Marketing & Data

Knowing the Customer
Digital Advertising
Digital Advertising Solution
Tracking People and Transactions

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Marketing & Data – The Story

Knowing the Customer
Even though the customer belongs to the merchant, credit cards do not provide any customer information to the small merchant. Some argue that this is because the customer will not allow the credit card company to share information. This is not true. Credit card companies often sell transaction data to anyone willing to pay for it, but it is usually poor quality and reserved for those with deep pockets (think about those expensive glossy postcards from Marriott brought to you compliments of American Express).

Traditionally consumer purchasing data has largely been poor quality and unreliable. The credit card companies are not solely to blame, but it does extend from the lack of cooperation between the credit card companies and merchants. Merchants don’t want to go through the hassle of reporting SKU (Stock Keeping Unit) data (they often lack the ability to track SKU data) to credit card companies, nor do they want to share the data and get nothing in return. The credit card companies have little incentive to share data with a group that spends very little on national advertising. Who could blame either party for not wanting to work together?

To solve this, small merchants began collecting email addresses, mailing addresses, phone numbers etc. directly from consumers. Soon data and social media converged to produce better consumer metrics, but merchants and payment providers still lack cooperation, thus consumer behavior predictors are still largely based on poor assumptions and little fact. Good examples are plenty.

A special bond exists between a community and its merchants. “Save Main Street” is a real thing. Small merchants are an integral part of every community, and they know their communities better than anyone. Sharing the right data will only serve to make each community stronger. Google and Facebook understand this well, but lack easy-to-use tools.

Digital Advertising
People crave connecting with people. Companies like Facebook realized this early on, as did LinkedIn (albeit for different reasons). Enabling people to connect with each other brought with it the desire for merchants and companies to connect with people too. Google realized early on that they could perfect the TV commercial model (playing the numbers game) and companies would pay dearly to get in front of massive amounts of customers. The desire to grab digital market share produced a frenzy and pushed digital advertising prices sky-high (“Insurance” as a keyword demands on average $54.91 per click). As a direct result, people learned to game the system and Google and Facebook were forced to stay one step ahead of the gamers to protect their revenue. Today this “game” has led to a myriad of complex tools that the average small merchant or person doesn’t understand. Tools that yield good results, but still lack quality data.

Digital Advertising Solution
We believe that the solution that will win the merchant market must also plan to win users through integrity, transparency and participation. The historical effectiveness of all campaigns (1% - 4.69% effectiveness), clearly means marketers lack quality customer data to find the right audience, lack a quality message and often use the wrong medium to communicate the message. A Google or Facebook ad, while better than a TV ad, still lacks solid conversion numbers (3.75% on average). We believe this is because even using the best data available today means taking a shotgun approach - at best. Case in point: If a person stayed at a hotel in St. Louis last month, why does the hotel continue to market to that person a few weeks later? How do they know if the person will ever be back to St. Louis again? To effectively market to that person, the hotel should know answers to questions like why they stayed there, whether they will return, when they will return, whether they liked their visit, whether they would consider staying there again, and whether their trip was for business or pleasure. Instead, marketers usually market to all previous customers in the hope that 1% of them will be back sometime in the future.

The winner of this space will need to rethink marketing and start thinking about how to get better data. We think it starts with integrity, transparency and customer participation. For example, what if the St. Louis traveler could use a platform to “reveal” they are going back to St. Louis next month? What if that platform used behavioral metrics based on past preferences and user participation to assist them in planning their trip? Using predicative analysis aided by participation, we believe that platform could become their personalized Orbitz and Yelp combined, helping to make their trip feel customized and familiar.

Tracking People and Transactions
Customers have not knowingly given credit card companies the right to track their transactions and purchase data, yet credit card companies consistently hand us nice graphs at year’s end to show us where we spent our money. Most customers feel it’s OK for credit card companies to track their spending habits in the name of fraud protection.

Google tracks where people go and how long they are there, credit card companies track how much people spend and where, and merchants track what is being purchased. Google and the credit card companies know where people live, but merchants do not. Merchants have local presence and understand the community. Credit card companies know people’s financial health, but Google and merchants do not.  Everyone has some data, but each on their own lack the full picture, Honey sorts and brings all this data together for our small merchants.

Next Section: Payments 101


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