Posted on: Tuesday 27th of March 2012
During the heydays of CRM (Customer Relationship Management) some companies began to suffer a dangerous delusion. Bedazzled by the enormous potential of the transaction and behavioural data they were now collecting (think Tesco Clubcard), they began to believe they were on the verge of knowing all they needed to know about their customers. Some even began to boast that they knew what their customers were going to do before the customers themselves.
They had fallen for the God Quest – the quest for omniscience. Perfect customer information was just around the corner, they believed. With perfect information would come perfect predictability and perfect control. Companies would know exactly what to do, and say, to each customer to maximize life time value and therefore profitability.
All they had to do was to get the last remaining bits of data . . .
They never got there, of course. After a number of years (and many millions of pounds of wasted investment) the Grand Dream was quietly dropped and forgotten, to be replaced by more mundane and achievable things like operational efficiencies in billing.
But now the God Quest is back with a vengeance under the new name of Big Data. Take a look at this magnificent prose from Ajay Agarwal, Managing Director of Bain Capital Ventures.
The ‘holy grail of closed loop marketing is finally here’, he tells us.
“A web business can mine thousands of signals from its prospects based on the hundreds of actions a consumer might make on a website (checking a price, looking at an image, reading a review, typing in a detailed search query, etc.).
“The holy grail of closed loop marketing is finally here. With sophisticated technology and analytics, marketers can link spending on customer acquisition directly to a set of downstream customer actions — whether those actions take place on the web, on a mobile device or in a physical location.
“Consumers with smartphones are conveying their intent while scanning QR codes, downloading mobile coupons or simply walking into a store with their location-aware device.
“Social networks are providing a new source of demographic data that, combined with Facebook’s Open Graph, offer marketers a new treasure trove of information.”. .
This is poppycock from start to finish. What Bain are selling as ‘the holy grail of closed loop marketing’ is actually a very broken and dysfunctional chain – made up of one weak link after another. Here are some of these weak links.
Purpose Gathering click stream or location data does not ‘convey intent’ as Agarwal claims. We do many different things online. We may be having a casual conversation, pursuing a deep and abiding passion, investigating a passing trivial interest, or researching an important purchase. Clickstream data has no way of distinguishing between these very different motivators, resulting in the creation of shed loads of noise.
Persona We all live our lives switching from one role to another. Am I researching that trip to Paris as a romantic holiday or boring business trip? The clickstream stalker doesn’t know. But I do. And why on earth should I tell him?
Process I may be revealing my purpose, and my persona, in an email I send to a friend. Mr Agarwal may have a really clever text scrutinizing algorithm to divine – or guess – what my real purpose is, and what role I am acting under. Whether or not I find it creepy that he’s reading my emails, there remains a question: Is an ad generated by an algorithm how, where, and the form I want to gather the information to pursue my purpose? If it isn’t even if it is ‘perfectly relevant’ there is still a very good chance that I ignore it.
Content He thinks that by mining my ‘signals’ he understands my ‘downstream actions’. But what is he doing as a result? Sending me marketing messages that are designed not to help me make a better decision, but to help him sell me something. As a result, I probably don’t trust what’s he’s saying anyway. Which means I’m likely to pay very little attention to it (and far more attention to a decision support service that I do trust).
Relationship It’s worth looking again at the language Argarwal uses. He fails to recognize that he’s dealing with human beings. He treats ‘consumers’ as mere eyeballs to be shepherded down a funnel. Real people get intrinsic satisfaction from a sense of empowerment – of being in control of the process they are undertaking. Yet the process he‘s describing is one of disempowerment, of reducing the individual to a mere target of someone else’s activities.
For all of these reasons, Agarwal’s ‘holy grail of closed loop marketing’ is just another example of an old, discredited fantasy – the God Quest – being disinterred and recycled.
The God Quest was first sold as a CRM sales pitch. “Follow our recipe for perfect customer information and you too will be able to maximize the money you make out of your customers!” It wasn’t really about suppliers maximizing the profits they made from their customers. It was about systems integrators and consultants maximizing the profits they made from their clients: Selling them a fantasy that had no chance of ever coming true.
Now we’re seeing exactly the same sales pitch, come round for a second airing. The only things that are different are the jargon (Big Data) and the focus of data excitement (online vs transaction data). Apart from that, nothing else has changed.