BROADENING HORIZONS IN THE AGE OF DATA NAVEL-GAZING
October 11, 2020
By Guest User
We often hear that the world’s most valuable resource is no longer oil, but data. Companies have access to more data about their customers than ever before, and some of the most celebrated brands in the world are lauded for how they leverage this asset to elevate the customer experience. Brands such as Netflix and Amazon have highlighted the power of applying analytical intelligence to customer behavioural data, and translating it into highly personalised brand experiences. Mobile challenger banks such as Monzo and Starling have taken this a step further by leveraging their back-end data into customer-facing services with spending and budgeting tools that help people to manage their personal finances.
Clearly there is an enormous opportunity for brands that can translate customer behaviour analytics into personalised customer experiences. But there is a growing trend of brands becoming so focused on leveraging their own data that they ignore the vast opportunities for insight and growth outside of their current customer base. Netfluential’s recent experience of working with growing challenger brands such as Venmo, Brockmans Gin and the Craft Gin Club has demonstrated the importance of brands broadening their data horizons. This is the key to unlocking sustainable, accelerated growth.
THE RISK OF DATA NAVEL-GAZING
A recent Marketing Week survey into how businesses segment their consumers highlights the current trend for data navel-gazing.
The survey of more than 800 marketers working across 23 sectors reveals behaviour as the most commonly-used form of segmentation (44%), followed by location (42%) and age (38%). Even more tellingly, three-quarters (73%) believe that behaviour has become a more effective means of segmentation over the past five years.
Behavioural segmentations are appealing because businesses can use existing customer behavioural data to identify the characteristics of different user types. And this approach has the considerable advantage of enabling businesses to segment their entire customer database and then target individuals with tailored messages, products and experiences.
The risk is that this approach lacks context. Marketers are often blind to the needs and attitudes underpinning behaviours and this can lead to false assumptions. Lysa Hardy, the CMO of luxury confectionery brand Hotel Chocolat, has stated that the brand avoids making assumptions based on purchase behaviour alone. Within the 55,000 members of Hotel Chocolat’s Tasting Club, some subscribe because it conveniently provides a guaranteed supply of the product; others join to try new flavours. These are two very different consumer cohorts with different needs. Whilst they share behavioural similarities, Hotel Chocolat knows that it needs to engage with these two cohorts differently to ensure resonant messaging and a relevant experience.
THE CHALLENGER BRAND LIFECYCLE
In the life of any young challenger brand, there is a pivotal moment where they must look beyond what’s worked to build their original customer base, and identify the next frontiers for growth. At this stage, internal data must be supplemented by wider perspectives in order to succeed.
The last decade has seen a plethora of start-up businesses disrupt the status quo with a customer-centric proposition. The rapid growth that businesses such as Monzo and Deliveroo enjoy in their early years is founded on a new, unique and motivating idea. External investment then helps them to scale quickly.
But eventually the word-of-mouth generated by the original innovation cannot sustain the same levels of growth. Challenger brands must maintain momentum to attract new investment, and this requires a shift in strategy. Businesses can pre-empt this stage by adding a layer of meaning to the originally disruptive idea and amplifying it widely to recruit new users.
This year saw Monzo enter this new phase of brand building maturity. Previously reliant on word-of-mouth generated by its passionate user community, the brand launched its first major above-the-line campaign in May 2019 with the ‘You make Monzo, Monzo’ TV ad. This campaign also signalled the arrival of a more meaningful brand proposition – moving away from the one dimensional ‘bank of the future’ message, to a more holistic positioning – a bank listening to the needs of its customers and providing the services they want such as instant spend updates, easy bill splitting and a speedy sign up process. The move has seemingly paid off with Monzo reporting its strongest ever period for new customer acquisition in the month after the campaign first aired.
Many of these disruptive businesses begin life with a preference for internal data and in-house development. But the evolution in brand building strategy often coincides with a shift in internal culture and an increasing openness to drawing on the data, expertise and methods of agency partners.
ENGINEERING NEW OPPORTUNITIES FOR GROWTH
Every company is chasing the holy grail of sustained growth, but this is not easy to achieve. There is a widening chasm between the top companies dominating the growth and profitability in their category, and those struggling to deliver even incremental improvements.
Netfluential is helping challenger brands to navigate their pivotal moment of transformation - the moment when they must look beyond the behaviours of their own ‘early adopter’ customers and identify emerging and unmet needs amongst a broader recruitment audience.
Brands need to engineer new opportunities for sustained growth, and often this means looking in new places. Our mixed-method approaches help brands to broaden their horizons by:
De-averaging the target audience to identify new sources for growth
Moving from what to why by defining the needs your brand exists to serve, and re-orienting the brand proposition around those needs
Identifying where to engage your target consumer cohorts – which moments, occasions and touchpoints?
If you are reading this at a time when your business is beginning to explore new frontiers for growth, we would love to hear from you (hello@netfluential.com)