Article

9min read

How to Create a Modern Data Foundation for Experimentation

Staying ahead of the game to deliver seamless brand experiences for your customers is crucial in today’s experience economy. Today we’ll dip our toe into the “how” by looking at the underlying foundation upon which all of your experiences, optimization and experimentation efforts will be built: data.

Data is the foundation experimentation is built on
Data is the foundation experimentation is built on (Source)

 

Data is the technology that can power the experiences you build for your customers by first understanding what they want and how it’ll best serve your business to deliver this. It’s the special sauce that helps connect the dots between your interpretation of existing information and trends, and the outcomes that you hypothesize will address customer needs (and grow revenue).

If you’ve ever wondered whether the benefits of a special offer are sufficiently enticing for your customer or why you have so many page hits and so few purchases, then you’ve asked the questions the marketing teams of your competitors are both asking and actively working to answer. Data and experimentation will help you take your website to the next level, better understand your customers’ preferences, and optimize their purchasing journey to drive stronger business outcomes.

So, the question remains: Where do you start? In the case of e-commerce, A/B testing is a great way to use data to test hypotheses and make decisions based on information rather than opinions.

A/B testing helps brands make decisions based on data (Source)
A/B testing helps brands make decisions based on data (Source)

 

“The idea behind experimentation is that you should be testing things and proving the value of things before seriously investing in them,” says Jonny Longden, head of the conversion division at agency Journey Further. “By experimenting…you only do the things that work and so you’ve already proven [what] will deliver value.”

Knowing and understanding your data foundation is the platform upon which you’ll build your knowledge base and your experimentation roadmap. Read on to discover the key considerations to bear in mind when establishing this foundation.

 

Five things to consider when building your data foundation

  1. Know what data you’re collecting and why
    Knowing what you’re dealing with when it comes to slicing and dicing your data also requires that you understand the basic types and properties of the information to which you have access. Firstly, let’s look at the different types of data:

    • First-party data is collected directly from customers, site visitors and followers, making it specific to your products, consumers and operations.
    • Second-party data is collected by a secondary party outside of your company or your customers. It’s usually obtained through data-sharing agreements between companies willing to collaborate.
    • Third-party data is collected by entirely separate organizations with no consideration for your market or customers; however, it does allow you to draw on increased data points to broaden general understanding.

     

    Data also has different properties or defining characteristics: demographic data tells you who, behavioral data tells you how, transactional data tells you what, and psychographic data tells you why. Want to learn more? Download our e-book, “The Ultimate Personalization Guide”!

    Ultimate personalization guide e-book

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    Gathering and collating a mix of this data will then allow you to segment your audience and flesh out a picture of who your customers are and how to meet their needs, joining the dots between customer behavior and preferences, website UX and the buyer journey.

    Chad Sanderson, head of product – data platform at Convoy, recommends making metrics your allies to ensure data collection and analysis are synchronized. Knowing what your business leaders care about, and which metrics will move the business forward, will ensure that your data foundation is relevant and set up for success.

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  2. Invest in your data infrastructure
    Data is everywhere, in its myriad of forms and gathered from a multitude of sources. Even so, if you’re going to make use of it, you need a robust system for gathering, storing and analyzing it in order to best put it to work. Start by understanding how much first-party data you have the capacity to gather by evaluating your current digital traffic levels. How many people are visiting your site or your app? You can get this information using Google Analytics or a similar platform, and this will help you understand how sophisticated your data-leveraging practices can be and identify gaps where you might need to source supplementary data (second- and third-party).
    Next, you’ll need to evaluate your infrastructure. Companies that are further on their data analytics journey will invest in customer data platforms (CDPs) that allow them to collect and analyze data – gathered from a variety of sources and consolidated into a central database – at a more granular level. Stitching together this data via a CDP helps you bring all the pieces together to form a complete picture of your customers and identify any gaps. This is a critical step before you leap into action. Chad Sanderson concurs. “[Start] with the business and what the business needs,” he advises. “Tailoring your… solution to that – whatever that is – is going to be a lot more effective.”‎
  3. Get consent to build consumer trust
    Data security is rightly of foremost concern to consumers. The very users from whom you want to gather that first-party data want to ensure that their private information remains secure. Getting their consent and being transparent about the inherent benefit to them if they agree to your request – be it through giveaways, exclusive offers, additional information or services – will give you the best chance of success. Demonstrating that you adhere to, and take seriously, various data compliance laws (such as GDPR) and good governance will also build trust in your brand and give you the opportunity to make it worth their while through improved UX and personalized experiences.

    Build trust in your brand by respecting your users’ private information
    Build trust in your brand by respecting your users’ private information (Source)

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  4. Collect and discover insights to upgrade your customer strategy
    We’ve already covered the fact that data is everywhere. As Chad Sanderson highlighted above, identifying immediate business needs and priorities – as well as focusing on quick wins and low-lift changes that can have a quick and high-level impact – can help you navigate through this minefield. It’s best to think of this section as a four-step process:
    ㅤㅤ Collect data as it flows into your CDP
    ㅤㅤ• Transform or calibrate your data so that it can be compared in a
    ㅤ  ㅤlogical manner
    ㅤㅤ• Analyze the data by grouping and categorizing it according to
    ㅤ  ㅤthe customer segments you’ve identified and benchmarking
    ㅤ  ㅤagainst business priorities
    ㅤㅤ• Activate your insights by pushing the learnings back into
    ㅤ  ㅤyour platforms and/or your experimentation roadmap and really
    ㅤ  ㅤput this data to work
  5. Turn your data into actions
    It’s crunch time (no pun about numbers intended)! We’ve examined the different types of data and where to source them, how to be responsible with data collection and how to set up the infrastructure needed to consolidate data and generate insights. We’ve also covered the need to understand business priorities and core strategy to drive data collection, analysis and activation in the same direction. Now we need to put that data and those insights to work.
    In the experience economy, where constant evolution is the name of the game, innovation and optimization are the key drivers of experimentation. Taking the data foundation that you’ve built and using it to fuel and nourish your experimentation roadmap will ensure that none of the hard work of your tech, marketing and product teams is in vain. Testing allows you to evaluate alternatives in real time and make data-driven decisions about website UX. It also ensures that business metrics are never far from reach, where conversion and revenue growth take center stage.Use the data you’ve gathered to fuel your experimentation roadmap
    Use the data you’ve gathered to fuel your experimentation roadmap (Source)

 

Invest in a solid data foundation to maximize and scale

At AB Tasty, we apply the Bayesian approach to interpreting data and test results because in A/B testing, this method not only shows whether there is a difference between the tested options but also goes beyond that by calculating a measure of that difference. Being able to identify what that variance is allows you to best understand what you will gain by adopting a permanent change.

Collecting and analyzing data, and then leveraging the insights that you glean, are key to unlocking the next level of experience optimization for your customers and your business. An experimentation roadmap grounded in real-time responsiveness and long-term, server-side improvements will have a solid data foundation approach at its core, where understanding who you want to target and how to act drives success. Furthermore, if you invest in your data foundation – and the five core drivers we’ve explored above – you’ll be equipped to scale your experimentation and allow optimization to become a key business maximizer.

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Article

8min read

Creating Emotional Connections With Customers Using Data

Be sure to check out the series introduction, part 1 with Zion & Zion, and part 2 with Cro Metrics if you haven’t read them yet.

For the third blog in our series on a data-driven approach to customer-centric marketing, we talked with our partner Matt Wright, Director of Behavioral Science at Widerfunnel, and Alex Anquetil, Manager of North America Customer Success at AB Tasty, who discuss what emotional connection means in a marketing context, why it’s critical for brands to forge emotional connections with their customers, and how data can be used to both build and measure the efficacy of these connections.

What do we mean when we talk about creating an “emotional connection” in a marketing context?

Simply put, emotions are the driving force behind every purchase. People don’t buy from a given brand because they need a product they could easily find elsewhere, but because they feel an affinity, a sense of trust, well-being, or inclusion with or loyalty to that brand.  

In such a crowded market, forging deep emotional connections with customers is essential for marketers to attract and retain customers today. Marketers can’t merely “appeal to emotions,” but need to understand their behaviors and motivations and ensure that their missions and messages align with customers’ emotions and needs.

Matt asks to reframe the question, “What’s the role of emotional decision-making in marketing? People build mental models around their emotions, experiences, and cultural associations. They think of some as ‘good’ or ‘bad’… they tie emotion to them. The key for marketers is to understand which emotions resonate with which group of people. And this is where A/B testing can help you find clues as to what works and what doesn’t. Creating strong emotional connections is paramount, and through experimentation, you can create them all throughout your sales funnel.”

Our brains have limited bandwidth,” remarks Alex, “so we tend to save our resources for the important things. When we make a simple purchase, we take shortcuts. We grab what’s available from the wheel of our basic emotions – happiness, anger, surprise – to enable us to make quick decisions. If brands can leverage these emotions, whether positive or negative, and align their sales tactics to them, they can create frictionless experiences. The fact that every purchase is emotional is the reason why we don’t have ‘one perfect user interface,’ or ‘one ideal sales funnel:’ every brand, product, and user is different.”

Matt says, “That’s a great analogy. Usability is the foundation, but you need to build upon it. Even if your UI is ugly, in the right circumstances, it will convert. For example, if your website is for a charity, people don’t want you to spend your money on making it look beautiful. They want the money to go to the cause – so they may negatively judge you if you have a digital masterpiece for a website. But if you’re designing for a chic brand, people want it to look and feel exclusive. This is what A/B testing teaches us: it’s not about win or lose, it’s about gathering insights, which I think is often overlooked at a base level of experimentation.”

Why are emotional connections with customers so important for brands?

For Matt, emotion is especially important for positioning. “It’s not something people typically do experimentation around – I wish they did – because the data you can glean from testing things like value propositions or copywriting is extremely valuable for successfully positioning a product. Also, as customers move through their journeys, they’re going to have different emotions at different moments, including doubts, so give them signals to reassure them they’ve made the right decisions. By doing that, you’ll strengthen their loyalty to you.”

Alex thinks that first impressions matter, and if you don’t connect on the first day, you may not get another shot. “People look for meaning in what they buy, even when it’s something as banal as a pack of batteries. Utilitarian products can have ‘the right’ signals attached to them (think of the Energizer bunny, and the tradition and reliability attached to it). No one wants to buy products that have negative connotations. When it comes to clothing or luxury items, these are 100% emotional, and it’s essential for marketers to confer the correct image and status by selling to the right groups (because, of course, there are in-groups and out-groups by the brand’s standards) and by attaching the right emotions and motivators specific to each brand and product.


Should brands create different types of emotional connections for different audiences?

Again, Matt has a preliminary question to reposition how we approach the subject: “Is it worth it to build multiple experiences? The best way to decide is to start small then go deeper, and keep testing until the data leads you to a value proposition. If the data shows you it’s worth it, then build different approaches, yes.”

But Alex, who’s familiar with both the French and US markets, says yes right away. “When looking at short term and long term outcomes, I think there have to be different types of emotional connections for different cultural or geographical audiences. The question is, do you want the emotions to serve sales or marketing at all costs? In other words, do you want your value proposition to associate your brand with specific emotions? When brands expand to new markets, they may require different approaches. For example, certain French luxury brands sell product collections only in France and entirely different ones in the US. With perfume, US customers tend to buy larger bottles, while the French buy smaller ones, due to different cultural priorities and motivators.

Examples of motivators and leverage:
 

Source: HBR.org, “THE NEW SCIENCE OF CUSTOMER EMOTIONS,” NOVEMBER 2015, SCOTT MAGIDS, ALAN ZORFAS, AND DANIEL LEEMON

“You can analyze your own market data to find out what your highest-value group is and what their motivators are, then push that to the market and take everyone on your journey, or you can do it the other way around, and make sales your ultimate objective.”  

Matt thinks the brand will usually lead and cites the example of Netflix. “There’s a debate going on right now to decide whether, in order to keep growing, Netflix should sell ads. Now, they can probably run an A/B test and find out they’ll make more money if they do sell ads, obviously. But how will that affect their brand image in the short, medium, and long term? They might not lose money, but on an emotional level, they might lose a lot of their historical appeal.

“When dabbling with emotions, it’s not as simple as just an A/B test. When making strategic decisions, experimentation can certainly help incrementally optimize things, but it can do bigger things, including help you make key decisions, better understand your customers, innovate, take risks… Not enough people realize the power of advanced testing. Companies that use them see exponential improvements.”

Talking about experimentation tools, Matt explains: “Early on in the industry, we talked about A/B testing in pretty much only an optimization win-or-lose mindset. And it’s so much more than that. When you make this investment, it’s going to help you make decisions, not just find tiny, incremental bits of revenue for your company. There’s a resourcing problem: conversion rate improvement isn’t the only thing you can do, there’s a huge range of other things you can achieve, and teams need more than a CRO manager to effect the full capabilities. It’s a key competitive differentiator.”

How can data be used to create emotional connections in marketing?

It’s a lot harder to target audiences today due to cookie policy changes and new regulations. But as Matt says (and everyone else agrees), “First-party data will lead to strong positioning and really good ads that connect with users. Because it’s owned by brands, it’s going to be the best quality data for testing hypotheses and segmenting data so brands can offer personalized, exclusive experiences.”

Alex puts it this way: “At the end of the day, you’re still going to be tracking conversions and clicks, so you need to do the groundwork in marketing. It’s more advanced than usability testing. To test for emotions, you have to do some groundwork and some guesswork. You need to know your brand; you need to work with market research. And when you find an emotion aligned with what you want your brand to represent, you need to identify a segment of high-potential customers. Then you find the motivators you associate with that segment, thanks to qualitative research and feedback; then you need to quantify all of that to see if you’re correct. Then you push motivators, measure results, see what boosts efficiency, retention, loyalty, customer lifetime value… and discover whether you’ve got a winning proposition.”

Matt grins: “I wouldn’t call any part of that approach ‘guesswork’. You’re simply combining qualitative with quantitative to come up with better hypotheses for testing. It’s the heart of good experimentation.”


The next installment in our Customer-Centric Data Series will be out in two weeks. Don’t miss it!