Retailers reach for multichannel customers
ALTHOUGH THE INTERNET has revolutionized the art of gathering customer data, understanding customer behavior remains beyond reach for some retailers. Now that the Internet constitutes an important channel for consumers, the challenge to retailers lies in obtaining what is known as a 360-degree customer view. Because customers now buy goods from both brick-and-mortar stores and online storefronts, retailers are scrambling to match data from multiple channels to construct complete marketing profiles of individual customers.
Customer data matching can be difficult and costly, and many companies are carefully evaluating its importance to their overall business. Specialized Bicycle, in Morgan Hill, Calif., this year began selling bikes online as a complement to its traditional reseller channel, and is currently evaluating the feasibility of having an integrated database.
"The full view of the customer would be of great value," says Sean McLaughlin, marketing director at Specialized. "Right now, we can learn some things in an aggregate sense, like inferring what products are doing well in different channels."
"We definitely have customers that want to have a relationship that spans different channels," says Steve Krause, CTO of Personify, a Web-based marketing and analysis firm in San Francisco that specializes in gathering customer data online. "They want to compute the value of each customer, but it is very expensive, and very hard."
Later this year, Personify will announce its Constructa product, a solution designed to address the needs of companies looking for complete customer profiles. At the same time, the company questions the need in the general marketplace.
"It's not all worth it, especially when the economics of pure Web data is so much better than traditional data," Krause says.
In some senses a truly accurate and utterly complete view of each individual customer is unattainable, but with each step taken toward the ideal, retailers get closer to their customer base than they've ever been before.
"The 360-degree view is something that you probably never actually capture, but you're better off for trying," says Philip Russom, director of business intelligence at Hurwitz Group, in Framingham, Mass. "But there is a conventional wisdom that says that any kind of leading recommendation you can make to a customer will lead to a demonstrable lift in sales."
A number of data-aggregation companies are trying to help businesses reach the 360-degree view by specializing in matching multichannel customer data. Acxiom, in Little Rock, Ark., has long been a pioneer in collecting complex sets of customer marketing data. The 30-year-old company is exploring the new frontier of matching online data with offline data via a product called AbiliTec.
Using a dizzying array of algorithms and percentages, AbiliTec can narrow down buying information for individual users to an acceptable margin of error. The program is so accurate that it can recognize customers changing their maiden names and customers with multiple addresses and credit cards.
"They've got records that would scare you," Russom says.
Russom says information of this kind has been collected for decades by companies such as TRW and Acxiom. Typically vendors will let a customer "opt in" to marketing data collection. There are some less-than-scrupulous marketers out there, but in general the information is harmless.
"We're dealing with this brand-new problem of customer data integration," says Andy Griebel, business development leader of Acxiom's AbiliTec group. "We want to be able to do this in a real-time fashion, so that when someone is at a store or calling a call center, we can tie their profile in and serve them better. It sounds simple, but it's not."
Another approach in obtaining the complete customer view has more socialist roots. The Customer Profile Exchange, or CP Exchange, is a way of passing standard customer data from vendor to vendor in a cooperative manner. Using XML standards, CP Exchange has the capability of constructing an incredibly rich profile of a customer because it collects buying patterns of a customer on multiple and disparate Web sites. As the profile gets passed on between participating sites, it continues to build and become more complete.
"This is a standard way to profile customers and share data," says Matt Cutler, CP Exchange co-founder. Cutler is also the co-founder of NetGenesis, a Cambridge, Mass.-based online marketing software and consulting company that counts a number of click-and-mortar retailers among its clientele. "This is one piece of this puzzle, and there is no magic bullet yet. But there is a priority in getting this complete picture of your customer."
Analysts think the retail industry will continue to pursue the 360-degree customer view as the Holy Grail of personalized marketing. The Internet has given retailers a thirst for a previously unheard-of depth of customer data.
"[The] 360-degree [model] represents the high end of the spectrum, to the point where it is almost undoable," Russom says. "But the idea that every customer touchpoint constitutes a valuable channel of information is real. And there are so many reasons to want the 360-degree view that it will always be a goal."