How consumer data can help brands predict what customers want without losing their trust
Every purchase can tell a company about the customer. This information gives marketers an opportunity to understand consumer behavior and create experiences that feel relevant. However, there is a point where personalization can be uncomfortable. The challenge for marketers is understanding how to use the information without making consumers feel like they’re being watched.
In a previous post I wrote on How Brands Dominate Google Search Results, I discussed how understanding search intent allows brands to create content around what consumers are really looking for. Search behavior gives marketers valuable information, but consumers can show more than just what they’re typing on Google. Their purchasing patterns can give clues about their preferences and what they need next.
What Our Habits Reveal
Consumer behavior is shaped by habits. One way to understand these behaviors is through the habit loop, which is cue, routine, and reward. A cue triggers behaviors, a routine is the behavior itself, and the reward reinforces the pattern.
For marketers, seeing these patterns can help with predicting consumer behavior. A customer may not tell a company that their needs change, but changes in their normal purchasing will show that.
Target’s current privacy policy shows a look at how extensive behavioral communication can be. Target explains that it may collect commercial information like products purchased, browsing and search history, and make predictions from collected information. The company also explains that it can combine information from different interactions to personalize the experience.
The Power of Prediction
A really good example of predictive marketing with Target was when they attempted to identify customers who were pregnant. Instead of waiting for customers to purchase obvious baby products, they looked for changes in shopping patterns associated with pregnancy. Pregnancy is a major life event where shopping routines will change, so retailers have an opportunity to become part of a consumer’s new habits. Target could identify customers who might need baby supplies and reach them at a good time. But, knowing what a customer might need and knowing how to communicate that are very different. When pregnancy promotions made Target’s knowledge too obvious, it risked making customers uncomfortable. The solution was that baby related offers could be placed with promotions for unrelated products to make the marketing look less targeted.
Personalization and Privacy Tradeoff
This example shows an important issue for marketers in that consumers want relevance, but they also want control. Research from McKinsey on personalization and consumer privacy found that consumers concerns depend on the type of information being tracked. Tracking purchases and searches may generate less concern than things like access to private communications. The psychology behind personalization matters just as much as the technology. A well targeted message can still fail if it makes the customer question how the company knew something. This does not mean brands should stop using this data. It just means they should use it strategically so that it makes shopping easier and more relevant.
Consumer data gives marketers the ability to anticipate what they might want next. This creates a lot of opportunity and responsibility. The best marketing doesn’t need to show everything a company knows. The goal for marketers should always remain the same in using consumer insights to create value while still maintaining trust. Understanding consumers can make marketing more effective and respecting consumers can make long term relationships.
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