Last month, I talked about how to measure success when there are many conflicting goals and available metrics flying around (refer to “Marketing Success Metrics: Response or Dollars?”). This time, let’s start thinking about how to act on data and intelligence that we’ve gathered. And that means we get to touch different kinds of advanced analytics.
But before we get into boring analytics talk, citing words like “predictive analytics” and “segmentation,” let’s talk about what kind of data are required to make predictions better and more accurate. After all, no data, no analytics.
I often get questions like what the “best” kind of data are. And my answer is, to the inquirer’s disappointment, “it depends.” It really depends on what you are trying to predict, or ultimately, do. If you would like to have an accurate forecast of futures sales, such an effort calls for a past sales history (but not necessarily on an individual or transactional level); past and current marcom spending by channel; web and other channel traffic data; and environmental data, such as economic indicators, just to start off.
Conversely, if you’d like to predict an individual’s product affinity, preferred offer types or likelihood to respond to certain promotion types, such predictive modeling requires data about the past behavior of the target. And that word “behavior” may evoke different responses, even among seasoned marketers. Yes, we are all reflections of our past behavior, but what does that mean? Every breath you take, every move you make?
Thanks to the Big Data hype a few years back, many now believe that we should just collect anything and everything about everybody. Surely, cost for data collection, storage and maintenance has decreased quite a bit over the years, but that doesn’t mean that we should just hoard data mindlessly. Because you may be deferring inevitable data hygiene, standardization, categorization and consolidation to future users — or machines — who must sort out unorganized and unrefined data and provide applicable insights.
So, going back to that question of what makes up data about human behavior, let’s define what that means in a categorical fashion. With proliferation of digital data collection and analytics, the definition of behavioral data has expanded considerably.
In short, what people casually refer to as “behavioral data” may include this to measure success:
- Online Behavior: Web data regarding click, view and other shopping behavior.
- Purchase: Transactional data, made of who, what, when, how much and through what channel.
- Response: Response history, in relation to specific promotions, covering open, click-through, opt-out, view, shopping basket, conversion/transaction. Offline response may be as simple as product purchase.
- Channel: Channel usage data, not necessarily limited to shopping behavior.
- Payment: Payment and related delinquent history — essential for credit purchases and continuity and subscription businesses.
- Communication: Call, chat or other communication log data, positive or negative in nature.
- Movement: Physical proximity or movement data, in store or store area, for example.
- Survey: Responses to various surveys.
- Opt-in/Opt-out: Sign-up specific 2-way communications and channel specific opt-out requests.
- Social Media: Product review, social media posting and product/service-related sentiment data.
I am sure some will think of more categories. But before we create an exhaustive list of data types, let’s pause and think about what we are trying to do here.
First off, all of these data traceable to a person are being collected for one major reason (at least for marketers): To sell more things to them. If the goal is to predict the who, what, when and why of buying behavior, do we really need all of this?
The ‘Who’ of Buying Behavior
In the prediction business, predicting “who” (as in “who will buy this product?”) is the simplest kind of action. We’d need some PII (personally identifiable information) that can link to buying behaviors of the target. After all, the whole modeling technique was invented to rank target individuals and set up contact priority — in that order. Like sending expensive catalogs only to high-score individuals, in terms of “likely to respond,” or sales teams contacting high “likely to convert” targets as priorities in B2B businesses.
The ‘What’ of Buying Behavior
The next difficulty level lies with the prediction of “what” (as in “what is that target individual going to buy next?”). This type of prediction is generally a hit-or-miss, so even mighty Amazon displays multiple product offers at the end of a successful transaction, by saying “Customers who purchased this item are also interested in these products.” Such a gentle push, based on collaborative filtering, requires massive purchase history by many buyers to be effective. But, provided with ample amounts of data, it is not terribly difficult, and the risk of being wrong is relatively low. Pinpointing the very next product for 1:1 messaging can be challenging, but product basket analysis can easily lead to popular combinations of products, at the minimum.