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Build Richer Customer Relationships Using 'Small Data'

Aug 28, 2013 (05:08 AM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=240160513


We live in an age of data. Every two days, we create as much information as we did from the dawn of civilization until 2003. Such an explosion has happened because everyone now has the tools to share content with pretty much the entire world.

For businesses, there's more information about customers and potential customers than ever before. This means that every interaction between a business and a consumer is crucial because the impact of both positive and negative interactions can be amplified by that person and his or her social network. The traditional rules of marketing don't apply anymore. Customer engagement matters more than reach because the right engagement with the right people can have a greater impact than any Super Bowl advertisement. So, how can companies create personal engagement?

There's a temptation to adapt traditional analytical marketing techniques like segmentation, propensity modeling, etc., and bring them into the big data era. So, companies and management gurus are focusing on how all the data that customers are producing about themselves can be turned into models that then serve up the right content, offers and pricing. This type of marketing definitely needs to be done, but it isn't really going to create engagement. Yes, the offers will get better, but you're still treating customers as "segments" or "personas," rather than people. To have meaningful interactions, you need to use what I call customer "small data" such as tweets, blog posts, LinkedIn job title updates, questions on Quora and pictures on Pinterest, to name a few examples.

[ If social media makes you squirm, be aware: Ignore Facebook At Your Peril. ]

Credit card companies have always been leaders in data-driven marketing, but they are missing the boat on customer small data. Recently, I received an email offer from a credit card company offering the type of rewards I would want based on my purchasing habits, Web browsing habits and demographic. But did that interaction create an emotional connection between me and the company? In a word, no. Imagine instead that the company used the same data to send me a gift certificate for my favorite restaurant to thank me for being a customer. I would have felt entirely different about the company and it wouldn't have cost them any more than the rewards program they offered me.

Becoming a customer company today requires a fundamental shift in thinking. Traditional thinking is focused on using information and data to present the right offer or message. But the platforms that customers use to express themselves aren't just data sources, they're places where companies can really listen to customers. People like wine and social media expert Gary Vaynerchuk have talked about the Thank You economy and how personal engagement is the key to becoming a successful business. The shift is from presenting offers to segments to engaging with people via their small data. Companies as varied as Comcast and KLM have shown what happens when you engage directly with customers.

So, how can you use small data to become a customer company? First, listen to the questions people are asking about your company or industry on Twitter, LinkedIn or Quora, and try to help them in a personal way. Vaynerchuk talks about how he spends hours on Twitter answering people's questions about chardonnay and chenin blanc. Find the equivalents for your business. Follow your customers and try to personally thank them. Recently, we saw that one of our customers was going to Europe (based on his tweets) and sent him a travel charger. He was thrilled and thanked us on Twitter.

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As a result, 18,000 of his followers now have a positive impression of our company, Appirio. This is just one example of what can happen when you focus on small data.

Customers are still people and there is no substitute for the power of knowing things about them like their alma mater, their favorite bottle of wine or how they like to spend their weekends. With social media, this level of customer intimacy is possible.

Don't listen to those who say that knowing customers as individuals is not possible in today's world of online, arms-length transactions. Social media and the Internet make it possible to create personal relationships at scale. If a cable company like Comcast and an airline like KLM can form personal relationships with customers, so can you.