Individual customer profiles – a life saviour when margins drop in your business
Here in the third of four blogs on marketing automation excellence, we go in depth on Individual customer profiling. More precisely we will discuss both strategic personality profiles and tactical behavioural profiles.
Tactical Customer Behavioural Profile (CBP)
[CBP] = f1([Individual Record], [Rich Data], [Market Research], [Transactional Customer Profile])
Strategic Customer Personality Profile (CPP)
[CPP] = f2([Individual Record], [Rich Data], [Market Research], [Transactional Customer Profile])
Complex formulas that simplify business and give an extremely high-value contribution. Formulas that are a Previsions core competence. We would love to meet and discuss the importance of these formulas for your business. Previsions would love to show more concretely how these formulas can help you to excel in your market through;
- Best in class campaigns
- Best in class time to market
- Best in class aligned customer journeys
Previsions contribution is a cost-efficient way to create and maintain these precise and powerful individual customer profiles for all your customers. Stable personality profiles as well as agile behavioural profiles on every single customer. Profiles your marketers can use to make your customers your brand’s advocates and give you the ability to time and craft your offers to better fit your customers’ needs and desires.
The power of customer profiles
Graeme Wood once wrote: “Change has never happened this fast before, and it will never be this slow again” and as Martin Lindstrom states about Amazon acquisition of Whole Foods “The Biggest Nightmare in Retail History Just Happened” If you’re a brand owner a lot is at stake. This Amazon move is likely to skip conventional brands altogether – all in favour for private labels. Not a good situation for giants like Unilever and Kraft.
Talking about giants. Coca-Cola has decided to eliminate the position of CMO in its organization. Instead, Coke has created a chief growth officer role. Coke isn’t the only example of an organization struggling to pull off the digital business transformation.
In B2C there is however also hope for CMOs struggling with translating the role of Marketing into Money and Growth. Beyond traditional segmentation, there is an opportunity for a faster more precise and comprehensive feedback loop. Tightly coupling marketing activities with ROI measurements down to individual customers. The trick is a refined out-side-in analytics approach focusing on agile bottom-up aggregation of consumers. The days of enforcing board room decided top down deep-frozen market segmentation models is gone. It’s time to aggregate from bottom up with an agile process originating in individual customers desires, needs and demands.
As often its new technology that is both the cause of the problem and the solution to the challenge. I guess all of you remember the fax machine? Some of you maybe also remember when the fax machines widely enter business life 40 years ago. Some early adopters went ahead and the simple to understand value proposition rather quickly made most business owners with international business understand that the fax gave a huge commercial time advantage versus snail mail, particularly in the tender phase. No one could afford not to get a fax.
Individual customer profiles – Competitive edge through time advantage
Technology continues to change the rules of the game. While the fax was the killer of the B2B in the 1980s analytics and artificial intelligence are fundamentally changing the rule of the game in B2C of our times. While old business models struggle does increased automation in marketing & sales empower businesses to treat people on their customer journey more and more on individual bases. Advancements in analytics, machine learning and digital customer touch points move marketing and sales execution focus from segments to individual customers.
To be able to individually profile customers out-side-in in this automated world give huge time and prediction advantage and transforms B2C businesses at least as drastic as fax changed B2B before. Lead time to insight and action on the individual customer will reduce drastically. With individual customer profiles, you will also be able to predict. Your brand will always be many steps ahead of your competition. You can be more proactive as you know better where your customer is heading and in what direction you should take the next step. The commercial impact will be huge.
If customer profiling had been as easy to grasp as the concept of fax we would expect very rapid adoption. However, the concept is somewhat more complex and require a top-notch marketing team, so the early adopter businesses are likely to prosper from a competitive time advantage and a better compass for a long time.
The end of mass
Businesses need to embrace customers as individuals. This is what individual customer profiles enable. As analytics and machine learning move the focus of marketing & sales from segments to individual customers, the success is dependent on that we respect that customers are individuals, not segments, target groups or any other form of grouping. The customers are individuals and need to be treated as such.
Historically, due to human limitations, businesses have been restrictive in how many different groups of customers the brand could handle. For good reason, businesses have used segmentation to oversimplify reality. However, even the best segmentation model violently forced people into groups they have too little in common with. When we historically designed a segmentation model we created a few distinct boxes. We then expected that all our customers would fit in one of these boxes. For a minority of customers, this fit was good. Most customers, however, had profiles that diverged quite significantly from the profiles of the segment boxes.
While humans are limited in how many different customer groups we can handle computer-based machine learning are capable of handling individual customers very precise. Preciseness that require rich accurate customer profiles. Richness and valuable information about an individual that is destroyed and lost if we continue to force fit individuals in one of few segment boxes. Automation critical customer insights information that machine learning could use. With individual customer profiles, this loss of critical information will be avoided.
Individual customer profiles – the enabler of customer life-cycle management!
While treating customers as individuals, businesses from time to time need to group customers. There is however not one optimal grouping that fits all purposes. By ensuring powerful and comprehensive individual customer profiles optimal agile customer groups can be created for any business purpose. It will be these individual customer profiles that that ensure a strong link between short-term and long-term customer perspectives. It will be the individual customer profiles that ensure a consistent customer journey and strengthens the Brand’s connection with the changing day to day consumer realities. The individual customer profiles allow marketing to consistently address customers on a personal level with an offering that you know your customer need and in a tonality you know is appealing. Ensuring you know who you talk to and what that person needs.
Enabling a deeper knowledge of a specific customer and ensuring you can timely reach that customer with an attractive offer. This is what individual customer profiles are about. They days of force fitting individuals into one of few segments are gone.
Individual customer profiles – the key to growth!
Brands navigating the market for increased sales, better margins and improved consumer stickiness to the brand. Success is dependent on deep consumer insights and ability to execute on these insights. Markets are increasingly complex as well as unpredictable and organizations need an agile mindset to adapt to unforeseen developments. At the same time building and evolving a brand is a delicate matter of consistency.
The challenge for any brand is to connect and sync CEO, CMO and CFO helicopter perspectives and desires to lead a consistent and prosperous brand journey with a skilled empowered organization capable of agile execution.
To get a competitive advantage in a B2C business precise timely insights in consumer desires, needs and demands are critical. These are built from an intrinsic mix of the customers’ personality and context. Personality and context are captured in five categories; Values (psychographics), attitudes, life stage, needs and behavior. Rich data embraced these categories equally. The end game is that every single individual is profiled from all these five perspectives.
Customer profiles are intended to address this challenge. To excel every customer has two profiles. This distinctly separate analytics into two views; the strategic view and the tactical view.
The strategic personality profile view is stable. This means that consumers’ personality profiles do not change significantly in a normal business cycle (change is slow and hard to induce). Likely change is so slow and insignificant that it is commercially not viable to try to change people’s personality profile. The personality profiles rather create a strategic dimension to be navigated from brand and communications perspective. The strategic view helps to identify key long-term aspects in peoples’ resonance with a brand. The purpose with the personality profile is to understand why people are doing things and to predict and influence how, what and why people might change behavior and adopt new services near time.
The second view is the tactical behavioral customer profiles. The intention here is to understand usage profiles and to influence people’s consumption. Service packages are adopted and optimized to people’s current and expected needs. This is done to increase revenues, margins and loyalty.
Together the two profiles create unique precise and agile individual consumer insights that bring you better competitiveness through improved more timely campaigns and better-aligned offerings. Short term campaign efficiency can improve some hundred percent. Midterm marketing efficiency even more, as you will gradually increase your capability to augment your offering and predict demand.
These individual customer profiles will speed up and refine the feedback loop. Continues learning through fast accurate feedback will bring you closer to your customers and help you become truly customer centric. They will enable you to address every single customer on a personal level with an offering that you know your customer need in a tonality you know is appealing.
In the following two sections, we will first go through Customer Personality profiles and after that Customer Behavioural profiles.
Individual Personality Profiles
[Customer Personality Profile] = f2([Individual Record], [Rich Data], [Market Research], [Transactional Customer Profile])
The most long-lived perspective of a customer is the customer’s personality. A customer’s personality comes from human values (psychographics) and attitudes. Values stay stable over a long time. They stay as core influencers in the customer journey, particularly for achieving strong advocating customer relations. Attitudes are more our direct personal views of contemporary life phenomena. Attitudes are formed by the close encounter between our values and the current context.
Depending on personality individual consumers navigate life in different ways. Some people love change and innovation, have a flexible mindset, are eager to get the most out of life. Other people believe their present situation is more acceptable than what may come tomorrow, the latter want calm water and have a clear opinion of how things should work and are less flexible to change. Some individuals have strong concerns for others and believe in equality for everybody, while other individuals are me-oriented with strong individual desires and a strong appetite for personal pleasure.
Personality profiles reveal peoples’ motives and design preference, it also guides campaign tonality.
To operationalise these deep insights of the customers we use Life Value+ a 2-dimensional market map. A map of peoples’ personality in relation to consumption and acceptance of new ideas and concepts.
Previsions map is named Life Value+ and customer gets a unique position on the vertical as well as the horizontal axes (X and Y coordinate) of the map. It’s these X and Y coordinates that are the customer personality profile. The customer profiles can be predicted for every single customer and prospect. This way we create a very operational, powerful and adaptive customer analytics solution.
Customer Behavioural Profile (CBP)
The second part of the customer profile is the tactical behavioral customer profile.
[CBP] = f1([Individual Record], [Rich Data], [Market Research], [Transactional Customer Profile])
While the personality profile reveals peoples’ motives, design preference and guide campaign tonality are the intention with behavioral profiles to understand usage, product features and to influence people’s consumption. Service packages are adopted and optimized to people’s current and expected needs. This is done to increase revenues, margins and loyalty.
How many dimensions that build a behavioral profile is dependent on the versatility of the industry. As an example, a mobile service provider could have behavioral indexes like; Top-ups, Voice, Messaging, News, Video, Music, Gaming, Social Media, Mobile wallet, Service Stickiness and Mobility.
Every single customer has a unique behavioral profile. A typical way to present the behavioral indexes is by a spider diagram. In the diagram bellow is the actual indexes plotted in blue while the minimum is presented red and the maximum is green.
Dashboard – Transforming data to insightful actions on individual customers
The challenge has been that rich customer insights have not been operational with fast learning loops. Precise interventions on millions of individual consumers have not been possible and alignment of strategy, marcom and sales have been challenging. Individual customer profiles are a game changer in this perspective. These profiles are cornerstones for more precise and agile customer interventions.
A real-time navigation dashboard based on the Life Value+ market map provides an overview with the possibility to drill further down into details. Customers can be chosen as individuals or any type of target, segment or service usage group. The selection is presented with position and distribution on the Life Value+ market map. Additionally, ingrained in the map, you find the spider highlighting the behavioral profile for the selection
The customer profiles this way provide a powerful hierarchical multidimensional view of the market and increase business through a deeper understanding of people’s needs and drivers. The organizational learning process is enabled and management could quickly and accurately follow up steps taken and then guide the next steps
In near time future, individual profiles on every single customer can increase precision, timeliness and effectiveness of campaigns many 100 %. Additionally, the learning cycle will be much shorter and precise. Informed quick iterations thereby can improve efficiency even further. Deeper insights that transform to better-personalized offerings that lead to more sales and better margins. Mid-term, with further automation and organizational learning, the positive business impact will be even bigger than the short term.
Going Forward – Segmentation as we know it is dead, long live segmentation!
For foreseeable future, some business activities will be handled by humans. For this reason, segmentation will still be needed. Entering the world of automation and applied artificial intelligence, the norm, however, should be that people are individuals and grouping them into segments are exemptions when really needed.
The last blog will be on the future of segmentation to ensure that humans and machines can cooperate successfully. The trick is to change segmentation from a top down to a bottom up process.
Individual customer profiles – Timely address customers on a personal level with an offering that you know they need in a tonality that is appealing.
Henrik Pålsson
Chief Visionary Officer
Previsions AB
