Investing in Customer Intelligence: Beyond the Channel Problem
In a recent study, Forrester projected that $2.9 billion of budget will be moved from digital ads in the next year. The report notes: “Display advertising never worked like we pretended… CMOs know this already, but nobody wants to talk about it.”
With $2.9 billion on the table, it’s worth a discussion.
First, we need context: according to Forrester, we entered the “Age of the Customer” in 2010 with the introduction of smartphones. That technology put information in customers’ hands everywhere all the time. With access to information on demand, power shifted from companies, who previously controlled that information, to the customer.
Shifting power from companies to customers also created a compound problem that has not been fully recognized:
1. Burdensome Content
There are so many external sources of information now, through social media, online reviews, competitors, and old school word of mouth, among others.
The content created by external sources may or may not be accurate, or complete, or legitimate. Worse, it may not support customers’ consideration or purchase decision.
This is a variation of the tyranny of choice: customers must make their way through the content labyrinth to become aware, to consider whether the product is of interest, to assess whether it meets their needs, and ideally to reach a purchase decision.
That is a lot of work.
It’s also a risky assumption that customers will put in that great time and effort only to be rewarded by spending their money on companies’ products and services.
2. Non-Linear Behavior
When companies controlled information, they could distribute content selectively through advertising and marketing campaigns. By gating content, they would guide customers deliberately through a linear purchase cycle.
With customers now in control, and content everywhere all the time, behavior may not be linear. Customers may begin in the middle, first consuming content created for the consideration phase for example, then move backwards, then sideways, exit, only to reappear again in the middle.
Each of the discrete phases is still important, but customers’ journeys may take them off course.
For example, a friend on Facebook asked for recommendations on the best device to stream media. His objective was to create a consideration set.
The responses were many, but only some supported his need. They included:
- Votes (“Team Roku!” and “Apple TV rocks!”), which minimally informed a list
- Pricing input moved the process to a later phase (and assumed the price was the only decision driver)
- Empty feedback (“good interface” or “works well”) that didn’t add much insight
- Installation instructions which jumped past the purchase entirely
The peer group clearly intended to be helpful. But there was no definition, no description, no benefits, no comparison. There were no value propositions.
There was no true decision support.
In short, the group did not respond with information that satisfied my friend’s need. Instead, assuming his interest survived all the confusing input, it sent him further into the content labyrinth.
They made him work harder. The input did not propel him forward to the next logical step in a linear progression.
3. Compromised Customer Intelligence
There is another issue compounding the challenge created by customers charting their journey, consuming content everywhere all the time.
Companies can only track and measure interactions within their own ecosystems. When customers interact with external content, it creates gaps in customer data.
And data gaps fracture customer intelligence.
The Compound Problem
What results from this compound problem is that customers are increasingly on their own, often doing the heavy lifting, and increasingly difficult to understand.
They have to work harder to spend their money, and we understand less about how they reach decisions.
The compound problem explains why customers are typically 75-90% through the purchase cycle before Sales is even aware of them.
Please consider that statistic seriously because it is highly concerning.
We pigpile on every interaction trying to prompt a transaction.
That finding was also published in 2013 and should have prompted a sea change in commitment to creating customer intelligence. It did not.
It’s Not a Channel Problem
The dreadful irony is that we can collect data everywhere, and that ability is only increasing. And yet our customer intelligence has not grown in parallel.
I was speaking to an analytic friend about projecting need based on customer behavior. She said that it’s possible to move up to the category level based on item level SKU. My answer, “So, if someone is shopping for sheets, we can project that they might also need pillowcases? That practice hasn’t changed for a couple of decades.”
The issue is that we have let customers get lost in the labyrinth of content. Rather than create intelligence that will guide them out, we let them wander.
We have not created actionable customer intelligence across the arc of their behavior. We don’t try to fill in or jump over those gaps in customer intelligence.
Instead, we assume that every interaction indicates purchase intention. We pigpile on those interactions trying to prompt a transaction.
This brings us back to digital: when display ads haunt a customer based on a fateful page view, we are just regurgitating content. We are not reflecting any understanding, we are not adding any value.
Digital simply takes a single, disassociated action, assumes click = purchase intention, and then regurgitates—repeatedly.
The customer does all the work—often 75-90%―and yet there is no context created or applied to that fateful page view that will haunt them for weeks and even months. Our only tactic is to pounce on that action to close a sale—whether the customer is fully aware, considering, assessing, or opened the page in error.
A lot has been written about the efficacy of display or how meaningless, interruption tactics don’t work. That does not address the true problem.
The issue with digital is not a channel problem, because the same issue exists for other channels that deliver hollow content with a transaction as the only objective.
It’s a Customer Intelligence Problem
Companies will move a collected $2.9 billion from under-performing digital? Good. They should. Performance should be the only determinant of investment.
Display advertising never worked like we pretended… CMOs know this already, but nobody wants to talk about it.”
But unless companies recognize the root cause of under-performance, they will continue to squander budget on unproductive tactics.
The root cause is, in fact, a lack of customer intelligence.
And that intelligence must extend along the arc of customer behavior. Companies must recognize that customer intelligence may not be continual; there will be gaps, and we need to understand them, too.
We also need to create and apply that intelligence in a way that relieves the burden, reduces friction, and guides customers through to a purchase decision.
And we need to recognize the hard truth that interactions are often additive, and that not every click should unleash a frenzy of hollow content.
We should create intelligence that will support customers through the 1-74% of their effort through the sales cycle.
The $2.9 billion now in play should be invested in actionable, supportive customer intelligence across the continuum of discernable activity. The result will be highly profitable, measurable, annuity customer relationships that are worthy of discussion.
Photo credit: Justin Luebke