How to Use Obama's Secrets to Micro Target Customers

July 16, 2013

US President Barack Obama gestures for the crowd to keep quiet about his visit to the O&H Danish Bakery to buy kringle pastries so that First Lady Michelle Obama wouldn't find out about the visit, during a town hall event on the economy at Racine Memorial Hall in Racine, Wisconsin, June 30, 2010. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)

I love how predictive analytics is in the news these days! It's literally coming out of the dark cave into the limelight.

The recent New York Times article on the Obama team's use of predictive analytics is the best I have read so far and it starts to explore how to deliver to marketers some of the Obama campaign’s technologically advanced formulas for micro-targeting.

However, you don't need to hire one of the Obama campaign veterans to apply Obama's secrets to your business. There are off the shelf solutions (like the one we are selling at AgilOne, or as defined by David Raab) that make it very easy to use predictive analytics and machine learning to woo customers. Here are three examples (quoting the New York Times article for the Obama tactics):

1. Use consumer behavior to micro target campaigns

What the Obama campaign did:

 The 2012 campaign took advantage of advanced set-top-box monitoring technology to figure out what shows the voters they wanted to reach were watching and when, resulting in a smarter and cheaper — if potentially more invasive — way to beam commercials into their homes.  In the end, an analysis by the Republican ad-buying firm National Media found that Obama paid roughly 35 percent less per broadcast commercial than Romney did. Kantar Media CMAG, an ad-monitoring firm, showed that Obama and his supporting super PAC got nearly 40,000 more spots on the air than Romney and his super PACs did despite spending roughly $90 million less.

What you can learn from it:

The key is to analyze consumer behavior in detail. Moving from batch 'n blast campaigns and mass marketing  to micro targeted campaigns pays. Even without access to setup box data, you could start with analyzing web browsing behavior and email engagement for example. Send more emails to those who regularly engage with your campaigns than to those those who don't. If customers express interest in certain products but don't buy, target advertising of those products - and those products only - to them. Use Facebook Custom Audience to target advertisements specifically to a group of named individuals. Mavi Jeans used a series of micro-targeted campaigns with personalized discounts and product recommendations to nearly double the average orders per customer.

2. Allocate resources intelligently

What the Obama campaign did:

The Obama campaign literally knew every single wavering voter in the country that it needed to persuade to vote for Obama, by name, address, race, sex and income. Call data, census data, state voter lists and the like fed into algorithms that produced support scores. One ranked how likely swing-state voters were to support Obama on a scale of 0 to 100, and another ranked how likely they were to show up at voting booths. Those scores helped the campaign direct resources toward the right voters.

What you can learn from it:

You can use similar algorithms to determine how likely a customer is to leave you (predict churn) or how likely a customer is to buy from you; even how likely they are to open one of your emails or how likely they are to buy a certain product. These very granular predictions - on a customer by customer basis - are particularly useful when you have limited resources, as the Obama campaign did. For example, when you decide how to spend your direct marketing or discount budget. It's best to send the catalogues or discount coupons to those customers who are persuaded by them to buy - and wouldn't not otherwise have bought anyway. A large PC manufacturer did just that with their direct mail and increased ROI by 64%.

3. Leverage social media to persuade

What the Obama campaign did:

The Obama campaign sifted through self-described supporters’ Facebook pages in search of friends who might be on the campaign’s list of the most persuadable voters? Then the campaign would ask the self-identified supporters to bring their undecided friends along. The technique, as they saw it, could also get supporters to urge friends to register to vote, to vote early or to volunteer and donate. But the campaign’s ultimate goal was to deputize the closest Obama-supporting friends of voters who were wavering in their affections for the president. 

What you can learn from it:

When it comes to persuasion, customers - like voters - listen mostly to their friends. Use referral programs and social campaigns generously.