26 Sep Looking for diamonds in a coal heap
OK. Imagine that there was this huge mountain of coal and I told you that somewhere in this coal there were diamonds and that you had to find them.
Well the dumb thing to do would be to sift this mountain lump by lump, so you would need a strategy right?
The smart guy might split the mountain into areas and then hire a prospector or mining expert to start analysing and sampling the coal trying to find if there were more pockets of diamonds in particular segments. He would concentrate on these areas.
Now that he had much less coal to sort through, he could then process it, crushing and filtering until he produced little piles of coal that could be sorted by hand.
Isn’t this what we do as marketers? We are faced with a mountain of data and we sift, segment, sort and filter it until we have lists of customers containing potential ‘diamonds’ and we pass these lists off to be processed by the channels. And the current rate of success is about 1 or maybe 2 diamonds per 100 hundred customers. Luckily, just like diamonds, the value of this 1 diamond outweighs the cost of processing the other 99 lumps of coal.
Let’s sit back and think about this. Why do we do it this way. Well the answer is that we get the most diamonds for the least amount of energy expenditure. After all, no-one want to dig up a whole mountain.
The same applies to using statistical analysis for ‘mining’ the leads for our diamonds. Isn’t it easier to process 30,000 customers instead of 1,000,000?
After all, we have been doing it this way for 20 years. But the big thing is that unlike physical digging, we do data processing, and this has changed dramatically in the last 20 years. You can now crunch more numbers on your smart phone than the SAS guy could do in a week 20 years ago.
So remember the dumb thing to do was to sift the mountain lump by lump. Well with cheap data processing, it is now feasible and economical to do this. Just to bring this into focus one of our customers is running their EDM processing on a server that costs about €10,000 to do the same thing that NAB paid €8m to do 15 years ago.
Processing the whole mountain is called Event Driven Marketing. It means that every individual customer can be analysed, every single day, to determine if something significant has happened to them, if their circumstances have changed, and if they have become a diamond.
What does this mean?
- It means that instead of having to reduce your data to a manageable size for processing, you can analyse everything, economically.
- It means that you can process every single customer instead of just those in the selection.
- It means that you can be accurate down to an individual customer instead of just segments of customers.
- It means that you can find every single diamond instead of just the high density clusters.
- It means that you can find each diamond as it appears, every day.
- It means that you don’t miss those diamonds that disappear by the time you get around to contacting them.
- It means that the lists you produce are much shorter.
- It means that the leads you produce are highly accurate – at least 10 times more than your previous lists.