Savvy marketers are rethinking their tech and data strategies to double down on precision marketing following COVID-19, say McKinsey researchers.
After COVID-19 hit the world, a lot changed in consumer behaviour. For example, between March and August 2020, one in five consumers switched brands, and seven in ten tried new digital shopping channels. The retail sector also experienced “ten years of growth in digital penetration in a matter of months”.
However, even though there has been a surge in data because of these behaviour shifts in the digital space, it has not “provided marketers with substantially better understanding of their customers, because their companies’ outdated data modeling isn’t able to capture these shifts with the necessary granularity and speed”.
This is the conclusion of McKinsey researchers who have laid it all out in a recent article.
The researchers found that “rather than using the data to try to better target customers and tailor messages, many marketers have reverted to mass communications and promotions”.
But those companies which played smart and moved to precision marketing (using hyperlocal data) benefitted from the trend, increasing their core product sales by more than 10 percent.
McKinsey suggests that organisations that hone their precision marketing “can drive significant customer acquisition during periods of convulsive change” but to do this brands need to update their modeling—”from pulling in new sorts of data to retraining algorithms—in order to both keep pace with changing needs and expectations as well as anticipate shifts in customer behaviour”.
According to McKinsey, precision-marketing models recognize and draw inferences from behavioural patterns that can immensely benefit companies. Unfortunately, most organisations are not ready to capture this kind of data. For example, an algorithm based on the precision-marketing model might find out that “customers who make more than two visits to a store’s website within a two-week period are 30 percent more likely to make a purchase”. However, if you as a company don’t have the wherewithal to capture this insight, you are not going to even know about it, let alone benefit from acting upon the insight.
That’s why companies need robust data that can also allow them to generate better competitor insights, which in turn can help them target the potential customers with tailored messaging, content, and offers.
What do companies need to do?
According to McKinsey, companies need to do at least three things to tap into the power of precision-marketing:
- Invest in tech that learns at scale (develop technology capabilities that “can read and interpret signals of consumer intent and consumer responses to marketing messages and then feed them back into the marketing engine”);
- Cut down on unproductive areas (such as event sponsorships, traditional TV advertising, and programmatic display based on outdated terms) and reallocate the savings into analytics–the savings thus generated could be reinvested into tech and funding of data-driven programmes
- Deploy agile marketing in remote settings (as remote working becomes the new norm) – for instance, convert “physical war rooms into virtual ones, creating additional points of contact to support adherence to agile protocols (such as sprint check-ins by video, for example) and the use of collaboration tools.
The researchers conclude by saying that organisations that prioritise their precision-marketing efforts can turn the COVID-19 crisis into a great opportunity of change. “By capturing new data, searching for new behavioral relationships, and enabling rapid experimentation, marketers can seize granular growth opportunities and enter the recovery with significantly greater ROI and resilience,” they said.