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You Are Being Crushed by Data and Losing the Consumer

Market to me -- not to those like me -- and deliver it at the time and place that best suits me. If you don't, you'll lose me, because someone else will deliver.


Last week, an incredibly business-savvy 13-year-old Girl Scout set up shop outside a medical marijuana clinic to sell the beloved cookies. Talk about knowing your market.

As the story went viral, I was struck by the stark reality of today’s consumer marketplace. Applying an analytical, data-driven strategy is so central to competing that even a child can understand it. However, personal choice and individualism fueled by instant gratification are the new tenets of almost everything “consumer.” Until recently, crafty marketers could come up with a handful of creative campaigns targeted for 20 or so consumer “personas” and, voila — that need was cultivated, and a profitable margin followed. Then the ability to digitize so many iterations of consumer behavior became pervasive. Marketers raced to target groups of people and make it seem individual. Consumers became spoiled and expectant, while competition among marketers turned into a war waged with data. Lower prices and creative packaging no longer reign supreme.

The fact is that every consumer expects to be presented with the goods and services that reflect them as a person, not a persona. Consumers not only are more likely to respond to personalized messages, they’re more likely to spend more than those who do. According to a recent study by Conversant, 55 percent of senior-level marketers reported that personalized media programs resulted in increased sales, and 60 percent saw more repeat purchases. Consumers are becoming more receptive to personalized marketing, as 55 percent think website recommendations based on their past browsing and shopping behavior are “desirable to receive.”

Market to me — not to those like me — and deliver it at the time and place that best suits me. If you don’t, you’ll lose me, because someone else will deliver. Just ask Blockbuster.

When Netflix first entered the market, it catered to an increasingly “convenient” society, one that no longer needed stringent time limits, special trips or very high out-of-stock risks. And almost immediately, I presume, the company got smart — really smart. The delivery model gave way to readily available Internet superhighways, touching consumers anywhere, especially as mobile devices filled our handbags and pockets. On the back end, the company realized that consumers were telling them a lot more about their preferences and segmentations. What started as around 10 genres at your neighborhood movie store ballooned to 76,897 “micro genres” available in your living room. Now the company has started creating its own series based on viewing data, offering entire seasons for viewers at once, because consumers don’t like to wait — opening the door for more production, more revenue and more brand loyalty — a true data disruption.

Even our snack food — the essence of an impulse buy — has become an intense, data-driven affair. Veteran San Jose Mercury News columnist (and now BloomReach colleague) Mike Cassidy shared a story with me about a company called NatureBox, which is building data and forecasting systems to personalize shipped boxes of healthy snack food. Former Netflix CFO Barry McCarthy is on that company’s board. Last year, NatureBox co-founder Gautam Gupta told Re/code reporter Jason Del Rey, “The idea was to start with discovery, really get consumers associated with the brand and quality of products that we’re sending and then allow them to replenish their favorites.” An easier, more efficient and personal way of understanding discovery and buying behavior is a good formula for success.

Do consumers who easily discover products assisted by data-driven insights personally have a tendency to form loyalties and buy more? Internal data from BloomReach strongly supports that notion. Consumers who engaged with the search box on a website as a way for faster discovery were as much as six times more likely to convert to a sale, while revenue per visitor across that same set of retailers for those using the search box was almost three times greater. Clearly, saving time through informed discovery equates to better business.

And then there’s Amazon, a company that, at its heart, is a data company. Even with millions of products and millions of customers, it still finds ways to comb through an endless array of “1s” and “0s” to figure out what you want, and get it to you when you want it. Notice the trend? It’s all about “you.”

It’s also important to note that Amazon throws billions of dollars at technology every year, and consequently many industries are feeling the pinch. So we shouldn’t be surprised that the old way of marketing has to evolve at a faster pace.

All is not lost, though. It’s time to embrace data engineering as a critical element of every strategy and get to know the “yous” that make up your existing and potential customer base. It may seem impossible — and it is, if you think about doing it manually. It’s not that human creativity doesn’t have its place. In fact, it should be celebrated. It’s just that man enhanced with the power of data is the ultimate machine.

It’s like that android character Data, from the “Star Trek” series, who could communicate with millions of beings and make data-driven decisions in milliseconds. He was a human creation, a reflection of human beings, yet computationally amplified at a scale capable of inhuman abilities. And, likewise, as we look to build our businesses further into the future, we must understand that the ability to connect with every potential customer requires an amplified application of what we could only dream of doing ourselves. We are now an economy of individuals, an economy of data.

Raj De Datta is CEO of BloomReach. Most recently, he was an entrepreneur in residence at Mohr-Davidow Ventures, and, previously, he was a director of product marketing at Cisco. Reach him @bloomreachinc.

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