BrainTrust Query: Is the Era of One-to-One Communication Finally Upon Us?
As the web has evolved, Amazon has changed the way people think about shopping. Google has changed the way people think about information. And Facebook has changed the way people think about themselves and each other. These changes, affecting many areas of society and business, have been quite dramatic, bearing implications for how companies view data, use social media and engage in marketing.
Earlier this week at the Shopper Insights in Action Conference in Chicago, Andreas Weigend from the Social Data Lab at Stanford University and former chief scientist at Amazon, talked about the "Social Data Revolution," emphasizing the step-by-step progress in communication over the decades.
A century ago, Mr. Weigend points out, consumers and shopkeepers knew each other personally. Then came the era of mass-produced products and mass, one-way communication. In this environment, segmentation of consumers became critical. For example, it was very expensive for Sears to create its catalogs so the company had an incentive to segment its audience, sending the right catalog to the right consumers.
But in today’s market, Amazon, Google and Facebook have moved beyond segmentation. With peer-to-peer communication occurring on many devices in real time, there is no longer a need for segmented groups. The data created when people click, search, and share information makes it possible to know who consumers are, what they like, and with whom they interact. This data can be considered "digital exhaust". The analyst’s job is to create a mindset for turning this mess into meaning.
For example, examining the clicks and purchases of thousands of consumers helps Amazon understand how they approach the purchase funnel so recommendations can be made to others. This, Mr. Weigend says, is implicit data.
When consumers create reviews or wish lists, this information can be used to help others make decisions. It also empowers people to say what they think. This is explicit data.
Ambient data is related to the situation or a specific location, helping to determine whether it is the right time to engage a shopper in a conversation. Amazon is very early in the process of figuring out how to use ambient data.
It used to be that algorithms were important since data was limited and we had to identify patterns — such as traffic models — to predict what people might do. Now there is real time data so you can look to see how the traffic is actually moving. Economics used assumptions to determine what people might buy. Now you know what people buy in real time.
In this new marketplace, companies can shift through the digital exhaust to understand what their customers do, what they like, what they talk about, with whom they talk, and how often. Then marketing can move closer to one-to-one communication.
Discussion Questions
Is mass communication — and even segmentation — a thing of the past or is it still relevant? Is it time for companies to reinvent their marketing communications functions to move toward real-time, one-to-one communication? If so, where should they start?
Mass communication is still relevant. The desire to reach a large audience with a brand message has not gone away. When combined with one-to-one communication a manufacturer can deliver a general brand message and targeted brand benefits.
Brands know how to create and deliver a mass message. Most do not know how to do the same for one-to-one communication. They should start by better understanding who are their customers, what those customers buy, when they buy and the factors each customer considers before making a purchase.
Marketing communications has never been static. It is ever evolving. As new information and channels of communication become available it will continue to change. Marketers can’t become complacent. They need to constantly educate themselves, so they can adapt to this ever-changing reality.
We are coming full circle to the days of knowing your customers and their preferences, but this time the connection is data driven, not personal-contact dependent. Mass communications will still be relevant for image building and general awareness, but more and more purchase decisions will be driven by specific customer knowledge based on data mining.
One-to-one communication sounds like a brilliant idea, but it’s largely limited to big merchants. The smaller the retailer the less they can make one-to-one communication (as described here) a reality. Customizing e-mail messages is relatively easy, pointing returning customers to specific pages is not much harder, but as you move up through the personalization spectrum, individual targeting gets more difficult, especially for merchants that have small product selections.
So the kings of the mountain like Amazon, Walmart, and Macy’s can make real-time personalization happen, but it’s questionable how well mom and pops will ever be able to do it effectively.
It’s now possible for marketers to develop one-on-one communication strategies in a cost efficient manner. However, it takes planning and investments along with a dedicated team. The first step is probably a segmentation analysis using the existing data/database. From that the team can create a strategy they feel is appropriate for reaching the various constituencies.
It takes technology along with effective oversight to maintain and update the data base so that there is a planned stream of customized communications material directed at the appropriate target groups. It makes all the difference in the world for revenue growth.
Consider dividing communication into two groups; People you want to do business with and people you currently do business with.
A retailer may use mass communication to broadcast general information to an audience that they do not yet have a relationship with. This is primarily the way they have always advertised.
But, for the technologically up-to-date retailer, a new era is upon us. We are able to customize based on past buying behaviors and purchases to deliver a personalized marketing campaign. This is what will drive repeat business and loyalty. Doubtful this will completely replace mass communication, at least in the short term.
Before there was writing, everything was pretty one-to-one, except when all the people were massed for a communication from the leader. Humans have been looking for improvements ever since, even though one-to-one is sometimes more desirable. And thus it shall ever be.
Interesting that we just had a robust discussion on RetailWire about barriers to implementation of segmentation schema, and during that discussion I failed to mention that perhaps the most formidable foe of segmentation is the superiority of “one-to-one” interaction. Segments represent an improvement in quest to become more relevant to shoppers, but if brands and retailers can truly manage to effectively deal with shoppers as individuals, segmentation is rendered as suboptimal.
To effectively get to a one-to-one relationship, both retailers and brands will need to amp up the level of content/offers they have at their disposal to send to shoppers, as individual needs will be inherently broader than those of segments. In addition, an investment in both targeting technology and intellectual property is key to transitioning to a one-to-one dialogue with shoppers.
Start with the strategy and brain power first, then adapt or acquire technology to support the strategy and effectively transition marketing content away from the mass and over to the individual shopper. No easy task, but some are making significant headway. More need to follow!
Mass communication is always relevant because you need awareness and initial engagement with your audience before you build real-time, 1:1 communications. Giant billboards and Super Bowl advertising commands their price because it helps reach a giant audience from which businesses can build 1:1 communications as a followup.
There is enough thought leadership on this topic on the web currently to make your head spin.
Segmentation is not necessarily obsolete. One-to-One marketing has definitely taken hold, however, consumer insights need to bubble up to help drive predive analytics models that take advantage of whatever type of segmentation is performed, either mass or one-to-one.
Don’t try to do this manually. Yes, we still see large organizations trying to leverage spreadsheets for these efforts. Get started by looking at some ideas from the best providers. These business partners have deep expertise in this area and can help guide the approach, so simple mistakes can be avoided. As with any predictive analytics process, several methodologies and algorithms are available for segmenting your customers. You can work with these providers to devise a plan to assist your marketing function, along with sales and other business functions with better understanding customers.
Even those who purport to engage in one-to-one communication often do so only in the most simplistic and superficial manner. Have you checked the relevancy of your Amazon recommendations recently?
While personalization in marketing has got a boost due to technology and social data revolution, mass communication is still relevant and will be relevant for marketing purposes. While catering to individual preferences has substantial value, the purpose of mass communication is to have an overall impact on segments. Note: individuals are still part of groups or segments and individuals preferences are largely impacted by what the group thinks or does. So one-to-one marketing needs to be looked at in conjunction with segmentation and mass communication.
Does it matter that a communication that is right for you be just for you? Do you refuse to laugh at a comedian in a crowded club because he isn’t doing a joke exclusively for you? Of course not. Marketing and communication done right does speak to the individual—though not one at a time. Relevancy, meaningfulness, timeliness, message, etc., are the important factors. Mass, segmentation, and one-to-one all have a future in retail.