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Blog | 5 min read

The Danger of Misidentifying Your Best Customers

July 28, 2021

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To market to your customers efficiently, first you have to know who they are. When brands mis-identify their customers, they fail to value them correctly and do not have a good idea of their behaviors and preferences. As a result, brands are unable to connect with them in a way that feels tailored and authentic. For the customers, this means a sub-par experience where they walk away unsatisfied and unlikely to engage again. For the business, this means losing ground in a highly competitive market environment where customers expect stellar experiences (and plenty of competing options exist).  To make matters worse, your best customers are often the most difficult to understand. High value customers often make more purchases across different channels over longer periods of time and, as a result, their data is messier and harder to accurately unify. Low value customers often make a purchase or two on a single channel and then leave. Their data is simple, but they also don’t make as much of an impact on your brand.

Unraveling the mystery

Let’s start at the beginning. Exactly why is it so difficult to accurately identify customers? Picture this: your brand just received a new online buyer called Jessie. You send her your welcome series. At the same time, another in-store customer called Jessica hasn’t purchased from you in four months, so you sent her discounts persuading her to shop with you again. Here’s the kicker — Jessie and Jessica are the same person. Static algorithms and business rules devised by technical teams do not account for the ever-changing nature of human life. They tend to focus on joining records using only common identifiers like name, email address, or phone number. This approach is rigid, lengthy, and often breaks over time. Think back to everywhere you’ve ever lived, every phone number you’ve ever had, every email address you’ve ever had. Was your high-school email address similar in any way to your current one? Are you still living in the hometown you grew up in? It's safe to assume the average person has gone through a number of these changes in their lives. 

Another glaring issue is that most systems — like e-commerce, loyalty, mobile, and point- of-sale – weren’t designed to integrate with one another. Since they don’t share the same identifiers of individuals, it’s difficult to differentiate which purchaser is which. This means there’s no linking key, and therefore no simple way to build a single view of the customer that includes all of their necessary information: who they are, what they purchase, and the ways they interact with your business.

Even properly collected and formatted data is useless if grouped incorrectly, as the right data merged into the wrong profile is still going to be inaccurate.

The fallout

There are countless ways for businesses to collect data on their customers. From loyalty programs, to transaction history, to email engagement — data is there for anyone who wants it. Unfortunately, that’s where the simplicity stops. Reaching data is easy, but organizing, let alone understanding messy data is where the challenge arises.

Most customer data management and unification practices cannot deliver an accurate view of their customers. Identity resolution, the act of merging consumer data with its matching profile, is hugely important — if that isn’t done properly, then the marketing steps that follow are guaranteed to be less effective. Even properly collected and formatted data is useless if grouped incorrectly, as the right data merged into the wrong profile is still going to be inaccurate. This leaves brands with incomplete, flawed views of their customers, and the fallout from this is bad, especially for high-value customers who make up a large chunk of a company's revenue.

Understanding customers allows brands to plan for the future and deliver personalized experiences at scale. Not having a single view of your customers causes a waterfall of negative consequences. Basic KPIs like total numbers of customers and customer lifetime value are off-base, individuals are assigned to the wrong segments, and marketing campaigns that need accurate data for targeting and effective personalization do not hit the mark, and often fail.

Even more distressingly, these issues hit your highest value customer the hardest. These customers are responsible for more than half of a company’s revenue. Retaining existing customers, especially high-value ones, costs much less than acquiring new ones, so it’s critical for brands to locate and understand them in order to target them more effectively and give them the best personalized experience possible.

A new era of advanced identity resolution

So how can brands tackle this issue? A robust Customer Data Platform (CDP) with the right identity resolution capabilities is the key to deciphering convoluted customer data and identifying your best customers. Applying a more flexible approach to data unification and resolution, powered by artificial intelligence, provides the basis to create a single view of the customer, the solid bedrock upon which accurate insights and effective personalization stand. 

Learn more about how Amperity solves the problem of high-value customers having the messiest data in our guide to AI-powered identity resolution.

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