You know a conversation is going in the wrong direction as soon as someone says “Well … I just assumed”. For example, when you’re talking to your wife and you say “I just assumed you’d be fine with my parents staying with us when they came to visit” or “I just assumed it’d be ok if we missed our date night this week since I’m busy at work”, even if you “win” that argument, you’ve definitely lost something in the relationship.
Today’s marketers make a lot of assumptions about consumers
As my co-founder Andy pointed out in a recent post, digital marketing these days is really about monitoring people. Companies monitor the online behavior of consumers – the websites they visit, the articles they read, the things they like on social media, etc – and marketers use that information to make assumptions about what content, products, or offers those consumers may be most interested in.
But we all know from personal experience that marketers get this wrong much more often than they get it right. If the consumer had the ability to question the marketer directly about this, I could picture the marketer saying something like “I just assumed you’d be interested in this email since you viewed that article the other day” or “I just assumed that ad would be relevant to you since you liked that post”. And then the consumer might respond with a note of derision, “You know what happens when you assume, right? You make an ‘ass’ out of ‘u’ and ‘me’.”
That’s the real tragedy of all these assumptions being made. They lead to bad digital experiences for the consumer and a lot of wasteful marketing spending for companies – a true lose-lose situation.
Knowing consumers rather than assuming you know them
As our team really dug deep into this dilemma, we came to a simple conclusion. If brands want to get to know their customers, they should just talk to them. This hasn’t historically been possible with websites, mobile apps, or emails and it hasn’t been cost-effective to do at scale through web chat or phone calls. With the advent of conversational chatbots on popular messaging platform such as Facebook Messenger, however, marketers can for the first time talk to all of their customers in an intimate way and get to know them directly as individuals.
For example, in the case of L’Oreal, the Beauty Gifter chatbot builds a rich profile of each user – including their skin type, skin concerns, product usage patterns, and makeup preferences – to drive personalized product recommendations. This first-party data is also stored in a CRM system to help drive future customer interactions. Not surprisingly, when asked, 82% of users said that they love the experience – a real win-win for both the consumer and the company.
Every company wants consumer insights and personalization
When we talk to companies, particularly in the beauty industry, two consistent threads through all of those discussions are the imperatives for consumer insight and personalization. We’re seeing this for a number of reasons:
- Reducing dependence on second- and third-party data. In defense of marketers, they generally recognize that making assumptions about consumers based on second- and third-party data isn’t a great approach to building a relationship with that consumer. They also point to the black-box nature of second- and third-party data with respect to not knowing exactly how the customer segments and attribution were created, how accurate the information still is, and therefore the applicability (or not) to how they intend to use it for targeting. Furthermore, most savvy marketers see the writing on the wall from new data privacy regulations in the EU and elsewhere and know it’s just a matter of time until some of today’s data sources go away entirely or are significantly curtailed. By collecting and using their own first-party data, these marketers can get ahead of that curve while maintaining full control over the integrity and application of their data.
- Better understanding path to purchase, engagement drivers, and customer lifetime value. As a recent Think with Google piece pointed out, “today’s top marketers are moving away from thinking about success in terms of return on ad spend and are focused instead on long-term, company-wide growth. To do that, one of the things they’re doing is making a shift to prioritizing Customer Lifetime Value (CLV) … We’re seeing this because it’s getting easier and easier to capture first-party data and to create a dynamic CLV calculation of customers and audiences … Often [brands] pay a lot of money for inaccurate, stale third-party data that doesn’t really tell them anything about their audience, and it’s hurting them where it counts – the bottom line.” We’re seeing in our own work with brands that Conversational Marketing can be utilized to better understand consumer-level paths to purchase (whether in a single conversation or as the result of multiple interactions over time), drivers of initial and repeat engagement, and individual CLV.
- Treating consumers as individuals. In a recent survey, Forrester Research found that personalization is a top priority today for more than two-thirds of brands. If anything, I’m surprised the number is that low. McKinsey calls digital personalization at scale “Marketing’s Holy Grail” and has found that personalization can reduce acquisition costs by as much as 50%, lift revenues by 5-15%, and increase the efficiency of marketing spend by 10-30%. BCG, for their part, predicts that over the next five years in three sectors alone, personalization will push a revenue shift of some $800 billion to the 15% of companies that get it right. Returning to L’Oreal for a moment, we saw 27x higher engagement with notifications from the chatbot compared to traditional email marketing due to personalizing content based on what we’ve learned about the consumer in prior conversations.
Of those who have been given much, much is expected
If you read our key takeaways from Decoded Fashion & Beauty, you know that consumer insights, personalization, and conversational marketing were all hot topics at the event. But companies need to be careful. As Amanda Tolleson, CMO at Birchbox, reminded her peers, “customers are happy to share information but when they know you have it, they demand you use it in the right way. If you ask but don’t circle back in a relevant way, you’re making things worse”.
Tracy Sun, Co-Founder & VP of Merchandising at Poshmark, added: “Preferences change. Personalization is never done. It’s essential to keep the conversation going.” So, as companies get to know their customers and collect valuable first-party data, they need to be aware of the heightened expectations of consumers to use that data responsibly and to continually enrich the customer experience – thus even further widening the experience gap between brands that have embraced customer obsession and those that just talk about it.
Dear brands, please get to know me and treat me as an individual
As both a consumer myself and as a practitioner in this new category of Conversational Marketing, I issue my urgent plea to brands to do the right thing for their consumers, which isn’t always the same as the easy thing. Don’t spy on your customers and make assumptions about them. Take the time to get to know your customers and treat them as individuals. Your efforts will be richly rewarded – and, with the help of companies like Automat, it’s easier than ever to get started. So let’s chat!