Managing Marketing: Talking data, big data, small data, first, second and third party data.

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Managing Marketing is a podcast hosted by TrinityP3 Founder and Global CEO, Darren Woolley. Each podcast is a conversation with a thought-leader, professional or practitioner of marketing and communications on the issues, insights and opportunities in the marketing management category. Ideal for marketers, advertisers, media and commercial communications professionals.

Will Scully-Power is the Chairman of Datarati and the CEO of Pascal. Here Will and Darren discuss Big Data versus Small Data and the role of first, second and third party data. Also the role of data in transforming organisations to be customer centric or customer first and how privacy issues around data will be transformed by technology like blockchain.

Will Scully-Power

 

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Transcription:

Darren:

Welcome to Managing Marketing. Today I’m talking with Will Scully-Power who is the Chairman of Datarati and the CEO of Pascal, a data science platform that helps marketing teams understand their customers better using machine learning and make decisions faster using AI. Welcome, Will.

Will:

Thanks, Darren, great to be here.

Darren:

Will, I love data. I’ve got a science background and was doing a lot of research for the first six years of my career before I got into advertising. It’s interesting how data has completely transformed marketing from what used to be the boring direct marketers and now it’s often leading the process isn’t it?

Will:

Absolutely. Look, I’ve been in this space for the last 15 years, specifically around data, automation, and CRM. And each year it gets more exciting around the new technologies that are coming to market but more importantly what types of new customer experiences they can create.

And I think that’s the most exciting opportunity for every marketer in this space is how do you use this data to deliver really cool new types of customer experiences.

Darren:

A lot of people when you say data they immediately think of big data and I think that’s such a misnomer because I read recently IBM said that 40% of big data is actually unused. Can you give people a sense of customer data versus big data?

All the data they need to improve customer experience

Will:

Sure. My view is that most customers have all the data that they need to deliver a monumental shift in improvement from the existing customer experience that they have today to what they could create tomorrow using the information they already have.

The challenge that they have is that they don’t actually have the strategy around what type of customer experiences are they going to create from the data they already have? We call this customer data that sits in front of them ‘small data’.

They really struggle to work out a strategy for their small data let alone the big data. From the work that we are involved in, most organisations (not just here in Australia but around the world) are nowhere near ready for big data because they don’t have the methodology around how to use it to ultimately deliver a better customer experience.

At the end of the day that’s what it’s all about; how do you use this information (whether it’s 1st, 2nd, or 3rd party data) to deliver a better customer experience.

Darren:

I wrote an article about a coffee shop owner in the building where I bought the first Trinity P3 office in South Melbourne. There was a coffee shop downstairs run by this guy Lorenzo. The first day I walked in and he said, ‘I haven’t seen you before’. He asked my name, took my order and the next time I walked in he said, ‘another strong latte?’ ‘Yeah, absolutely’.

On my birthday he gave me a cake. I mean I don’t even remember telling him when my birthday was. Now that guy was doing this for maybe 200/300 customers and had this big long queue of people forming up and there were four or five other cafes they could go to in that area.

He sold that business for a fortune and within a month it had gone back to nothing and the woman who had bought it said, ‘I think he lied about his customers’. And I said, ‘no he actually had customer data in his head’. He memorised 200/300 people; their names, birthdays, and what coffee they drank and that made them feel important.

Now to me that and the ability to take it to scale with technology and make your customers feel important and wanted is part of what the challenge is isn’t it?

Will:

Absolutely and I can share a similar story. We did some work with a group called Vita Group, they’re owned by Telstra, the Telstra Enterprise shops. They were going through a massive digital transformation with CRM data on marketing innovation and the like. They found that customers were giving them feedback around a poor experience in these stores.

We looked at what was actually going on. We looked not just at the data but were getting out and speaking to some of their actual customers –novel concept I know. What they ended up doing when there was a line-up in the store of more than three customers they would hand the customer a voucher to the coffee shop across the road. They said, ‘go grab a coffee on us and we’ll SMS you when you’re ready’.

Their net promoter score went from a very negative one to a very positive one in just a few days’ time. At the end of the day using explicit face-to-face data and taking insight from that, and then taking action completely transformed the customer experience. Something as simple as that, so it didn’t need technology or any sort of data centralisation and complex automation strategy.

It was just listening to customers, looking for an opportunity on how to improve it and deliver better experience.

Defining 1st, 2nd and 3rd Party Data

Darren:

The thing is always defining what the problem is clearly so that you can solve it. So many people are trying to solve the problems that don’t exist. A minute ago, you mentioned 1st, 2nd, and 3rd party data and I know a lot of marketers that I talk to get very confused by this.

1st party data is your customer data, the stuff that you’ve collected or know about your existing customers. Explain to me 2nd and 3rd party data?

Will:

Cool. Most people get confused with it because there’s never been a really clear explanation between 1, 2, and 3 so I’ll do my best.

Darren:

Do all three—make things as simple as possible.

Will:

1st party data is data you know explicitly about your customers. Typically, this is data that sits within your customer relationship management system; their name, phone number, email address etc. That’s 1st party data.

2nd party data is data that sits with a partner. So, it could be a situation where you take your customer data and you’ve got a partner in the industry that also has some profiling data and you marry the two up. So, that’s 1st and 2nd party data.

There are companies in this space, particularly around marketing, like Experian and Acxiom that have sets of 2nd party data that allow marketers to connect their 1st and 2nd party data to learn more about their customers and get a better view on what they look like.

Darren:

A fuller often richer view?

Will:

1st party data could be their address. 2nd party could be the geo-demographics of that particular area of the thermo graphics or psychographics. And then 3rd party data is data that sits in what they call traditionally data management platforms. So, these are what are often known in the industry as cookie pools.

What that essentially is saying is we have a database of I.P addresses and cookies that sit in our database out here. We are going to try and probabilistic match these cookies and these device i.ds with your 1st and 2nd party data to make a probabilistic estimation that Will is Will.

Darren:

And he is a customer, so I know who he is.

Will:

And he’s a customer, along with some Experian data, geo-demographics for example, plus now connecting it with the fact that Will also surfs news.com and surfsup.com and all of these websites—all of that information is housed in these data management platforms.

Darren:

Does that mean, as a marketer, the data that the Facebooks and Googles of the world are offering, that’s 3rd party data and I’m trying to match that? Or is that 2nd party data?

Will:

You take out Google and Facebook because they have so much data some of it can be considered 2nd party data and some of it can also be considered 3rd party data. So, what we’ve seen in this space is that the large CRM vendors (the Oracles, Salesforce, and Microsofts) of the world are buying these 3rd party data management platforms. Why?

Because they give a deeper, richer view of existing customer data. So, for example, Salesforce, last year or the year before bought a company called Krux – Krux is a 3rd party data management platform. And the goal for Salesforce customers is to say, ‘now you have all your data sitting in the CRM lets connect it to our 3rd party data management platform so that you can go and find other customers that look similar to your most profitable customers.’

So, there is obviously a real value chain there, which is why you are starting to see a lot of these larger CRM vendors acquire 3rd party data providers.

Darren:

I think that’s a terrific explanation. Now I’ll be able to direct people to this podcast whenever someone asks me. But almost every company CEO will stand up and go, ‘we want to be more customer centric’. It’s pretty essential to be customer centric, to actually understand or know your customers isn’t it?

Becoming a Customer First organisation

Will:

Yeah. It’s quite funny that anything you read today is about how organisations are transforming to become customer first, which makes you think what were they before? And the reality is they were all product first.

Darren:

Factory out.

Will:

It’s like we build products and we sell products.

Darren:

From the day Henry Ford said you can have any colour as long as it’s black every manufacturer has had the same view.

Will:

That’s right. We’ve seen a transition from not only companies saying we need to become ‘customer first’ and ‘customer centric’, and ‘customer obsessed’ but actually going one step further, which is how do you create that?

Well creating that needs to happen internally. So, first and foremost you really need to be employee first. And the best use case and example I’ve seen globally is Zappos. The whole ethos at the company is on their employees not the customer.

Darren:

Well, they deliver the customer experience.

Will:

Absolutely. Now a great story around that is they have what’s called the flower fund at Zappos. Their staff were talking to customers all day long; people calling in with the wrong shoe size or whatever it may be but through those conversations they found that customers would expose a lot of what was going on in their daily lives.

There was one particular story where a woman had called up and she had ordered a pair of shoes and got the wrong size and started talking to one of the call centre representatives. And this woman started to share the fact that she had lost her husband (or had the funeral) the day before and the call centre rep at Zappos, as soon as they got off the phone, sent a huge bouquet of flowers saying, ‘thinking of you, from Zappos’, and not just a bunch of flowers but four sets of those same shoes, in all different colours.

They call that the flower fund. And that was a really cool way to not only inspire and motivate the internal team but also a really cool way to deliver an awesome customer experience.

All of these companies that are saying we’ve got to become more customer centric and customer first, unless they have a strategy around how they’re going to become employee first they’re going to struggle because at the end of the day organisations today compete based on the people they have internally that are designing the strategies around these new customer experiences.

Darren:

And yet you see so often the whole employee focus is almost an afterthought in so many organisations.

Will:

Including ours. Two years ago, in our agency we did our annual offsite and our Head of Customer Experience stood up and said, ‘can I see a show of hands of how many staff members on your first day in the agency were asking yourselves these ten questions?’

And 100% of the staff members put their hands up. The questions were; where’s the best place to go and have lunch? When do I get paid? Who do I speak to about this? And these were all of the things we had just neglected in terms of employee on boarding and it was the biggest eye-opener for us, especially as an agency trying to help organisations deliver new customer experiences.

Darren:

But also, because you’re competing in a market where you want to get the best people and build that reputation. Smart agencies are realising that it’s not about payment of salaries it’s about being a place that people want to work.

Will:

Oh, 100% and you do have to practice what you preach. So, if you’re asking a CX strategist to come in and help advise companies on how to become customer first and they’ve had a terrible on boarding experience—what do you expect?

Why most digital transformation projects fail

Darren:

Going back—apart from being customer centric a lot of organisations talk about being technology and digital centric when they actually mean customer centric but they’re talking about technology and digital being their access to it, aren’t they?

Will:

Yes. 81% of digital transformation projects fail. Why do they fail? Because they’re technology first and not customer first. Everyone gets caught up in this digital first, customer first, the taxonomy when in fact the reason these digital transformation projects fail is because there is no real clear strategy on what they want that new customer experience to be.

So, our first piece of advice about how to ensure you don’t fail is start with the strategy, which is what’s our customer experience vision, what are our corporate and marketing objectives and how do they align to that vision, and why now (what if we do nothing—what’s the impact)?

So, if you start with the strategy layer and then move down into what do we want the customer experience to be at each stage of the customer lifecycle? So, at the acquisition, on boarding, retention, the win-back stages, what do we want the customer experience to be both online and off?

The third is operationally; what teams, skills, and capabilities do we need to enable those customer experiences, both internal and external with agents and partners?

And then the last component is what technology do we need to enable that? So, this is the reason why all these implementations around digital transformations fail—because they start with the last, which is technology when in fact they need to start with strategy.

Darren:

We get a lot of projects that start with companies that started with the technology and then phone us up and say it’s not working. And invariably it’s like wind it back.

Will:

Absolutely.

Darren:

Do you think also that people hold on to things like technology or digital transformation because they actually don’t know what they don’t know. It’s like anything to do with digital technology is for a lot of people still quite scary.

Will:

I think a lot of people are in roles today where they should probably know what it means but, for whatever reason, don’t actually know what this whole world of digital transformation means or it doesn’t mean.

Darren:

That’s a difficult place to be because the expectation is you should know but you don’t so a lot of them end up bluffing— ‘fake it ‘til you make it’. You’re a senior marketer. You’re in a company that’s going through a digital transformation and everyone’s looking to you and you’ve got no idea.

Will:

This is why we invested so much time in helping organisations in training on the strategy development and the ‘why’, not the ‘what’ and the ‘how’ because that’s what technology vendors will do.

How do you send out this campaign? That’s not the problem. The problem is the ‘why’. Why are we doing this in the first place?

Darren:

You’ve got a company that does this, don’t you?

Will:

We do—Data Scouts—and we started this three years ago because we found all the technology led implementations around transformation/automation were failing. And they weren’t failing because of the technology—the technology was fine. It was because the organisations didn’t have a customer first strategy.

We realised we actually needed to teach them how to develop a strategy so they’re not imposters sitting in the meeting. They actually have the tools and the framework that they can take internally and build it themselves where they’re not reliant on consultants or partners.

I think that is one of the real challenges that this organisation is facing. Over the years marketers have traditionally relied on other people, partners, and agencies to do all the heavy lifting.

And they’re realising now the world is changing and unless they can actually understand what this is and how it’s going to impact them and their teams, they’re going to be at a real risk of being unable to sustain their role.

I don’t think the industry as a whole has any comprehension of automation and transformation particularly around AI, machine learning and what that’s going to mean for people in those roles that don’t have these skills today.

Darren:

Well, it’s going to eliminate a whole lot of doers, isn’t it? And what’s left are people who can still develop and articulate strategy that can then be applied to algorithms and things for these AI platforms.

Will:

Yeah and what we’re actually seeing is the definition of the skill set that’s actually required has completely changed even in the last 18 months. So, a really good example of what we do when we’re recruiting for new talent; we use what we call the growth academy or growth academy’s periodic table of growth skills.

We give the candidate a series of red and green circles and we say, ‘go and put, on the periodic table, a green where you think you have the skills and a red where you think you don’t have the skills.

And what that will immediately show you is a) are they going to be right for the organisation? and b) if they are going to be right what things do they need to upskill on straightaway?

Darren:

Or how cocky they are because they just put green on everything.

Will:

Yeah, that’s true.

Darren:

Which means they’re not right for the organisation.

Why hands on experience is increasingly important

Will:

That’s right. So, we’re seeing this demand for people that have skills in how to build things and not the brands, or people they’ve worked for or the organisation division or the success of that division because at the end of the day no one cares.

All they care about is the value you can bring to the organisation and the experience you can deliver to the customers. This is why you’re seeing so many of these big organisations start internal accelerators and innovation labs because these start-ups are really creating disruption for a lot of these traditional businesses.

And rather than them lose staff and a lot of their smart talent to start-ups they’re trying to bring it in-house and really transition their own businesses. But we really think the skill set of today, now and going into the future is really all around being able to show an organisation what you’ve done (in terms of what you’ve built)—not how many people you’ve managed, not how successful your acquisition campaign was because almost guaranteed is that you weren’t involved in it at a hands-on level.

You didn’t build the landing page or come up with the A/B variable test or work out what trigger logic was going to be used. You may have been managing it but you certainly weren’t hands on and that’s the biggest risk.

You asked earlier how you get a lot of this new technology across, our advice to everyone that’s trying to upskill is get your hands dirty. Get in there and try it.

Darren:

Even in your own personal life. I mean this isn’t just about big enterprise. On a personal level there are so many opportunities. The definition of ageing is giving up the options available to you and just sticking with what you already know. In many ways that curiosity and wanting to get in and work out how things work and how you can use them is the way people do stay younger longer.

Will:

Education is about teaching people how to think. Albert Einstein–famous quote—not how to remember facts. I’m a big believer in that. When Facebook bought Oculus, I was so interested to understand how virtual reality was going to impact us as marketers and where that would potentially fit into the customer journey.

So, one of the things that I did was build a virtual reality app that we published on the Oculus store and not because I was trying to get rich. It was just because I was trying to understand how it works.

Darren:

AR I think is going to be the biggest opportunity—augmenting reality for customers. For me, VR exists in gaming and entertainment and things like that and I’m sure there are some applications but taking reality and augmenting that is the biggest opportunity. Anyway, time will tell.

Will:

Yeah absolutely, I was watching this morning the biggest funded private start-up in history is a company called Magic Leap, which is not based in Silicon Valley or New York, it’s based in Fort Lauderdale, Florida and they’ve raised recently an additional $700 million from Alibaba and a huge chunk from Google and they’re focusing on what’s called mixed reality (a combination of what sits in the middle between virtual reality and augmented reality).

They’ve got a vision for the future around an individual being able to use data and insights that are coming from the new sensors that are going to be developed and created around everything we do, touch, and experience every day and how we interact with that and so I think we haven’t actually seen anything yet.

The impact of GDPR on the collection and use of customer data

Darren:

It could be that I get motion sickness every time I put those VR glasses on but that’s just a personal thing. But going back to data, you can’t have a conversation about data without talking about privacy issues. And we’ve got this huge change in privacy laws in the EU, which came into effect in May 2018.

What is the reason do you think, governments are becoming so focused on protecting data privacy? Is it fear?

Will:

Two companies: Facebook and Cambridge Analytica. I think the reality is so much data is being created every day, we all know that but it’s creating an enormous amount of power for the companies that are not only harnessing that data but are taking action from that data.

So, think about a simple example; WhatsApp. Facebook acquired WhatsApp. If you think about your tightest social and family relationships that happens in WhatsApp. It doesn’t happen with a ‘like’ on Facebook so if you think about those real-time conversations that you’re having with your family and friends, those micro-conversations, as I like to call it—all of that data is being mined.

What you write in those messages is being mined and that information used with other types of 2nd and 3rd party data can start to paint a very crystal-clear picture of not only who you are but what you’re likely to do next.

Darren:

Your psychology. And the worst, most fearful part, which was brought up by the whole thing with Cambridge Analytica is to then allow someone to manipulate you by understanding your psychology.

Will:

Why is Google so powerful? If you want to know what people are thinking don’t just ask them look at what they’re searching for.

Darren:

Yeah, behaviour is the best predictor of what people are going to do.

Will:

Absolutely. The same thing that happens in search with Google is exactly what’s happening in WhatsApp and Facebook.

Darren:

But do you think the marketing industry has actually missed a big opportunity, which is to actually sell to the public (the average person) that providing this data, within some guidelines, actually makes their life better.

Because I remember when I got divorced and I changed my status on Facebook suddenly I’m getting emails for Russian brides. And then when I turned 50 I got lots of stuff about impotence. Now this is very basic data mining isn’t it?

Now if I provided them with more information then they’d know I married a Chinese woman and I don’t have any impotence problems. Why haven’t we got to the point of actually helping people understand what the quid pro quo is?

Will:

I think two things; one is because people read stories that make them fearful around how their data is going to be used. So, they’re often less likely to provide additional information because they don’t understand what the value exchange is.

So, for example, I go to a website and fill out a form—what am I getting in return? 9 times out of 10 that’s not clear around what that value exchange is and more importantly how the data is going to be used.

Secondly, what I think is going to happen is with a lot of these newer technologies, the likes of Blockchain etc, is the actual individual, the consumer will control their own data and the only way it can work is if it’s in a decentralised network.

Darren:

That no one can own; you control it because it’s not owned by someone else.

Will:

You control it and it’s authorised by a general ledger that sits on the Blockchain and I think ultimately that’s where it’s going to go. Where the individual will be able to share their, for example, Blockchain I.D. and in exchange for sharing that I.D and different amounts of data within that I.D. they will get return of value.

And that return of value could be anything from additional crypto currency or it could be you get a pdf that you can download that has got rich information that no one else gets. But whatever the use case it’s an exchange of value.

But we think that ultimately the only way that’s going to work at scale is on a decentralised network.

Darren:

That’s actually an exciting vision. I hope it’s not too far away because that’s where we start to get consumers or people engaged in what is the value of that transaction. They can make those decisions.

Will:

Absolutely and a really simple analogy here is why do you think Uber is so valuable? It’s because they have built a decentralised network where the power is put back in the control of the consumer so they can get a ride anytime, anywhere they want and for the driver; they can work anytime, anywhere they want.

And when you think about that as it applies to data I should be able to make the call on what data I give, what I get in return and what price or value I put on that.

Darren:

What you’re willing to transact. Will, this has been a great conversation but time has got away from us. I really appreciate your taking the time and explaining some pretty basic concepts but also some important ones so thanks for your time.

Will:

No problem, glad to help.

Darren:

Last question: you mentioned Blockchain and crypto currencies—how much have you made so far?

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About Darren Woolley

Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com

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