Tuesday, August 23, 2011

Building a data-driven brand

Last week, a prospective client challenged me about the relationship between branding and database marketing: “I am worried that we will lose our brand by customizing marketing around customer data,” he said, “Our brand could end up standing for nothing.”

The challenge exemplifies the paradigm change that data-driven marketing presents to traditional brand managers.  After the focus groups, the creative development with the agency, and the spending – they fear that personalization will make their efforts (and perhaps their jobs) obsolete.  And that fear is not unreasonable.

Increasingly, “brand enhancing” mass media spending is being replaced with direct-to-customer and social media marketing.  If these trends continue, then many brand specialists could find themselves working at the local convenience store. That is, if you define the “brand” as a package of static benefits targeted at the lowest common denominator customers (usually something like “women 25-54”).

However, if you are willing to reinvent your concept of brand, then customer data becomes a huge asset that will revitalize products and ultimately your company as a whole. If a brand “identifies one seller's good or service as distinct from those of other sellers” (American Marketing Association), then the key aspect of a brand is competitive differentiation.   

Database marketers have the same goals as brand experts -- make the business distinctive from the competition – so distinctive that customers will reduce their clamor for discounts and instead go out of their way to purchase your products/services.  If not, customers will price-shop you to death, reducing margins and your ability to sustain a growing business. Why risk being treated as a throwaway commodity?  Database marketing will position your business with meaningful benefits.

Here are three ways that brand managers can immediately leverage database marketing:
  •  Understand customer segments.  Your business is NOT a single, homogenous” group of customers who all behave the same.  Database marketers have long understood the value of segmentation – grouping customers by behavior patterns and attitudes.  Use that insight to craft brand promises that appeal to each segment. For example, the promise of free returns appeals to customers who are newer to your company and may not be comfortable yet with your products.
  •  Test and measure the “authenticity” of the brand.  By identifying specific customers in each segment, you can better target your research and testing exactly to the right people, which increases the accuracy of measurement (while reducing the costs as well!)
  •  Provide tangible business results (return on investment).  Build your brand promise, customized to the segment, into tests that database marketers frequently conduct, and measure the incremental results.  The incrementality of your branding efforts will speak to executives in terms of dollars, building credibility for the brand and for you.

Ultimately, customers are seeking brands that meet the fundamental promise, “you know me.”  You know who I am, what I want and where I live.  You respect my time and go out of your way to make a difference in my life.  Brands that meet THAT promise are destined for higher levels of customer retention, profitability and sustained growth. 

Build your brand around that promise, customized to segments, and you will see greater results in the business and in the boardroom.

Mark Price is Managing Partner of M Squared Group, a consulting firm focused on understanding and building customer relationships, and the author of the blog “Cultivating Your Customers,” where he writes about practical approaches to improve customer retention and overall customer value.

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