markets, niches and competences. The overall strategy is greatly improved using this technique. But many small companies still can’t gather information at the customer level to build up to the aggregate. A disconnect between sales and accounting is common and remains a frustration for most companies.
So if this is so difficult, why is it important? Because it’s all about the customer.
Historically, small craftsmen knew their customers, but as large factories lowered the costs, larger geographic areas were served by one factory. Selling and the customer relationship moved to the retail store and distribution network.
Today, with the Internet and intense competition at the retail level, factories and brands need to re-create the old relationship with the customer. During the mass merchandising and marketing era of the twentieth century, consumer research supplemented channel communication. It moved slowly, compared to instantly available information on the net today. The Internet has increased the speed of communication, as well as removed much of the purpose of the distribution channel. Therefore, companies are (and need) to maintain their own relationships with customers again.
Customer Relationship Marketing was theorized by myself and others in the 1990s. While software was created to gather information about individual customers, much of that software was old century; it required data entry, lots of manual integration of transactions, and ultimately drove word processors and printers.
Many did not keep up with the Internet, and so remained software packages on the desktop, struggling to natively collect data via the Internet and drive email communications and social media. Newer systems now exist that do a great job of connecting information (and analytics) with digital communications.
Today’s issues center around understanding these complex systems and knowing how to use them to efficiently communicate with customers and to ultimately create efficient, cost-effective new links to each customer at the levels they are interested.
Marketing has always been about matching customer wants and desires with company products (or more correctly, competencies) . As companies learn more about customers they will become better at balancing manufacturing (or inventory) management and thus profit. They will be better able to spot trends pushing innovation. They will be better able to properly place resources into service where needed and lower costs, while increasing the customer experience. The overall value to the customer is enhanced.
Too many small companies are focused on the wrong elements for providing better value to customers. Manufacturers focus on quality and precision tolerances, instead of what customers perceive quality to be. Companies are content to provide numbers to the accountant so they can submit their tax bills, instead of pushing the numbers forward to management reporting designed to make better decisions. Perhaps the most common issue is the lack of will to push into the 21st century with the discipline to do the “difficult but important things.”
In a recent seminar, someone said when we deal directly with customers, we know them. I asked if he had ever plotted their addresses on a map. I wanted to know exactly how many were in each zip code, so his prospecting mailing could be focused on his customers’ neighbors. You know his answer.
I asked him how many of his customers it took to represent 80% of his business. He didn’t know. It’s almost always fewer than owners think, normally around 20% of the total customer list. So, if the top 20% make up 80% of the revenue, wouldn’t it be important to know exactly whom these people are? And everything else you can find out about them?
These are just two basic examples; many more issues can be solved when the numbers are known about customers, their purchases, and interests. Some companies are keenly aware of these numbers, and a few of them are probably your competitors. Start to collect and use your customer numbers now.
Any company today looking to be in business a decade from now should become concerned about customer information . . . now not then.
 In a Digiday and Neustar polling conducted in June 2014 – See more at: http://www.emarketer.com/Article/Marketers-Scramble-Unscramble-Customer-Data/1011003
 Q2 2014 polling by Econsultancy and Tealium. Further Reading
 Steven Covey made this concept popular in this book First Things First. Channel Disruption Distribution http://hubs.ly/y03Mkt0  Finding Your Crack in the Market
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