Little Data – better than Big Brother?
In today's era of 'Big Data', could a 'Little Data' approach still deliver both greater credibility with consumers and an improved focus on customer service? According to loyalty marketing expert Peter Wray of Loyalty Matters, it certainly could be the answer to growing concerns of data availability and usage.
The era of 'Big Data' – in other words, the ongoing explosion of real-time consumer data – has now well and truly arrived. In the space of less than two years since the phrase was coined, almost every organisation globally has started to focus on what it will mean for their business or brand. In the context of consumer loyalty initiatives Rupert Duchesne, CEO for Aimia, termed the challenge facing marketers as "a race to join the dots", and huge commercial rewards are being hyped as a benefit of being a leader in the this particular race.
Google, Amazon, Facebook, LinkedIn and others already have a business model built upon the ability to collect and interpret customer data highly accurately. Customer loyalty programmes are also rapidly developing their expertise in this area. The reality, however, is that Big Data can be expensive to understand, difficult to deploy strategically, and a huge challenge in terms of the resources needed to gain real customer insight and a sustainable business process.
It seems that, while corporate competition is intensifying to gather information about consumers for targeted advertising and sales campaigns, the concerns about government surveillance continues to grow. In fact, a whole new breed of research business has been created as a result: Data Brokers now focus on capturing online surveillance of consumers' shopping preferences, personal income, and even their political interests and health issues. Some new initiatives (e.g. Weve, EE, O2 and Vodafone) are investing heavily in this and, with a UK-based coverage of 80% of consumers, they potentially have a huge audience at whom they can start aiming adverts in a location-based, time-specific and targeted way.
What does Weve do? According to its press statements, it does everything from the consumer opt-in process to text-based, rich media and app-based promotions, voucher integration and redemption schemes, as well as payment and loyalty processes that are designed to feed back even more data.
While many large companies in the customer loyalty market can – and will – develop the Big Data approach to marketing, it seems reasonable to ask if every retailer really needs Big Data – or could a Little Data approach based on the rapid growth in mobile marketing deliver customer service improvements in a more manageable way for smaller businesses?
Asaf Rozin, the CEO of start-up mobile marketing company Stampfeet, seems to think so. Stampfeet developed a mobile platform with built-in customer loyalty and analytics layers, in the belief that the mobile channel is perfectly suited to building more customer engagement, which is a key component in the success of any loyalty scheme. When asked about this initiative, Asaf explained: "Most small- to mid-size retailers do not have even a single data point, and the ones that do typically struggle to take advantage of it. In these cases, more data points won't make any difference. Quite the opposite, because it complicates the business processes needed to take advantage of that data. It's better to first find a formula that takes advantage of a lighter data set, and only then to look at adding more data points. After all, the purpose is to drive more business and not just to collect data".
One major problem with big data lies with the associated business processes that are needed to harness its true value. One application of this is the Giraffe restaurant chain recently acquired for £48.5 million by UK supermarket chain Tesco. Tesco acquired the restaurant chain with the intention of opening in-house restaurants in its stores, feeling that Giraffe's marketing concept is so strong that it will form a "welcoming oasis within the stores, offering tasty food at reasonable prices, served in a warm and friendly way".
Both these initiatives are interesting, not least because the Tesco acquisition of Giraffe will also expose it to the Stampfeet approach (a form of Little Data) from a retailer that has done more than most to develop the Big Data approach.
This also seems in tune with recent comments from Aimia's vice president of global digital strategy, Martin Hayward, who has published a report entitled 'The Four Futures' in which it is claimed that, out of the 86% of consumers who receive marketing emails, only 12% look forward to receiving them and 46% think they get too many. Hayward's observations are that the marketing and loyalty industries need to demonstrate a certain level of restraint with these new channels and data insights to avoid overwhelming consumers.
Although technical challenges are still creating some difficulties, the issue of consumer ownership of suitable smart phones or tablets is now not as great a concern as it was in the past. Mobile loyalty marketing is very much the focus of nearly all the major global loyalty programmes now: Aimia, Amex-owned Loyalty Partner, and LoyaltyOne, being among the main coalition loyalty management firms. Add to those the use of the technology in numerous frequent flyer programmes (FFPs), general single-brand retail loyalty programmes, and in many other card-based loyalty programmes.
Of course plastic card based loyalty programmes still have some life left in them, due to the legacy customers who are active members of these programmes but who, for a variety of reasons, are unable or unwilling to embrace a completely mobile interface with loyalty programmes. Cards and paper coupons are certainly not dead yet, and very big players (such as Tesco's Clubcard) are embracing the new technologies but also continuing to use basic direct-mailed coupons as their primary 'push channel' to members.
Another consideration for loyalty programme operators is that this technology is largely indifferent to the brands with which it can operate, and this poses a disintermediation risk for large scale programme operators – similar to the challenges they still face with social media.
But what does seem clear is that the speed of the change, scale and size of the digital data trail that consumers are creating in their shopping wake is a reality that would have seemed like Hollywood fiction just a few years ago. The former head of Google China, Kai-Fu Lee, was quoted in a recent Financial Times article as saying: "It is both a wonderful and scary future. Companies with huge amounts of data will know more about you than you know yourself. They will be able to predict what you might do next." And those remarks are an eerie echo of Lord Maclaurin when he Tesco's CEO during its consideration of the potential for the Tesco Clubcard programme back in 1995, and the data analysis work of Dunnhumby, when he said: "What scares me about this is that you know more about my customers after three months than I know after 30 years."
At a time when the global media's focus is on the ramifications of the 'Prism' secret surveillance scandal, and concerns that the US National Security Agency is working with Google, Microsoft and other internet companies to monitor digital communications, all organisations working with Big Data must now reflect on how they engage consumers and citizens. One thing is certain: the data genie is out the bottle, and it's unstoppable.