marketing's new imperative: customer identity management - Janrain

MARKETING’S NEW IMPERATIVE: CUSTOMER IDENTITY MANAGEMENT

By Andrew Jones

Custom research by Altimeter Group on behalf of Janrain

MARKETING’S NEW IMPERATIVE: Customer Identity Management Executive Summary Marketing today is different because consumers behave differently than in the past. They expect relevancy and are empowered with both access to information and platforms to praise or complain. As a result, marketing is moving away from untargeted push-messaging to building customer relationships through personalized experiences. The foundation to achieve that goal is Customer Identity Management. One-to-one marketing requires identity. Only by being able to view the customer as an individual, through some unique identifier, is it possible to personalize a customer’s experience. Yet, in today’s cross-channel world, it is necessary to consolidate data from multiple channels to gain a more holistic view of the customer. And a unified customer identity is necessary to deliver consistent and coordinated experiences across all customer touchpoints. Those organizations that know their customers — and know them well — will be best suited not only to survive, but to thrive. They will deliver relevant content to their customers at the right time and place because they know who they are, what they want, and when they want it. Those companies that rely on limited customer data and a fragmented customer identity will discover their customers have moved on to build relationships with companies that offer them what they want.

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About This Research This custom research report is sponsored by Janrain. While the research in this report may have been informed by Janrain, all findings and analysis are independent.

TABLE OF CONTENTS The Fragmented Customer Journey Has Disjointed Marketing

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Consumers Have More Identities Than Ever, Creating Data Silos

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Marketers Have Lots of Data But Lack Context

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ROI of Customer Identity Management: Personalized Engagement 7 for Short- and Long-Term Gains Identity and Personalization: Past and Future

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Conclusion and Getting Started

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THE FRAGMENTED CUSTOMER JOURNEY HAS DISJOINTED MARKETING

The customer journey has become incredibly dynamic, moving across channels and devices that continue to multiply. And for each new channel consumers adopt, marketers are expected to follow with an appropriate engagement strategy. As a result, marketing departments and technology have become specialized and even disjointed. In order to provide coordinated experiences across customer touchpoints, marketers need to understand who customers are, what they need, and when they need it. And, most importantly, they must be able to act on this insight. This process can be distilled to a cycle where marketers aim to “know” consumers in order to “engage” them most effectively (see Figure 1).

FIGURE 1 MODERN MARKETING PROCESS: KNOW AND ENGAGE

KNOW DATA FROM INTERACTION

CUSTOMER IDENTITY

CUSTOMER

COORDINATED DISTRIBUTION

ENGAGE Source: Altimeter Group

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RELEVANT CONTENT

CONSUMERS HAVE MORE IDENTITIES THAN EVER, CREATING DATA SILOS With the adoption of each new channel, consumers create a new identity and new data. Ten years ago, this was largely limited to an email address, phone number, physical address, and perhaps a loyalty number. Cookies and IP address were also used, although primarily for advertising. However, with the advent of social media and mobile devices in particular, the number of these unique “identities” has spiraled out of control. Figures 2 and 3 show just a partial list. Most companies today are engaging with audiences

on social networks like Facebook, Twitter, Google+, LinkedIn, YouTube, Instagram, SnapChat, Yelp, WhatsApp, Line, Reddit, Flickr, blogs, and private communities. Meanwhile, time spent on phones and tablets has surpassed time spent on PCs, and we are at the advent of a surge of new connected devices, like our cars, watches, glasses, home thermostat, and more.1 Plus, 86% of time spent on mobile devices is on apps rather than traditional browsing, meaning it’s harder to tie together a series of actions that an individual takes.2 Each of these channels represents a new identity and data silo. Although consumers are spending more time and creating more data on these channels, using the data is a significant challenge without the context of a consolidated identity. It would be valuable, for example, to learn that a Twitter user is interested in a product or service and then put him into a related email-nurturing

FIGURE 2 SOCIAL NETWORK PROLIFERATION: ESTIMATED MONTHLY ACTIVE USERS OVER TIME

1,4B

Facebook Twitter

1,2B

LinkedIn

1,0B

Pinterest

800M

Vine tumblr

600M Line

400M

Instagram Snapchat

200M

WeChat WhatsApp

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Sources: Facebook, Google, Instagram, Line, New York Times, TechCrunch, Twitter, Wall Street Journal, WhatsApp

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2014

campaign. Yet to do that requires a connection between two identities: Twitter and email. Most companies lack the ability to consolidate identity across channels in this way. Blake Cahill, Global Head of Digital at Philips, says: Big data is important today and will be more

important tomorrow. Large organizations need to move away from silos of data into one data

store with the right capability and people around it to draw out the insights you need. It’s also our approach from a customer record perspective.

You can’t have multiple customer records. They need to be harmonized across and accessible

Although 87% of CMOs expect to integrate customer touchpoints across all channels within five years, it comes as no surprise that only 16% say they do so today.3 Cahill says, “The customer of tomorrow expects you to know who the heck they are and what [products] they have. That’s a big transformation as the world throws off more identities and more data.” Gartner recently found that 89% of companies plan to compete primarily on the basis of the customer experience by 2016.4 Companies will have to address the proliferation of these identities and customer silos before they can hope to provide an integrated customer experience across all touchpoints.

throughout the business.

FIGURE 3 GLOBAL INTERNET DEVICES 20M 18M 16M 14M 12M 10M 8M 6M 4M 2M 0 2004

2005

2006

2007

2008

Personal Computers (desktop and notebook)

2009

2010

Smartphones

2011

2012

Tablets

2013E

2014E

Internet Of Things

2015E

2016E Smart TVs

2017E

2018E

Wearables

Source: Business Insider Intelligence, with data from Gartner, IDC, Strategy Analytics, Machina Research, company filings, and Business Insider estimates

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MARKETERS HAVE LOTS OF DATA BUT LACK CONTEXT With the explosion of customer data in CRM, eCommerce, web analytics, loyalty databases, social listening, and other systems, enterprises have troves of information about their customers. While each marketing silo has some kind of mission related to big data, each typically pursues it individually. As a result, companies often understand customers in only a limited context and rarely holistically as individuals. This approach is akin to the blind men around the elephant (Figure 4). Consumers are sharing and creating more data about themselves than ever across these channels, which represents an opportunity to know who they are and what they care about better than ever before. However, as Mark Fiske, Sr. Director of Global Digital Marketing at Ancestry.com, points out, “When you don’t have one tool to rule them all, you have channel managers optimizing to a different view of the truth, creating disjointed messaging.” As long as customer data is disconnected, its potential value remains locked exclusively inside the originating silo.

ROI OF CUSTOMER IDENTITY MANAGEMENT: PERSONALIZED ENGAGEMENT FOR SHORT- AND LONG-TERM GAINS Consolidating customer identity makes insights actionable across channels. Tools like marketing automation are starting to tie things together when it comes to coordinated engagement, but the value of these tools is limited to the data they are based on. For example, batch-and-blast emails, based on littleto-no segmentation, don’t have high open rates. High degrees of segmentation and personalization, on the other hand, have been shown to dramatically increase open-rates and click-throughs.6 At a time when marketers are spending more on technology every year,7 many are leaving money on the table by not investing appropriately in customer data and identity. ROI for Customer Identity Management comes in the form of both short- and long-term benefits. Longer term, traditional marketing campaigns consisting of one-way push-messaging will largely disappear. Marketing will be based on relationships because we will understand who our customers are and

FIGURE 4 BLIND MEN AND THE ELEPHANT

Companies often understand customers in only a limited context and rarely as individuals.

Image Source: Wikipedia

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what they care about. Today’s marketing structure and engagement technology is campaign-oriented though, which will not immediately change. In the short-term, Customer Identity Management can help impact established metrics like open-rates, clicks, downloads, leads, and (un)subscription rates, as described above.

Marketing Technology (Martech) vs. AdTech: Identity Enables Personalization While advertising is technically a segment of marketing, ad-tech has developed very separately from martech for several reasons. For one, advertising is built on an anonymous customer identity rather than a known, or authenticated, one. A second key difference is that advertising can be seen as “renting the eyeball” vs. “owning the eyeball.” CMOs are pushing a lot of advertising dollars to effectively “rent” customers over and over, but comparatively little on tools to help manage customer identity to retain customers and build relationships with them. In 2014, the expected worldwide advertising spend is $133B. Compare that with expected marketing software spend of $20.2B.8 Of the two budgets combined, that’s only 15% spent on marketing software. Each marketer will have to decide based on business goals the value of acquiring new prospects vs. nurturing and retaining existing customers. Yet the disproportionate spending is surprising, since Adobe has found that 41% of online revenue comes from returning purchasers, even though they represent only 8% of visitors.9 Once a customer is known, they already have brand familiarity, and possibly affinity, and can be engaged again without additional acquisition cost. One of the advantages of anonymous user data, and a reason it has been the primary driver in personalization tactics to date, is that it can be used in aggregate. A variety of ad networks and vendors use pooled anonymous data in order to know and target cookied users in ways one company on its own never could. Yet being anonymous also limits the types of data that can be used and how it can be enriched.

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There are stricter privacy regulations around known identity, and data cannot be aggregated the same way. But a known user profile can include Personally Identifiable Information (PII) and be continuously enriched with known customer data (i.e., progressive profiling). As users and their devices create more informative data than ever, known identity offers marketers an opportunity to leverage deeper insights about their customers and personalize their experiences more deeply and accurately than anonymous data.

At a time when marketers are spending more on technology every year, many are leaving money on the table by not investing appropriately in customer data and identity.

IDENTITY AND PERSONALIZATION: PAST AND FUTURE

I spend a lot of time at Forbes (thought to be

In the past decade, Amazon, Apple, Facebook, Google, Netflix, and Pandora have generated more than $1 trillion of market value. They have leveraged consumer technologies in new ways, transformed customer expectations, and disrupted prior industry leaders, such as AOL, Barnes & Noble, Borders, Blockbuster, Motorola, Nokia, and Tower Records.10 These companies’ business models are largely based on leveraging user data to serve relevant content or services (apart from Apple, which is responsible for the devices we use to consume many of those services on). Furthermore, they are some of the most loved companies in the world, delivering what we want, when we want it.

at Cosmo and Groupon (estimated to be 69%

Looking ahead, Facebook plans to change the customer-tracking paradigm — by using its own Facebook ID as the primary tracking method rather than cookies — with its newly launched Atlas ad platform. Because cookies are flawed when it comes to tracking today’s connected consumer across channels and devices, and because Facebook is basing it on rich profiles of self-volunteered information, Atlas may be able to improve both the targeting and tracking of ads. How should marketers think about this? Let’s take ecommerce as an example, where efforts at personalization have been based primarily on browsing and transaction history. Those histories might suggest a shopper to be a young, adult male. The retailer might then pay for additional third-party data to know more about what his demographic likes or what other sites he’s visited or products he’s viewed. Then they might show him the jackets it thinks are most relevant. Efforts at personalization, like the example above, often act on probability, or “best guesses.” Yet as one ad executive told Digiday last year, “The gender is wrong 30-35 percent of the time.” Likewise, a female Forbes writer explains how Google has classified her as an old male:11

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65% male and mainly readers age 33 and up) and tech sites like TechCrunch (65% male as well) and Ars Technica (77% male), and not enough time female visitors).

If the marketer above had access to the information in the user’s Facebook profile, they might have seen that this is not a young, adult male, but a woman in her mid-40s with a teenage son. Perhaps she bought some clothing for him once and he’s the one who does most of the browsing on the iPad at home.

CONCLUSION AND GETTING STARTED

Marketing Is in Transition, Requiring a Change in Mindset and Technology Your approach to customer identity will be dependent on your organization’s business objectives. A retailer will likely want to increase the average order value and total number of orders, whereas a publisher will aim to increase unique and repeat website visits and/ or mobile app usage. The data that helps each to improve their Key Performance Indicators (KPIs) differs substantially. The retailer will want data that helps him understand an individual’s budget and intent to buy, for example, while the publisher will want to understand a user’s content preferences. Cox Media is an example of a publisher pursuing this goal. The company decided to consolidate identities across the websites for its 80 different brands in TV, radio, and newspapers. Rebekah King, Director of Customer Engagement, explains that there are markets where the company has multiple brands. For example, she says, “In Atlanta, they have a shared newsroom, but until not long ago the consumer had to log in and manage subscriptions in three different places — WSBradio.com, WSBtv.com, and AJC.com — which created unnecessary friction for the user. Now we have one login to all of them, and the user can manage all of his subscriptions in one place.”

King says that not only does the consolidation make it easier on the user, but it also gives the company better insight into who the user is and what he cares about because it consolidates his content interactions from multiple locations.

Are you able to act on customer data in realtime?

Customer Identity Management provides the foundation for marketers to understand customer insights across channels. By unifying customer identity, retailers, publishers, and other business can have optimal customer insight to deliver the most personalized messages and positively influence KPIs. Marketers that successfully leverage customer identity will gain and build customer relationships, value, and loyalty. Those that don’t will instead put those relationships in jeopardy.

No doubt you have a lot of customer data — but is it actionable?

Getting Started: Customer Identity Management Audit How can an organization determine if and how Customer Identity Management will help? When it comes to getting started, there are a number of key questions that can help you answer this question: Answer each Yes or No: Is your customer data accurate? - And what is your confidence level that the data is accurate? Do you rely primarily on anonymous data for marketing? - Independent agency accounts suggest that in third-party cookie data gender can be wrong 30-35% of the time.12 Do you know which segments your customers are in (vs. probabilistic)? - “Knowing” being relative, but based on verified or self-volunteered data, such as forms, profile management pages, or social profiles. Do you do progressive profiling? - Are you able to continuously update customer records when they leave and come back or engage in different channels?

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- Do you have a good customer view that you’re able to act on immediately, or does it take two to three weeks to consolidate data?

- For example, are you able to use your social listening data to put prospects into emailnurturing campaigns or personalize the website? Depending on your type of organization, can customers manage and update their profiles/ information in a single place that allows all parts of your organization to use it? If you find yourself answering “No” to any of these questions, you are limiting the value of your customer engagement tools and customer relationships — and you have a case for investing in Customer Identity Management.

ENDNOTES eMarketer. “US Time Spent on Mobile to Overtake Desktop.” August 1, 2013. http://www.emarketer. com/Article/US-Time-Spent-on-Mobile-OvertakeDesktop/1010095. 1

“Smartphones: so many apps, so much time.” Nielsen. July 1, 2014. http://www.nielsen.com/us/en/ insights/news/2014/smartphones-so-many-apps--somuch-time.html. 2

“The Customer-activated Enterprise Insights from the Global C-suite Study.” IBM Institute for Business Value. 2013. 3

Sorofman, Jake. “GartnerSurveys Confirm Customer Experience Is the New Battlefield.” October 23, 2014. http://blogs.gartner.com/jake-sorofman/ gartner-surveys-confirm-customer-experience-newbattlefield/. 4

Charles Maurice Stebbins & Mary H. Coolidge, “Golden Treasury Readers: Primer.” American Book Co. (New York), p. 89 5

Jones, Andrew. Leveraging Social Identity: Know and Engage Customers Better to Build More Valuable Relationships. Altimeter Group. June 2014. http://www.altimetergroup.com/2014/06/newresearch-leveraging-social-identity/. 6

Murray, Gerry. “IDC’s Worldwide Marketing Technology 2014-2018 Forecast: $20 Billion and Growing Fast.” Technology Marketing Blog. IDC. October 17, 2014. http://www.techmarketingblog. blogspot.com/2014/10/idcs-worldwide-marketingtechnology.html. 7

Internet advertising to dramatically close the gap on TV advertising. “Global Entertainment and Media Outlook 2014-2018.” Pricewaterhouse Coopers. 2014. http://www.pwc.com/gx/en/globalentertainment-media-outlook/segment-insights/ internet-advertising.jhtml. 8

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Adobe Digital Index. “The ROI from Marketing to Existing Online Customers.” Adobe. 2012. http:// success.adobe.com/en/na/programs/digitalindex/1209_13926_existing_customers.html. 9

Frank, M., Roehrig, P., & Pring, B. “Code Rules: A Playbook for Managing at the Crossroads.”Wiley. 2014. 10

Hill, Kashmir. “Why Google Thinks You’re An Old Dude.” Forbes. Jan. 12, 2012. http://www.forbes. com/sites/kashmirhill/2012/01/27/why-does-googleget-your-age-and-gender-wrong/. 11

Marshall, Jack. “Online Data: Cheap, Plentiful, Inaccurate.” September 13, 2013. http://digiday com/ platforms/third-party-datas-accuracy-problem/. 12

DISCLAIMER ALTHOUGH THE INFORMATION AND DATA USED IN THIS REPORT HAVE BEEN PRODUCED AND PROCESSED FROM SOURCES BELIEVED TO BE RELIABLE, NO WARRANTY EXPRESSED OR IMPLIED IS MADE REGARDING THE COMPLETENESS, ACCURACY, ADEQUACY, OR USE OF THE INFORMATION. THE AUTHORS AND CONTRIBUTORS OF THE INFORMATION AND DATA SHALL HAVE NO LIABILITY FOR ERRORS OR OMISSIONS CONTAINED HEREIN OR FOR INTERPRETATIONS THEREOF. REFERENCE HEREIN TO ANY SPECIFIC PRODUCT OR VENDOR BY TRADE NAME, TRADEMARK, OR OTHERWISE DOES NOT CONSTITUTE OR IMPLY ITS ENDORSEMENT, RECOMMENDATION, OR FAVORING BY THE AUTHORS OR CONTRIBUTORS AND SHALL NOT BE USED FOR ADVERTISING OR PRODUCT ENDORSEMENT PURPOSES. THE OPINIONS EXPRESSED HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE.

AUTHORS Andrew Jones, Analyst Andrew Jones (@andrewjns) is an analyst at Altimeter Group where he focuses on customer identity, cross-channel engagement, and marketing technology. He has published several reports related to social media management and digital marketing at Altimeter Group since joining in 2010. He has worked with dozens of clients on digital business strategy, thought leadership, and technology selection.

About Altimeter Group Altimeter is a research and consulting firm that helps companies understand and act on technology disruption. We give business leaders the insight and confidence to help their companies thrive in the face of disruption. In addition to publishing research, Altimeter Group analysts speak and provide strategy consulting on trends in leadership, digital transformation, social business, data disruption and content marketing strategy. Altimeter Group 1875 S Grant St #680 San Mateo, CA 94402 [email protected] www.altimetergroup.com @altimetergroup 650.212.2272

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About Janrain

Janrain makes it easy to know your customers and personalize every interaction. Our Customer Identity Management Platform helps companies build a unified view of their customers across all devices by collecting accurate customer profile data to power personalized marketing. The platform encompasses social login, registration, customer profile data storage, customer insights, single sign-on, and user-generated content. Janrain powers customer identity management for brands like Universal Music Group, Pfizer, Samsung, Whole Foods, Fox News, Philips, Marvel, Mattel and Dr Pepper. Founded in 2005, Janrain is based in Portland, Oregon, with offices in London, Paris, Frankfurt, Singapore, Bangkok and Redwood City, CA. For more information, please visit www.janrain.com and follow @Janrain.