This weekend, in between shuttling kids around for soccer and lacrosse practice and attempting to watch some college basketball, I came across a really interesting string of thoughts about the state of digital analytics from my colleague, Jason Thompson, on Twitter.
I’ve been wrestling with some thoughts about the future of digital analytics, and those thoughts scare me but i think they need to be talked about.
— jason thompson (@usujason) March 23, 2018
If you read the full thread, you can see how passionate he is about digital analytics and how concerned he is that it is so often dismissed. Just like Jason, I too am passionate about digital analytics, and concerned that executives are leaving value on the table. When done correctly, digital analytics can benefit any organization.
With the news about how Cambridge Analytica assisted Donald Trump in his eventual election to the presidency, more people than ever before are worried about how their personal data is collected and used. Facebook is seeing strong repercussions — its stock price has plummeted 15%, and the hashtag “#DeleteFacebook” has appeared on Twitter over 400,000 times. Numerous articles have come out warning users of what data Facebook is collecting, how they are collecting it, and who has access:
All of this negative press can have some drastic consequences for digital analytics professionals. As an example, see what Europe is doing with the General Data Protection Regulation (GDPR) that is going into effect in less than two months. Europe is taking their data privacy seriously and creating steps for users to ensure they own their own data. For digital analytics and marketing professionals, this will make it more difficult to collect and store third party data on their users, meaning that first party data will become much more valuable.
Another article I came across this weekend was about the purchase of the company Zodiac by Nike. Zodiac was created here in Philadelphia by Peter Fader, a professor of marketing analytics at the Wharton School at the University of Pennsylvania. I have had the pleasure of speaking with the team at Zodiac on multiple occasions. The work that their company did on customer lifetime value was groundbreaking.
I was surprised to see that Nike was the company that purchased them. I just assumed either Google, Adobe, or IBM would come calling for them to add their software and IP to their suite of offerings.
This was the final piece of the puzzle that led me to my eureka moment about the future of data analytics.
When thinking about Jason Thompson’s tweets on how digital analytics needs to get a bigger seat at the table with executives, the data privacy movement, and finally, Nike’s decision to purchase a company that focuses on customer lifetime value, a lightbulb went off in my head.
Digital analytics should focus on more on retaining customers and less on obtaining customers.
Sure, obtaining customers is important but keeping the customers you already have should be your number one goal. Research has shown that increasing customer retention rates by 5% can lead to increased profits from anywhere between 25% to 95%.
However, in the work I have done with dozens of clients as a digital analytics consultant, most of the focus is on obtaining clients through digital marketing and using data to educate the marketing department where to spend their money. In my opinion, not enough time, effort, money and work is put into retaining the customers organizations already have, and I am not sure why. (According to a recent survey by EConsultancy and Lynchpin, only 28% of marketers are using analytics to increase customer lifetime value.)
As we move into an age where data privacy is paramount and targeting users based on third party data is frowned upon, it is going to be of utmost importance to retain the customers you currently have. This is the perfect arena in which digital analytics can thrive. You don’t have to rely on third party data to target new customers or enhance the user profiles of your current customers — you can have a direct relationship with your customers and the data they generate on your owned properties.
What is even more wonderful is if you actually provide the user with a better customer experience and a deeper relationship, they will be more loyal to you and perhaps become advocates. By using data to improve the customer experience and deepen that relationship you will be able increase your retention rate and in turn, increase your profit.
This is where we need to focus digital analytics in the near future. We need to understand how to retain our customers.