This Friday I read a comment from recent research on marketing decision-making, which said that the majority of marketers still rely on gut feeling. Noticing at the same time that these marketers point at data as a potential key asset for the marketing department, it seems to support what I see in my everyday engagement with marketers: That most are still unaware of 1) what types of decisions that can and should be supported by data, and 2) how to derive these insights.
In an earlier blog, I emphasized that as marketing continue to increase budgets to create strong brands and compelling customer experiences through a proliferation of touch points, the challenge is to ensure that we have the best possible foundation for decision-making. In most cases, there is a multi-million dollar question at stake on an annual basis and consequently, answering the two questions above becomes of increasing importance for us in order to enable our businesses to act in today’s competitive environment.
Empowering marketing decisions
There is a wide range of types of decision support for the modern marketing department that can be supported by data and analytics. From my current work, I see analytics at work on a strategic, tactical, and operational level within the marketing organization. It implies a wide range of processes related to above-the-line marketing (ATL), below-the-line marketing (BTL), budget allocation, marketing performance management, market intelligence, etc.
To illustrate some of the potential areas of decision support that I encounter in my daily work, let me provide some examples of the needed insights related to some of the key marketing processes for inspiration.
Marketing strategy: Enforcing proactive market engagement
- What is the overall market potential from existing customers given our knowledge of probability in relation to churn and value?
- What is the forecasted market adaptation rate of a new brand/category?
- How do we expect competitors to act/react in the coming year/quarter/month/week?
Marketing budget: Optimal level of investments to support corporate objectives
- What is my overall Return on Marketing Investments (ROMI) compared to sales/promotions/discounts?
- What is our planned split of marketing investments on brand/category/product level and how is this adjusted throughout the year?
- To what degree does efficiency of our resources and processes uphold the necessary profitability?
- What is the optimal mix of marketing vehicles for a campaign to reach its objectives being, for example, brand, equity, or sales?
- How do we enforce a global contact policy across the entire customer experience that is based on a customer life cycle perspective and upheld in real time?
- In what way do we determine the right message to the right customer at the right time across touch points based on past and immediate interactions?
- How do I increase the effect of conversion rates of 1:1 marketing activities such as e-mail, direct mail, websites, and social media?
- What is the attribution of digital marketing activities?
- Why does our most profitable customers have a higher basket abandonment on our website than our less profitable ones?
In my engagement with marketing organizations, I encounter many other examples, including combinations of different types of insights to shed some light on a potential challenge. Examples of this could be:
- Are we focusing our retention activities on the most valuable customers?
- Alternatively, are we focusing on trying to cross-sell to customers that will actually become of high value to us?
In other areas, I encounter very relevant discussions related to the understanding of the effect of a campaign’s creative work, where we potentially need to expand our analysis beyond traditional surveys and metrics to make an assessment.
A key consideration regarding the above examples is that – as markets and organizations continue to evolve these areas that might be relevant for one particular company in one particular point in time – what is also needed is the ability to enforce a culture of openness and curiosity to continuously challenge and change your view on the market and the customers you work with.
The need for data and analytical thinking
As our engagement with customers continuously improves through stronger system support such as Point of Sales systems (POS), mobile applications, call center systems, social media management tools, etc., so does our ability to capture the data that are created through these interactions. As these data are continuously expanded, often beyond current capacities (competencies and tools), most marketers I speak with have a desire to integrate more data sources and become more advanced in terms of dynamic exploration and types of analysis.
We are generally moving towards more fact-based decision-making. I see that most companies start with a limited data foundation – as we simply do not know what we need before we start asking questions, as mentioned above. This is where the necessary business understanding, creativity, and analytical thinking comes into play, and where I see several leading Danish as well as international companies use a lot of their energy. Bringing in different types of roles in a controlled environment can really be very fruitful and ensure the necessary alignment of roles, responsibilities, and expectations that are the pillars of this initial cultural change.
One of our larger international customers have throughout the years become very strong in the combination of business sense and analytical thinking and have now built what they call a Customer DNA Factory. Managed by the marketing intelligence department, this is a project to gather all relevant data on customers and to use this to enforce fact-based decision-making across the organization. Going beyond the primary responsibilities of the marketing department, this also includes the sales department in areas such as estimating price levels.
I see several Nordic organizations moving in the same direction, starting out by asking the right questions, capturing data, and deriving insights to find answers.
If you want to learn more about the possibilities with analytics for marketers, see Thomas Davenport’s “Competing on analytics: The New Science of Winning” and Gert Laursen’s “Business Analytics for Sales and Marketing Managers: How to Compete in the Information Age”.