One of the key goals in sales and marketing is to create consumer engagement and promote customer loyalty. Until recently, marketers simply streamlined processes that had worked in the past for customer engagement and loyalty and ceased those that had failed. Big data has since transformed digital marketing, and marketers who understand its core principles can implement substantial processes to improve in key areas, such as customer engagement, loyalty and marketing optimization. Having access to voluminous historical data doesn’t automatically create better marketing, but companies can gain a competitive edge through complex analytics.
Fundamentals of Big Data
At its core, big data consists of four key principles: volume, variety, velocity and veracity.
Volume is the vast amount of data created every day. Marketers collect data in order to understand customer behavior and initiate conversations. The variety of data can be either structured or unstructured. Structured data represents information already present in databases or spreadsheets—customer transactions, for example. Unstructured data is information gathered from social media, email, video or product review. Currently, about 80 percent of available data is unstructured and requires complex analytics to become useful.
Velocity is the speed at which data is being transmitted. A company must track social media updates, sales calls and emails relevant to its product or service at every second. Veracity refers to the excessive and useless data that organizations must eliminate. Creating forthright data can increase campaign efficiency and customer engagement, but manually managing all that data can be difficult. Customer relationship management systems, such as Salesforce (CRM), help businesses by seamlessly aggregating all data relevant to their operations. (For more, see: The Big Play In Big Data.)
Big data, in conjunction with analytics, can deliver insights into customer locations, needs and contact information, helping companies identify and target potential customers. Personalized interactions can be built by converting customer data from social media, customer reviews and other sources into actionable insights that target customers’ individual needs. By building long-term relationships, marketers create customer loyalty and identify preemptive customer defections. For example, Netflix’s (NFLX) algorithm uses previous customer actions to drive real-time video recommendations.
The proliferation of data can also provide insight into what influences customer loyalty. Companies can compare potential spending with current customer spending, which allows them to focus on acquiring high value customers. Additionally, through peer review systems and social media, organizations can efficiently target, grow and retain customers. In the this of digital technology, especially with Twitter (TWTR), and Facebook (FB), customer retention has slightly greater significance as a single negative comment can tarnish a business’s reputation and result in customer departure.
Optimization and Performance
As the Internet continues to increase in value, it has grown from an information source into a communication tool, marketplace and live streaming outlet, among other things. The Internet’s rapid expansion has transformed the landscape of digital marketing as well. New fields such as search engine optimization, content marketing and mobile and social media advertising have been been created to further marketing strategies in this space. As a result, in 2015, marketers are estimated to spend $540 billion on advertising, with digital ad spending increasing 15.5 percent. (For more, see: How Caterpillar Hopes to Profit From Big Data.)
The Bottom Line
With 90 percent of data created over the past 2 years, big data and analytics pose potential opportunities for businesses to engage and acquire customers. Through analytics, companies can acquire high value customers and increase profitability. Relevant data can be gathered from social media, emails, transaction history and other channels. Marketers can build on this data, producing video banners, loyalty programs and other personalized, targeted advertisements for individual customers. While developing insight into large data sets can be difficult, analytics tools, such as Hadoop, provide effortless analysis, thus enhancing marketing strategies as well as the industry as a whole.