Jim Conning of Royal Mail Data Services (RMDS) provides some practical advice for how to use customer data in promotions, based on new research
Accurate, comprehensive data on customers and prospects is the essential bedrock of successful promotional marketing campaigns. But as it becomes more vital to marketers, new challenges, such as ensuring compliance with the General Data Protection Regulation (GDPR), are growing in importance, according to a new study from Royal Mail Data Services.
Based on research with UK brands and marketing agencies, the survey highlights four trends:
GDPR compliance is marketers’ number one concern
Nearly three in 10 (29%) of respondents listed GDPR compliance as their biggest worry, up from just 12% in the 2016 study. Breaking this down, a quarter (25%) of brands saw GDPR compliance as their greatest challenge, rising to 35% among agencies.
The study drilled down to ask brands and agencies how confident they were that their internally held customer data was GDPR compliant. The positive news is that 78% of all marketers were either “very” or “reasonably” confident that it complied with the new regulation – although worryingly, 11% were not confident, including 2% who did not know if they were compliant or not.
The barriers to using marketing data effectively
Marketers are facing churn rates that see nearly one in five (19%) customers leaving every year. Consequently, finding and acquiring replacements remained the number-one objective for marketers, with 42% citing it as their biggest challenge. However, this has fallen from 52% in 2016. Interestingly “analysing customer data”, a new option for 2017, has emerged as the top concern for just under a quarter of respondents (24%). Clearly, boosting analytics capabilities is a fast-emerging priority for brands and agencies alike.
Companies also seem to be giving up on the idea of reactivating dormant customers, rather than searching for new ones. In 2014 nearly one-quarter (24%) said this was their number-one marketing priority, but by 2017 the figure had dropped to just 6%. This could be linked to worries about poor-quality customer data or whether dormant customer data is GDPR compliant and can be used in marketing to this group.
Turning data into successful campaigns
How can marketers effectively use the huge amount of data they now hold? What is holding them back?
When asked where the gaps were that need filling, the results mirrored overall marketing challenges. The same number of respondents (24%) pointed to analysing customer data as their biggest issue, a figure that rose to 28% within brands. This demonstrates a clear need for greater analytics skills and capabilities, particularly for brands.
Perhaps reflecting that they already had analytics skills, the biggest area for improvement that agencies flagged (29%) was access to better-quality customer data. Brands also struggle to embed data cultures within their businesses. More than one in five (21%) said that a having a better understanding across the organisation of the importance of good-quality customer data would improve business performance.
When it comes to driving successful campaigns in terms of response and conversion rates, marketers agree it is all about data and how you use it. On a scale of one to five, the four top success factors reported were quality of contact data (4.6), segmentation and targeting (4.6), personalised content (4.4) and timing (4.3). In comparison, creative design scored just 4.0 out of 5. These top-four factors all rely on good-quality data and analytics in some way, and marketers reported that they had all increased in importance dramatically since last year.
Ensuring better data quality
Poor-quality customer data was cited as their biggest challenge by nearly one in five (18%) marketers. The main drivers of poor-quality data were basic errors – specifically out-of-date information and incomplete data. This was above factors such as duplicate data, spelling mistakes and data in incorrect fields.
Marketers understand that data is a living entity and quickly becomes out of date. This is leading to them focus on more formal, regular data cleansing – 22% do this daily or continuously. However, one-third (33%) still have no formal processes in place to clean customer contact data, although this has dropped from 37% in 2016. This means a sizeable minority are putting themselves at risk of data-quality issues – and potential GDPR investigations over non-compliance.
Poor-quality data hits business performance – marketers estimate that the average cost of poor-quality customer data is 6% of annual revenue. For major brands this is measured in millions of pounds – and excludes any potential fines for GDPR non-compliance, which can be as much as 4% of global turnover.
Data is the lifeblood of promotional marketing campaigns – having the best ideas in the world mean nothing if you can’t reach the right customers and prospects. However, as the Royal Mail Data Services research has found, marketers face key challenges around GDPR compliance, analytics, and quality that they need to overcome if they are to deliver successful campaigns that boost the bottom line.
A full copy of the report, “The use and management of customer data”, can be downloaded from the Royal Mail Data Services website.
Jim Conning is Managing Director of Royal Mail Data Services (RMDS), which is the specialist data business of Royal Mail Group. It provides organisations with customer contact and address data, data-quality, addressing and marketing services. It is committed to developing new ways for customers to look up, capture, validate and use contact and address data more effectively. Royal Mail Data Services helps organisations improve customer data quality, marketing performance and customer engagement.