How Does 'The Great Reshuffling' Affect Your Customer Data Management?
This past year, millions of people have hit the road to escape COVID-19 hot spots, to move closer to family, or because they couldn't afford to live where they lived anymore. According to Pew Research Center, 5% of all U.S. adults have moved permanently or temporarily because of the pandemic, and another 17% know someone who has.
This 'Great Reshuffling,' as Zillow calls it, is a boon to real estate, but a major headache for marketers and CRM teams everywhere trying to keep their customer data current. Is it a lost cause? Not if you have the right identity-based framework in place to support your customer data management and help you refresh your customer database in real time.
We’ll get to that, but first:
How bad is the customer data problem?
Population migration to the suburbs and to the warmer states of the country isn’t a new phenomenon. If anything, people used to move twice as frequently when the U.S. Census started to keep track, and the trend has been steadily downward since the mid-1980s.
But the past year has added a sense of urgency and unpredictability to the equation. In 2020, it wasn’t just kids going off to college anymore, or new graduates moving to their first job in the city, or retirees moving South.
My next door neighbor, a young graduate, lost his job early in the pandemic and moved back to his parents' in North Dakota to weather the storm. He's not alone—for the first time since the Great Depression, Pew reports, more 18-29 year-olds live with their parents than on their own or on campus. The couple across the street moved too, but for a different reason. Their employers are all-in on remote work, so they packed everything up, sold the house and moved to Florida. Why have a fake palm tree for your Zoom background when you can have the real deal, right?
Now, someone else is moving into that house across the street, with a very different background and different shopping habits. Was 2020 a blip in the historical trend, or does it represent an inflection point and a whole new dynamic for population migration in our country? My bet is that we’d better be prepared for more volatility in the long term. It’s high time for retailers and consumer brands to invest in a CRM infrastructure and a customer data management strategy that can keep up with the millions of change-of-address requests piling up at the post office. ‘Current Resident’ is not a name you want in your CRM records.
Customer data management is a problem on top of a problem
Even without this new volatility in customer data, CRM databases are notoriously difficult to keep up to date.
It's not just mailing addresses. Every year, more than 30 million people change their primary phone number, and two million legally change their name. Email addresses, social media accounts, TV subscriptions—everything you know about your customers can change without notice. No data attribute is safe.
Salesforce reports that virtually all (90%) customer database records in your CRM are incomplete, and according to IBM, 20-40% are duplicates. If you do nothing, it takes just two years for 60% of the data in your CRM to become obsolete. Analytics teams spend nearly half their time scrubbing and normalizing data instead of doing analysis and modeling.
What’s the impact of bad CRM data?
IBM says it can be 30% of sales. BCG points out that in some product categories, like beauty, up to 45% of sales is attributable to marketing. When the CRM data is off, it trickles down to everything the company does. From analytics to audience segmentation, planning to logistics, targeting to personalization, bad data affects your relationship with customers up and down the funnel. And, ultimately, your bottom line.
Are CPG brands affected too?
CPG brands are an interesting case because they traditionally sell their products through retailers. Their CRM system, when they have one, caters to their B2B needs: their customers are category buyers and distributors, not consumers. Even when they adopt a consumer-focused CRM system to help them manage rewards programs or event promotion, that system is generally limited to a very small fraction of their overall consumer base. In a recent study, BCG and Google estimated that the CRM databases of the largest CPG brands in the U.S. are one-tenth the size of the databases of their retail peers.
Does that mean that they care one-tenth as much about what’s going on with their customers? Far from it. In fact, CPG brands are some of the most proactive players in the burgeoning area of data clean rooms, safe spaces where two partners (a CPG brand and a retailer, for instance) can share data and explore synergies without jeopardizing data security or compromising users’ privacy. And many are ramping up direct-to-consumer (DTC) channels to retake some control over customer relationships.
According to Shopify, DTC already accounts for 6.6% of all CPG sales in the U.S. and for 40% of the growth. For traditional CPG brands, the objective with their DTC initiatives is not to replace their brick-and-mortar or online retailer partners, but to collect insights that can help them better position their products across all channels. What they’re lacking in scale, they’re working hard to make up in depth.
Unified identity is the antidote
For large retailers trying to reconcile online and offline channels, and for CPG brands trying to develop first-party data for the first time, the key to success is to use a coherent identity framework to tie all the pieces together.
Customer data always flows in from dozens of different channels. Even a pure-play DTC brand has data flowing in from email lists, customer service, online reviews, or sponsored events. Each of these touchpoints is an opportunity to strengthen the customer relationship, but it’s also a potential breaking point, especially now that third-party cookies and other device IDs are on the way out. Today more than ever, companies need a unified identity framework to validate their customer data records against a trusted source of truth, enrich those records at every turn, activate them across all their marketing and sales use cases, and ultimately use what they learn to optimize all their marketing investments.
Until recently, those capabilities weren’t available. Marketers and CRM managers had to cobble together point solutions that weren’t designed to work with one another and ended up further fragmenting their fragile data ecosystem. That’s not the case anymore.
What benefits can you expect?
We did a data loss analysis recently with a key client that was particularly compelling.
We focused on just four pieces of marketing technology at that company: an identity resolution module, CRM, onboarding, and data management platform. Between each of these four systems, we measured a 25% data loss due to different types of identity mismatches. You might think that’s an acceptable level of data loss, but the combined effect was that they could only trust 42% of the customer data flowing through their marketing activation programs. Unified identity brought it up to 86%.
I’m not saying that the hard work of managing customer data is gone entirely. People will keep moving to the suburbs and across the country, pandemic or not, and they’ll keep changing their email address until we’ve run out of domain names. With dozens of new consumer channels, new privacy rules, and radical changes in the digital identifiers ecosystem, you need to be prepared to start working with more volatile data.
But for brands and retailers who recognize the limitations of their existing customer data management infrastructure and are ready to do something about it, there’s a new breed of identity-based solutions that’s rolling off the assembly line.
Please contact us and we’ll show you the way.