What Merchants Can Learn From Spotify Use Of Customer Data

However, if there was any year Wrapped may have flopped, it was 2021. It’s not been a good 12 months for the world’s biggest tech companies, as they’ve been accused of everything from invasions of privacy to helping foment insurrections, aiding and abetting human trafficking, and undermining democracy. Even Spotify has faced its fair share of barbs for not passing a fair share of its earnings on to artists, among other things.

Vanity Fair writer Delia Cai’s Tweet sums it up pretty well:

So why is Wrapped such a big hit? The truth is Spotify has worked out how to leverage the vast amounts of data it harvests to create a great customer experience. And that’s something any eCommerce merchant should be trying to do.

Big data energy

Before we dive into what Spotify does with all that data and a couple of takeaways for us mere mortals without access to Taylor Swift’s discography, it’s worth taking a look at Spotify’s data collection efforts.

Understandably, Spotify isn’t too keen to have its data collection practices as a matter of public record, but thanks to the EU’s General Data Protection Regulation (GDPR), we have a pretty good idea of what Daniel Ek et al have access to.

When the regulation came into force in 2018, it gave people under its jurisdiction the right to request a copy of any of their personal data a company has access to. Austrian developer Peter Steinberger exercised that right and (after some back and forth) access to data on basically every interaction he had ever made with Spotify.

The data included things you would expect Spotify to track, like which songs he listened to and which genres were his favorite, as well as some surprising minutiae, like the brand of headphones he was using, at what point of songs did he turn the volume down, and even when re resized the browser window Spotify was open in.

As other developers pointed out, vast amounts of this data amount to nothing more than virtual trash. After all, what actionable insights can be gleaned from what size a user likes their browser windows to be? That’s without even getting into the ethical concerns about storing so much data.

But when it comes to data, much like talent, what matters is what you do with it. Spotify collects so much data (and makes a lot of it available) that some scientists have suggested it can be used to figure out when the world is happy, but what’s really interesting and pertinent for eCommerce is how the streamer makes its customers happy with that data.

3 ways Spotify uses data to make a great customer experience

Let’s dive into just three ways Spotify leverages data to make for a memorable customer experience, and what merchants can learn.

Personalization

For a lot of people, their music taste is a defining characteristic. Whether you’re an emo, a goth, a punk, or a house head, a lot of people have their identity wrapped up in what tunes they listen to. So it makes sense that Spotify Wrapped takes a personal approach to presenting the Wrapped data to users.

That means doing things like giving users their own top five rankings for songs and artists and telling them how they ranked compared to other users in terms of minutes listening to a particular artist or podcast. Spotify even quizzes users within their own wraps, presenting them with two true statements and one false statement about their listening behavior and asking them to determine which is false.

While the nature of providing this service to millions of people means lots of it isn’t personalized (for example, the line “you understood the assignment” has appeared in umpteen Wrapped to widespread derision), there’s enough personalized in there to make every user feel seen.

What merchants can learn

The importance of personalization is well-established and there’s been enough digital ink spent on the subject to fill a digital ocean, but it bears repeating. As the Spotify example shows, you don’t have to personalize every little interaction you have with a customer, even just a well-placed reminder that you know and care about them can go a long way.

Staying on-trend

Another advantage of all that data Spotify has on users (including data from their cookies and any other apps they may use to log in) is they know what’s hot and what’s not. Beyond the basics like location data and usage time, Spotify can tap into users’ interests and hobbies, and use that information to connect more deeply with users.

For example, Spotify highlighted the different themes and topics users created playlists around. From gardening playlists (more than 2.9 million), sea shanty playlists (187,000) and somehow even vaccine related-playlists (more than 42 million) all had a moment this year at one point or another. This is another way of Spotify making users (read: customers) feel seen and feel that Spotify as a brand understands what they care about, rather than just offering them up a product or service.

What merchants can learn

Listening to your customers never goes out of style! Back in the day of the mom-and-pop corner store that meant chatting with them when they came in to buy milk, today it means actually interrogating the data they provide you to see what they care about outside of your products and services, and adjusting your communications accordingly.

User-generated content

Wrapped is the ultimate in encouraging user-generated content (UGC). As much as music is personal, it’s also communal, and Spotify taps into that by encouraging users to share their Wrapped playlists on social media. But don’t take our word for it, just take a look at what some top industry insides told Adweek.

“Spotify’s ‘Wrapped’ annual activation is my favorite social content every holiday season. Every year they make it more shareable, community-driven and insightful,” Gabe Alonso, Head of digital platforms and community, PepsiCo.

“I’m a big fan of interpreting data and understanding user consumption. Spotify turned listening data into a user-generated content campaign, sparking people’s curiosity about what their friends and family were listening to, how often they were listening and what drove people to the app/website,” Andrew Rebhun, VP of digital, El Pollo Loco.

What merchants can learn

Alright, so Spotify has a leg up in that its user-generated content can include global megastars like Taylor Swift, Justin Bieber, and BTS. But that doesn’t mean you can’t learn a thing or two for your site. The Spotify example shows that whatever content you do create around your brand should be easily sharable, and, more importantly, it should encourage interactivity. People get more out of Spotify Wrapped by sharing it, so that should be your content creation goal.

That’s a wrap

Spotify is data-driven, as are the best eCommerce stores. Most importantly though, Spotify goes beyond just harvesting vast amounts of data. Instead, it translates that data into an aspirational customer experience, allowing it to extract more value from the customer. This is something Jerry Smith, COO of Ogilvy Group Asia and the CEO of Ogilvy Consulting Asia, touched upon in our most recent podcast episode, which you can listen to below on Spotify, or anywhere else podcasts are found.

Here at SmartOSC, our mission is to build data-driven eCommerce stores that convert. Get in touch now if you want to learn how we can help your business.

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