The future of customer engagement and data driven marketing

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insight Copyright © Ikano Insight 2016. All rights reserved.

The future of customer engagement

& data driven marketing

1



Introduction

Customer engagement and data driven marketing is changing, and

businesses need to transform their thinking to meet changing consumer

demands as well as keeping up with new technologies and ways to

capture and use data. But, delivery of best in class customer experience

remains at the heart of this. So how is this shaping businesses today?

Are they keeping up, or are they struggling to evolve?

Ikano Insight conducted qualitative & quantitative research to

understand current views around customer engagement and data

driven marketing as well as future trends. An online questionnaire was

sent by email to marketing, loyalty and data professionals across

industries including retail, hospitality, leisure, and food & beverage.

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Contents

Key Findings .............................................................................. 3

The Results ................................................................................. 5

Q1. Is customer loyalty dead? ............................................... 6

Q2. Which aspects of customer loyalty, engagement &

insight add the most value to businesses? ........................ 8

Q3. Do businesses currently understand and value

customer insight? ................................................................... 10

Q4. How well does customer data support decision-

making in businesses? ........................................................... 11

Q5. Which types of customer insight would help

marketers and data professionals to do their jobs

better? ....................................................................................... 12

Q6. Who actually utilises campaign results or customer

insights? .................................................................................... 13

Q7. How many businesses have an overall customer

experience budget? ............................................................... 15

Q8. How are businesses currently using customer

loyalty, engagement and insight? ...................................... 16

Q9. What are the barriers to achieving great customer

engagement and insight? ..................................................... 17

Q10. Which trends will affect businesses in 2016? ......... 18

Summary.................................................................................. 20

3



Key Findings

Customer Engagement & Loyalty

Customer loyalty is very much alive and kicking, but

93% of respondents believe that it needs to change

and evolve in response to increasingly sophisticated

customer expectations around personalisation and

omni-channel customer experience.

Having a solid customer engagement strategy and actionable customer

insights were seen as the highest priorities for all respondents when it

came to adding value to their organisations. However, only 10% of

organisations had a single ‘holistic’ customer experience budget. In

most cases the budget was split across traditional departmental silos;

the drawback of this approach is that the results also indicate that

customer data and insight is not being shared across departments and

applied throughout the whole business. This of course leads to decisions

being made from different perspectives, with conflicting priorities.

Budget is seen as one of the primary barriers to greater levels of

customer engagement, which impacts on other barriers including a lack

of customer data, or the technology to access this data.

Use of actionable Insight

It seems that whilst aware of its importance, few

respondents have a view of the real impact of their

customer insight and engagement activity.

All respondents had some kind of campaign management or CRM

system, but the data and insight coming from these systems is not used

to inform the way their whole business was run. Given the increasing

number of companies who claim to be ‘customer centric’ or ‘put the

customer at the heart of everything they do’ this is perhaps surprising,

and may suggest that more organisations pay lip-service to the idea

rather than display the behaviour within their business.

4



Data

There is a sense that businesses are generally data

rich but information poor. Data is being collected but

is not formulated or presented in a way that is useful

and relevant across the organisation.

Only 10% of respondents claimed that their organisation was fully data

driven whilst, at the other end of the scale, 20% had only recently

started to use customer information to support decision-making.

Encouragingly, 70% of those surveyed now have some kind of simple

dashboard combining customer data and other business performance

data, showing a promising acknowledgement that the two data sources

should be used in partnership.

The Future

89% of respondents identified customer

segmentation and targeting as the most prominent

trend that would impact upon their business in 2016,

highlighting awareness of the importance of providing personal,

relevant and meaningful communications and experiences to connect

with consumers.

Our survey highlights that businesses are aware that customer

loyalty is changing – and that change is being customer-led.

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The Results

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Q1. Is customer loyalty dead?

Loyalty is still very much alive and kicking…

…but 93% of respondents believe that the concept of customer loyalty

needs to evolve in order to better engage today’s consumers. Today,

building customer loyalty is less about the psychology of collecting

points, but is about engaging with customers on their terms consistently

through all channels. Areas where respondents felt that customer

loyalty needed to evolve were around:

Moving from incentives to service

Whilst incentivising purchases are still core to many loyalty

programmes, many customers now want more than this and

expect a seamless omni-channel customer experience across all

touch points, regardless of device. Service can also act as an

incentive; for example giving your most loyal customers VIP

treatment with personal shopping experiences or access to

exclusive events.

Creating a more personalised approach

Consumer preference is now at the forefront of building

engagement; from letting them choose when and how you can

interact with them, personalising everything from their name and

product recommendations on your website, through to offering a

choice of rewards from your loyalty programme.

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Finding insights from a wealth of data

With a sea of big data at your fingertips it can be difficult to

know where to begin, so make sure you’re only collecting data

that is relevant - ask yourself ‘So what? What’s the data telling

me?’ This is your first step to producing actionable insight, and

together with a greater knowledge of customers’ needs and

desires you have the possibility to segment and target different

customer groups with relevant messaging in order to drive the

relevant behaviours and increase the ROI of your marketing

spend.

Driving repeat purchases

The insight gained from analysis of customer spend behaviours

will build a picture of their characteristics, enabling you to

develop better targeted triggered communications with the right

product at the right time to drive repeat purchasing. Combine

this with a loyalty programme, and you will further incentivise

and encourage your customers to spend more per transaction

and increase the frequency of their spend.

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Q2. Which aspects of customer loyalty,

engagement & insight add the most value to

businesses?

In order of importance, respondents rated which aspects of customer

loyalty, engagement and insight would add the most value to their

business:

1) A customer engagement strategy

2) Analysis of customer data to deliver actionable insight

3) Campaign management & CRM

4) A simple dashboard that combines business and customer

data

5) A tool to manage customer loyalty

6) CRM software

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70% rated customer engagement strategy as their first priority, with

analysis of customer data to deliver actionable insight a clear second

priority at 69%. This isn’t too surprising, as engagement and customer

insight work hand in hand. By conducting data driven marketing

activity you can track customer engagement patterns and behaviours

across multiple touch-points. This allows refinement and targeting of

marketing efforts through CRM campaigns (rated as the 3rd most

important) - for example, creating relevant content that makes your

brand more ‘sticky’ to the customer.

Interestingly, whilst campaign management and CRM (segmentation

and targeting) were rated 3rd place, actually owning a piece of CRM

software was rated as least important in terms of adding value to a

business. Without the software it would be impossible to complete any

segmentation or targeting, suggesting that businesses may be

considering outsourcing their CRM activity.

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Q3. Do businesses currently understand and

value customer insight?

Interestingly, no respondents said that their business was already using

customer insight to inform the way their whole business was run. 60%

were making some use of customer data but felt they could better

utilise the learnings they received.

No respondents said that customer insight wasn’t a priority, implying

that whilst most are aware of the value of insight there is still a way to

go in terms of integrating and using it to make meaningful decisions

across businesses.

Customer data should provide the insight to understand customer

patterns and behaviours so that you can align your entire business

around actual customer needs and demands. According to research by

Deloitte, customer centric businesses are 60% more profitable than

those who don’t focus on the customer.

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Q4. How well does customer data support

decision-making in businesses?

Just 10% of respondents said that their business was already fully data

driven. 20% had just started to understand their customer data whilst

the vast majority (70%) felt that more could be done to use and

understand the customer data that was available to them.

Similarly to the previous question, we can see that businesses are

aware of the value and variety of customer data available to them but

they are not actively using it; and it is apparent that data driven

decision-making is an emerging concept. The results may highlight a

possible knowledge gap on how to apply insight to data, or how to

aggregate data sources - suggesting that businesses may need

external support or training to create a bigger picture from their data.

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Q5. Which types of customer insight would help

marketers and data professionals to do their

jobs better?

Clear themes emerged in how customer insight can be used more

effectively to:

Map the full customer journey

Understand how and why customers use different channels

Link CRM activity to purchase patterns, customer

behaviours and value

Learn which factors drive the purchase decision, including

behavioural triggers and the range of competitors that

customers consider on the path to purchase

Understand the help and assistance customers are looking

for

A key pattern which runs through the above themes is linking data

and/or customer research (which probably already exists within the

organisation) to the reality of customer behaviour; understanding why

and when customers purchase and through which channels.

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Q6. Who actually utilises campaign results or

customer insights?

Responses show that within most businesses, there is an absence of

leveraging customer insights across the organisation. Just 60% of

businesses use customer insights and campaign results within their

marketing department - the one business area that you’d most expect

to be using insight to drive campaigns and strategy.

Insight doesn’t just come from simple click-throughs or social media

likes; but from far richer sources such as purchasing and web

behaviours, customer reviews, call listening, feedback surveys, on-

premise activity and wider consumer trends to name a few. These

sources of data sit across the whole business and so it’s remarkable

(but probably not unexpected) that very few departments make any

use of the valuable insight that could be gained. Take the

merchandising team for example; knowing which products are selling

best in a particular store or which ones receive top reviews is surely a

simple and yet incredibly powerful insight to inform their decisions?

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Insight can drive a business’s future growth by ensuring that all

departmental budgets are spent efficiently and effectively to deliver

maximum revenue.

The results highlight that departments are very much operating in silos

and data is not shared or used cross-departmentally. To utilise the full

value of customer data, it needs to be made relevant to all support

functions as well as customer-facing parts of the organisation.

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Q7. How many businesses have an overall

customer experience budget?

Just 10% of businesses had a single customer experience budget

that covered all aspects of customer engagement.

For 80% of respondents, the budget was split across different

departments within the organisation, reinforcing our opinion that many

departments are still operating in silos. The previous question showed

us that not all of these departments have access to the same

information and the same ‘customer view’, and so the customer

experience budget is likely to be spent in an uncoordinated way.

It’s now time to invest in teams that focus on optimising the customers’

journey, interactions and experience across all of the different touch-

points. As we’ve discussed, customer experience impacts on all areas

of the business and it is crucial that a culture of customer centricity is

reinforced and maintained to ensure that you are an agile, customer-

focused and forward-thinking business that can withstand the changing

consumer landscape for years to come.

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Q8. How are businesses currently using customer

loyalty, engagement and insight?

All respondents use some kind of CRM campaign management to

segment and target customers; with a nearly 50:50 split between those

who do this in-house vs. those who outsource. In addition to this, over

50% outsource their CRM software. Whilst some respondents are

happy to run their own campaigns, few have their own in-house tools

and so rely on external suppliers to provide them with the technical

software and/or campaign management.

78% coordinate their customer engagement strategy in-house; however

an equal percentage do not use any tools to manage customer loyalty,

suggesting that they do not run a loyalty programme. This is an

interesting response considering that many respondents highlighted the

importance of becoming a data driven organisation and also their

belief that customer loyalty needs to evolve – all of which could be

delivered through a modern loyalty programme which engages the

customer on their terms.

17



Q9. What are the barriers to achieving great

customer engagement and insight?

Budget was the biggest barrier to achieving greater customer

engagement and insight. Whilst there are many variables in how much

a customer insight and engagement strategy will cost you, there are

options available for all budgets.

44% said that knowledge gaps, lack of customer data and not having

the right technology in place all got in the way of achieving greater

levels of customer engagement, all of which may be a reflection of

budget constraints.

Not having suitable technology in place is linked to a lack of customer

data - to collect and analyse data from disparate sources you must

have technology which is fit for purpose and ultimately delivers you

with a Single Customer View to understand your customers and drive

behaviours. Data driven marketing is completely measurable, and its

use allows you to prove a case that for every £1 spent you could

achieve a £6 return (as some of our partners have).

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Q10. Which trends will affect businesses in 2016? 89% of respondents identified customer segmentation and

targeting as a key trend that would impact upon their business in

2016.

Segmentation provides you with a view of your core customer types

and enables you to understand the best way to drive value; which

channels to use; how to retain customers; and even who to ignore -

creating a long term contact strategy for each customer type, which of

course will feed into your campaign targeting.

Whether in-store, online, or on-the-go; customers now expect

personalised, relevant and streamlined experiences across all channels.

Technology brings with it a plethora of data and targeting

opportunities, including demographic segmentation to send timely and

contextual communications using location-based technologies: to the

right people, in the right place, at the right time.

To segment successfully, always start with the data and ensure that all

relevant data is considered (e.g. calls into your call centre, social media

data, purchasing history). The better you know your customers and

communicate accordingly, the more likely they are to stay loyal.

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Q10. Which trends will affect businesses in 2016?

(continued)

Linking social media engagement data to customer data within a

CRM system was another emerging trend.

This is an area that we are particularly interested in, and have recently

published a guide on Linking Social Media & Customer Loyalty. The

data leveraged from those who opt-in to share their social media

activity with you creates a more sophisticated picture of your

customers, as well as a depth of understanding which can be used to

segment and target specific groups. But, for a customer to grant you

access to their digital lives, you must give them something in return, for

example rewarding them for engagement or connecting their social

media profile to their online account.

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Summary

Customer loyalty needs to change and evolve in response to

increasingly sophisticated customer expectations, and so a solid

customer engagement strategy and actionable customer insights are

essential for businesses to meet this demand.

Rather than operating in silos, insight and budget needs to be shared

and allocated accordingly in order to deliver customer experience

excellency. When collecting data, make sure that it drives the

actionable insights which support decision-making and helps you to

deliver personal, relevant communications to your customers.

The successful businesses of the future will be those who

genuinely become customer centric and understand the impact of

all major business decisions on their customers.



Marketing

The future of customer engagement and data driven marketing