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Is contextual marketing the undeniable future for marketers?

23rd Mar 2015
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While data-driven marketing has risen in prominence in recent years, the latest marketing discipline to splinter off from this promises a more connected, intuitive approach to customer engagement, retention and conversion. Its name is contextual marketing, and it could just be the solution to many of marketing’s current challenges.

“Marketing is broken,” announces Bernard Chung, senior director of global solution marketing at SAP, one of the leaders in personalised marketing technology. “It’s not working, it’s getting worse and the response rates are not improving.”

And if you look at the situation from a performance perspective you can see how big the problem is. “A 2% success rate in any other function, such as sales, operations or quality control, is not a very good job - you’re not going to be in that role very long.”

For Chung, contextual marketing is the next level of personalisation. Up until now, it’s only looked at a customer’s past information: which campaigns they responded to or purchases and which services they used. It was based on what they did or didn’t do. Many marketers now leverage predictive analytics like collaborative filtering techniques, explains Chung: “The recommendations via are based on similar-looking people to the customer, but that isn’t quite right because while they might be similar, they aren’t you.”

Instead, contextual marketing leverages the traditional sources of customer information; historical, predictive propensities, and most importantly the current “in-the-moment” customer intents. This real-time customer intent allows marketers to identify and act upon the right emotional moments to nudge the customer into conversion.  

“For example, I know my customer is on my website looking at product X, in fact he’s been looking at it for over five minutes. Based on my data, typically, I know that when people look at my products for over five minutes there’s a very high chance that they’re going to convert. At that moment, if I have that information, I might do a pop-up saying: ‘if you’re interested in this, you get free shipping today.’ You want to capitalise on that moment when they are at the highest emotional state to convert: use that extra incentive. It’s being able to capitalise on the real-time customer intent – it really drives up conversion,” he enthuses.

Contextual marketing is just the ticket for an electronic retailer

Chung sites a great example of M. Video, a large consumer electronics retail chain in Russia, which has been running a contextual marketing campaign targeted at website and cart abandoners. The company’s goal was to combat shopping cart abandonment and recover lost revenue by creating relevant experiences for prospects post-abandonment. M. Video was able to achieve this by sending real-time messages based on the consumer’s contexts such as on-site behaviour and their interests.

“The customer is targeted with relevant messages and offers based on their interests while browsing onsite. The trick is striking while the iron is hot and tapping into the emotional connection consumers have with the products they are interested in purchasing. This is why following up with abandoners immediately after they’ve left the website is essential. It works, and the numbers prove it. Shortly after implementation, M. Video has recovered more than $7.1 million in revenue and saw an overall 29.3% increase in their cart recovery rate.”

In this instance, the relevance to the end user is clear but behavioural marketing has had some criticism in the past from those concerned about privacy issues. This needs to be addressed, agrees Chung. He suggests the best way is to be transparent and upfront about any plans to use customer data and the value that the customer will receive, and give customers an option to opt in or out.

“In most cases, if customers know that they will be receiving offers and promotions on the products/services that they like and want, they are more than willing to trade their preferences and historical information. And marketers can also capture frequency preferences of each customer so they don’t feel overwhelmed.”

One way he suggests of achieving this is to set up an online privacy/preference centre where customers can specify the communication frequencies by type of communication, by each specific channel, and also specify which days/times as well.

Developing an enriched customer view

Developing a single customer view is critical, but organisations have their work cut out for them, says Chung.  

“An average, mid-sized marketing organisation uses over 36 different marketing systems, from email and social media, to content systems, yet there aren’t that many integration points between them and they don’t really work together.”

To this end, he advises developing a single platform to assemble the information streams to identify who the customer is, what they’ve done and what they are looking to do. Even using unstructured data such as social data, and then employing tools like text analysis from web forms to identify key words, helps to build a broader picture of the customer and provide intent and motivational information as well.

“Companies can even convert audio files from call centre calls into text, analyse it and leverage the data to figure out the customer’s sentiment to help enhance and enrich their experience,” he adds.

However, Chung warns that the challenge lies in accurately channelling the correct response or message based on all the customer data: “Taking the information on a real-time basis and acting on it in a split second is not an easy thing to do. If a customer is upset or complaining maybe trying to sell him something is not the right move, maybe instead you should be offering him a benefit. There has to be an automated response, a decisioning engine that takes this data and makes the right recommendation or action to take.”

With that in mind, shouldn’t all organisations therefore be creating a contextual marketing team to start the process of gathering and analysing data?

“There definitely needs to be an additional space for contextual marketing in organisations, but you could, for example, identify the shopping basket abandonment from the commerce system and send the customers a follow-up email with links to the products they were looking at. You can re-engage them and provide a simple convenient way to remind them to finish their purchase.

In addition, marketers can pool additional channels such as the call centre, or mobile app data to broaden the customer view: “Think about all interaction points the customer has with you, collect that data and combine it with all the other interaction channels and then it becomes a powerful differentiator, a powerful capability within the organisation. The vision: to engage customers across multiple channels throughout the entire buying journey process so you’re moving a customer from one step to the other and escorting them through the buying journey.”

This brave new world for marketers is hard to pin down as the digital landscape continues to evolve, but Chung whole-heartedly believes that contextual marketing is the future of marketing and enabling the goal to delivering one-to-one marketing. “From a customer perspective, they don’t feel it’s marketing, instead is perceived as 'value added information'; a conversation that helps builds relationships, delights customers, and makes the customer experience enjoyable and fun. That’s where the future is going. When you are not perceived as marketing, then you’re doing the true marketing that you need to be doing.”


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