Data now and in the future part II: Building solutions for the remembering self is wrong

Disclaimer

I am in between jobs and searching for new opportunities and this article is a reflection of my personal opinion and experience, not any company I may represent.

What is this article?

This article is the second chapter in a series of three articles about the use of data and technology in digital communication. It will further elaborate on how we use data in a wrong way both in terms of trying to understand how we should design our communication as well as how we evaluate it. Furthermore I will give you a list of activities you should perform going ahead to secure a more effective use of data.

In the last article in the series I will talk about where we are heading with data and, why among many other things, Black Friday will no longer exist in the future.

Why am I writing this article?

For a quite significant number of years, I have been working on using data and technology to help a large variety of companies optimize their digital communication and leverage business opportunities. Those who know me, know that I am a vibrant proponent of using data and technology at the core of your communication strategy. One of the key reasons to use data and technology, is to support customer-centricity and customer experience. To deliver the most relevant communication to each potential and existing customer at just the right time, using the optimal amount of resources. We all agree that how we use data, is to try to better support the customer journey and to put the customer in the center of your business strategy. Now that is all good and we are all agreeing that this should be the common goal, using data. We have however been lying to ourselves, if we think that the way we use data is customer centric. In fact, I would go so far as to say data today is for the most part extremely company-centric. We as consultants fail to use the right datasets to understand user interaction throughout their customer journey and we fail in reporting on results.

If you have not yet read the first article in the series, here is a link: https://www.dhirubhai.net/pulse/data-now-future-part-i-why-we-wrong-customer-ulrik-sandholt/

The land of a million silos

When looking at the data we collect today, the most central issue is that "companies collect it", and as such every single company gather massive amounts of data around consumer interaction with their brand only. Thus, we have unwillingly created an unfathomable amount of data silos each containing a miniscule but entirely accurate percentage of a fraction of the entire customer experience trying to solve a problem. We do not have a coherent picture of how anyone actually fully solve any problem they have, unless it happens on one website only. In my experience, this is extremely rare. Just consider finding a holiday and imagine for a minute how many websites you use to find the next family holiday. No one in the world understands what you are doing. Momondo might understand how you search for flights, TripAdvisor how you research activities, Airbnb how you find accommodation and so forth. No one understands the full experience, not even after 25 years of structured information development on the internet. I think this is yet another clue that the internet in its current form, is not effecient. We should have all this data and structure, but navigating it is still a messy back and forth labyrinth of endless marketing efforts to misguide you away from your goal.

Even though we want to, and many try to make accurate predictions on consumer interest in companies’ solutions or products, the datasets we base them on are simply vastly statistically insignificant, since they each holds less than 1% of the truth. However, no one seems to be willing to accept that and as a result our predictions become a mere optimization of something that is random from the beginning. The customer experience again suffers significantly and going from 0,95% to 1,12% in conversion rate, becomes a massive success.

In fact, the most effective way data is used today, is for exclusion. Who are not going to keep shopping with a company, who are not going to buy this product (because they just did), who are already customers and should not get ads for a membership and who are not a part of our most treasured customers. All valid goals for data usage, but also incredibly unambitious. We cannot treat every single consumer as if they were about to buy something. Just try and remember how annoying it is, when you walk into a store and the clerk working there tries to sell you something in every other sentence, instead of helping you.

We need to use non siloed data sets. I will get back to that.

We judge our effort by forgetting the competition

It has taken very long time, to make companies use Digital Analytics as a cornerstone of their digital decision making, and God knows, in the majority of companies today, it is still very rarely used for anything other than as an advanced reporting tool. And that is the second objection I have, to how data is used today, in this article.

We use data as a reporting tool to keep us comfortable when thinking about how we secure progress against digital KPIs. And of course rightfully so. It is how we ensure business targets are being met. My qualm with this is that business target are suffering from the exact same idiotic flaws as our support of the customer. We THINK they are customer centric and provides full insight, but in reality it is quite the contrary. Think about this.

If I asked you to be the best 5.000m runner at your company and you currently ran 5.000m in 22 minutes and 43 seconds, what would you do to prove to me that you were achieving that goal?

That’s right. It wouldn’t be how many seconds you shaved off your best time since the same month last year. You need to know the market size. How good is the best time currently? You compare your time progress to the progress of the competition, and see if you are gaining on the competitors. Who cares if you have improved your time with 25%, if the orthers have improved 40%. If you think that is a huge success, you are going to keep setting up your company to fail, by repeating activities that loses market shares rather than gaining them.

You need to understand the competition and how well they are doing. How can we not have asked these questions before? I do not know how many times I have seen some retailer brag about them having a 55% improvement in revenue YoY and making that sound like it was Godsend. First of all, is 55% even good? Second of all, how much money did you spend getting that 55%? And thirdly, what was your vantage point? It’s not hard to improve complete bullshit with 55%, but it is hard of you already have 75% market share.

Again, we fail to use data as it was intended and I feel a pattern is emerging. We love to talk about ourselves and we forget about the context. Forget about the surrounding world, because we think, why worry about something we cannot manipulate. Our position in relation to the world around us, and not just in relation to where we were last month. Again our lack of data is to blame. We use what we have, and as the internet is designed as a siloed experience with siloed data collection, our understanding of the world is obviously a siloed one.

The conflict of the remembering and the experiencing self

My last point when it comes to data, is our inability to question the very significant difference between opinion and behavior. The reason that is a very big issue, is that when we actually decide to talk about the external customer journey that lies outside our little company data silo, we do so almost exclusively in examining opinion. And mostly so, through qualitative studies, interviews and surveys. Very rarely do we do hardcore observation and when we do, due to cost restrictions we do it at a very small scale. The issue with relying on qualitative data when designing experiences to fit in the customer journey is quite significant. Unfortunately, it turns out that we as human beings have quite significant issues relying our memory and as a rule of thumb we remember less than 1% of our lives. I can only recommend watching this TED talk with Daniel Kahneman , if you would like to dive deeper into the realms of memory vs experience. I can really recommend it. The basic point is that there is an inherent conflict between your remembering and experiencing selves, and as such thinking about what makes you happy is something entirely different that what actually makes you happy. A great example of the conflict between memory and experience, is in a survey conducted every year by our beloved FDIH colleagues, where they ask consumers what web shops they have used most and based upon these answers rank the most popular web shops in Denmark.

Up until I started to dive into these issues of what I call “the quantifiable customer journey”, we had to accept this as truth. However a string of data suppliers have shot up over the last years, that actually collect data from millions of devices from applications with full consent on consumer devices on what web pages consumers visit. This data, which is by the way the full anonymized browsing history and obviously massively more statistically significant than a consumer survey, shows a very different picture than what consumer memories paint in surveys such as the FDIH web shop survey.

This is the list you get of the 10 most popular web shops for Danes when asking them. https://www.computerworld.dk/art/250922/her-var-de-20-mest-anvendte-webshops-i-danmark-amazon-gaar-tilbage-blandt-de-danske-kunder

1. Zalando

2. Just-Eat

3. Nemlig.com

4. H&M

5. Matas webshop

6. Coop.dk

7. Amazon

8. Wish.com

9. DSB

10. Danske Spil

But when we actually look at actual behavior in these 3rd party behavioral data sets of Danish shoppers for 2019, the story is entirely different. For instance Wish.com is around 35th on the list, not 8th and Elgiganten.dk is by far the most popular. HM.com was significantly further down the list, and even more interesting, if you pooled Amazon.de, Amazon.co.uk and Amazon.com together, they were in contention to be the biggest web shop in Denmark. That is without even having a Danish domain. To put it shortly, the numbers didn't at all match the numbers when asking people.

When I saw these numbers the first time, I just thought “Wow, Facebook really has power over your perception of popularity”. The Wish.com ad spamming, might not change behavior as much as we think, but we think it changes behavior a lot more than it does. But I also thought, this is mind blowing. Almost like when I saw and analyzed the connection between on and offline behavior in the Matas omnichannel project and realized just how much the web shop drives physical revenue, and what that meant to how we work with ROAS.

We have been wrong all this time when researching for design thinking and use so much interview and focus group data. We have to consider if memories of experiences holds any value at all in terms of supporting design thinking and designing communication to support experiences. I immediately thought of Daniel Kahneman and behavioral economics. The memories of our experiences are vastly different than the experiences itself and as such, we are basically lying to ourselves about what we prefer, unless very significant or recent.

Data is a curse as well as a gift

Not only was this a massive difference between observation and behavior and should make you think twice about asking people in surveys about insignificant experiences a long time ago, but it should also underline the importance for you to think differently about how you evaluate your success and how you successfully support customer experience. You cannot use the wrong data for the wrong purpose, and accept the result, just because you like the way it looks. This happens way too often. You cannot judge your own success by looking solely upon your own progress, when the market might have progressed more.

Enough of this crying, I want a solution

First, you need to promise yourself that after you have finished this article, you will think differently about data and change how you use it. You need to stop relying solely on information you collect yourself. You need to start looking at 3rd party data providers for statistically significant insight into how you compare to the competition. In order to understand how many consumers visit your competitors and with what frequency and how many also visit your web site, how soon after or before, you need large scale data sets. I know 90% of you out there claim to know who your main competitors are, but you will be surprised. The competitors you had, might not be the ones you thought. You need to think different. Remember it is the ones who are crazy enough to think they can change the world, who end up doing it. Here is a list of activities you need to complete

1. You have to make identification a strategic top priority. You cannot rely on browsers identifying users any longer. More than 50% of your customers are already using a browser that disallows 3rd party cookies and restricts 1st party cookies. What technologies should we use, how should we integrate. You need a platform to support the future and adequately.
2. Identification rate should be a top 3 KPI from tomorrow. The percentage of your visitors that you can identify in your CRM and who logs in. If you fail, you will lose to the competition.
3. You need to identify what experience you can offer your customers and potential customers going ahead that will allow you to identify them frequently and in large volume. The loyalty club very much alive, but there are a plethora of ways to achieve it. What can you offer your customers that they will happily let you identify them for?
4. Identify every single touch point, where you can identify your customers (email links, sign up forms, transactions, app links, sign ins, etc) and identify every opportunity to get the three different consents. Cookies, data and marketing consent. Without it, you are doomed.
5. Connect your digital id to your customer ID, by setting the digital id to the CRM id in your digital platforms. Remember that the purpose of data is to identify, measure, analyze and activate consumers and behavior. If you do not have identification across data silos, you will not successfully measure, analyze and activate using data.
6. You need to quantify the entire customer journey. It is not enough to ask consumers what they remember they did before they came to your website. The brain cannot remember and they only tell you what they think they did. Not what they actually did. Use solutions carefully. Understand where in the full journey you can make a difference and where you need to improve your current communication. You need to build an experience that does NOT just support the remembering self.
7. Understand the full customer journey and consumer profile for your own customers AND your competitors customers. Again use 3rd party data as well as your own 1st party data. You need to understand who is taking your customers away from you and who is delivering your customers to you. You need to accept that they decision is most likely made anywhere else than on your website.
8. Monitor competitor performance and benchmark your performance against that. It is not enough to just look at how you improve your own performance. Remember the data from all the devices? You can actually calculate the engagement marketshare for any industry across all webshops and compare it to previous years. Reporting should be about gaining market shares as well as increasing revenue.
9. If you are a manufacturer of products sold through distributors, this should be even more relevant to you. You need to understand how you fare on distributor websites compared to the competition, so you can prioritize what distrributors to focus on and what distributors not to focus on improving product exposure at. It is not a walled garden.

And there are already good cases out there. Matas does a great job with identification and their loyalty club, McDonald's has built an impressive digital ecosystem around a very physical product and Fitness World has discovered that an app can make all the difference in the world when it comes to frequent and volumetric identification. Still, however I have yet to see anyone actively understand and support the entire journey effectively. We are apparently still doing baby steps in 2020. I am yet to see anyone embracing big data in journey behavior. There is a very good reason for that. One that will change everything in the future. One that will make distributors of comparable products, the gas stations of the 21st century and quite likely dramatically challenge Googles business model. That is what the last article in the series is about. Where are we heading with data in the future, will companies still collect it and what will AI revolutionize, no matter if you want it, or not.

Thanks for reading.

And remember if you read this far, do not be afraid to reach out. I have too much time to enjoy the sun these days. I'd love a cup of coffee. My phone number is 61957543.