9 Ways to Use Data to Understand Your Customers (Video)
ISM Founder and President Barton Goldenberg discusses how to leverage data effectively in creating targeted customer experiences in this clip from CRM evolution 2018.
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Read the complete transcript of this clip:
Barton Goldenberg: Here's some very good and effective ways at understanding a customer, whether you're looking at a lifetime value or you're looking at lead scoring, you're looking at look-alike modeling. Giorgio Armani is a good story. Lots of good stories. About 51 percent of all buyers of Giorgio Armani clothing are men; 49 percent are women. You might not have thought that, but it’s the truth. The question that was posed at the time--it was a few years ago--was do we understand our customers well enough so that we could create what's called a look-alike model, which is understanding the profile of the customer, the buyer behavior, and then take that profile and find more customers like him. That's why it's called a look-alike model, OK?
So we built the models. We built the algorithms, and we really knew the customer very well, and we built the model. At the time it wasn't the right segmentation, but it's what they did. Top 20 percent, next 20 percent of sales, third, fourth and fifth, so they had five segments. You take the Rockefellers and that family, that's the top 1 percent because they buy every Giorgio Armani clothing from the day it's made.
We then took the next kind of 19 percent out of that 20. We clustered and looked carefully, and we noticed that there were characteristics in the next 20 percent, the second tier, that were incredibly similar to the first tier, but we had never approached them in the same we approached the first tier. So you know what we did? We started to approach the second tier the same way we approached the first tier, and we started to get a lift of the second tier moving into the first tier. Everybody understand what we're doing here? That's called look-alike modeling, and it works, and it's very interesting.
As a sailor, I always like these kind of expressions. Everybody gets so much information all day long they lost their common sense. Remember, I said it's not the information. Not in this year's Bermuda America's Cup, but the one in San Francisco, Team Oracle was down 8-1. If they lost one more, they'd lose the whole World Cup. The skipper was an Australian, very clever and a good sailor, and Oracle told him they used fin technology, right? The fin came out of the water at a certain degree, and you went very fast. Oracle's computer said you have to run at this particular wind angle, which means the way the boat is headed. The skipper was saying, "The kiwis aren't ... It's not the way they're going. It's not right." "No, no, no. It's the computer, the technology. It knows what it's doing. You just follow along."
Loss number one, loss number six, loss number eight. We got one more, we're out. He couldn't sleep that night. He wrote the story; it's a very well-known story in the sailing world. He said, "I don't give a darn what the computers say. I know when I looked outside the boat I didn't see my fin rising, and I saw his fin rising. I'm not taking 38 degrees. I'm taking 42." He won eight consecutive races and took the World Cup.
We can get overwhelmed with data. There's all kinds of machine learning and artificial intelligence and all kind of stuff that's helping us, but the bottom line is you've got to do data analytics. You've got to put your stake in the ground. There's lots of good things, but make sure you take your head outside the boat every once in a while. Make sure you're making sense.
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