As I think of all of the reasons I have to be thankful this year, one is the continued focus on marketing analytics and the value it can provide across industries:
1. Spend on marketing analytics is expected to increase. Currently analytics represents 6.7% of marketing budgets but it will rise to 11.1% over the next three years according to this CMO survey
2. Analysts are in demand. In a list of the hottest skills on LinkedIn, the top was statistical analysis and data mining
2. Analytics add value by increasing company profits. According to a McKinsey study, “a one-unit change in the use of marketing analytics … yields a 0.39 percent increase in profits”
I am very thankful that what I love to do is valued and in demand.
Have you read the recent Ad Age article in which Brad Jakeman from PepsiCo is quoted as saying that “digital marketing” is the “most ridiculous term I’ve ever heard”? Many marketing departments are silos with separate work streams, separate analytic teams, and separate strategies. As a joint Marketo and Harvard Business Review report stated, “To address the challenges of the digital age, marketing may have added new departments such as Web, mobile, and digital. Paradoxically, these new departments often add more silos and slow things down further, making marketing even less equipped to meet customers in their micro-moments.”
Customers expect a unified experience. How can marketers provide a consistent experience when analysis, insights and strategies are not shared or coordinated? Mr. Jakeman said it best, “There is no such thing as digital marketing. There is marketing — most of which happens to be digital.”
So what are marketing departments to do? Agree on a common goal, collaborate, integrate insights, and ultimately create a comprehensive customer-centric strategy.
My prior post talked about the value of customer data. Your next question will naturally be, “so how do I leverage what I know about my customers to my advantage?” There are many ways to transform insights into increased market share. The lists below are examples but by no means the only things you can do. However, I would suggest that you see your customer data and its application as a source of intellectual property, something to be guarded and leveraged wisely.
It can enable you to increase revenue by:
- Identifying those likely to buy in the near term
- Separating those customers who need an offer to get them to buy versus those who would buy regardless
- Determining the right accessories or ancillary purchases to promote based on a customer’s purchase
- Highlighting the “next best” products based on your customers’ purchase patterns
It will also help you retain your customers by:
- Understanding the customer journey and the experiences that matter
- Identifying those likely to defect
- Ranking your customers by their lifetime value so you can reward your best customers
Lastly, it can also help you reduce your costs by:
- Enabling you to conquest smartly, targeting those that look like your best customers
- Determining the best conquest sources and communications
Are you leveraging your customers’ data to increase your market share?
A former colleague of mine always referred to his clients’ customer data as their crown jewels. He had a point. No one else knows as much about your customers’ behavior, attitudes, and preferences. If your customer data doesn’t seem valuable to you, imagine if your competitors had access to the very same information. What would they do with it?
There has been lots of talk about analytics as a source of competitive advantage. More recently, big data has promised to uncover untapped value and insights. However, have you thought more holistically about the resulting customer insights and intelligence? Used wisely, what you know about your customers can be a source of competitive advantage. It can help you increase market share by promoting the right product at the right time to the right person using the right channel. It can provide insights that enable you to improve marketing ROI, conversion rates, and conquesting. It can help you identify customers likely to defect, uncover what you need to do to retain them and help you determine if they are worth retaining based on their future lifetime value.
Finally, if you aren’t thinking about your “crown jewels”, I bet one of your competitors are. They may be able to purchase data about your customers from a third party vendor and use it for conquesting. If you don’t think customer data is valuable, your competitors do and they are willing to pay for it.
Remember the days when we asked ourselves, “What is the value of a like? A tweet?” The debate is over. A social media strategy is a requirement for any business. However, Social Media Specialists can apply best practices used regularly in other marketing channels to enhance the effectiveness and ROI of their campaigns.
Targeting. It is important that you identify the best targets for a promotion using a data driven approach. You can leverage your CRM system and use customer insights to target your customers online who are are most likely to respond to your social media campaign. Alternatively, you can use customer data to identify the conquests on-line who look like your best customers.
Post campaign measurement. Just because it is social media, doesn’t mean that you shouldn’t consider control groups and incremental lift. Here’s your chance to demonstrate the value of social media as a channel using the same rigorous methods as email and direct mail.
Combining data and insights across channels. Why not append your customer’s social media interactions to their off-line attributes and all the other customer data you have? One client found that some of their best brand advocates on-line shopped mostly in stores. Without linking off-line and on-line behavior, you don’t have a complete view of your customer. For example, you might be tempted to remove these best customers from your online communications because they don’t shop online; however, in this case, email was driving them to the store!
Are you taking advantage of the analysis tools and approaches that work in traditional direct marketing to enhance your social campaigns?
The artist, Anne Truitt, believed that ideas floated in the air, available to anyone for the taking. I thought of this today when I read a recent Forbes article on text analytics. It combined ideas from two of my recent posts. First, in order to at least break even on text analytics, you need a plan. The author is preaching to the choir. See my post titled “Plan your dive. Dive your plan”.
Second, in order to create a plan, you have to consider the benefits that text analytics will provide as well as the costs. Not all text needs to be analyzed. However, it can help you spot high-priority issues or customer defection. In the example of preventing churn, you need to know how much a customer is worth. As I mentioned in a post on text analytics, overlaying customer data to customer feedback will help you determine what action you take. For example, you may choose not to retain some customers who threaten to leave because they are unprofitable.
In summary, text analytics can be a powerful tool when used in the right situation. But first you have to determine if its worth applying text analytics.
Every sport has its own lingo and scuba diving is no exception. For example, you will hear one diver say to another, what’s the viz? In other words, what is the visibility when you are under water. But what comes to my mind most often is “plan your dive, dive your plan”. My scuba instructor drilled that into my head.
Why do I think about this so often? It applies to almost every project I manage at work and probably the same is true for you. You need to create a plan for each project and then follow your plan!
When you start a project, you need to define it. This includes creating objectives, outlining the scope of the project and incorporating feedback from the stakeholders. Next you need to create the project plan which details how you will meet those objectives through discrete tasks starting from project kickoff until the final delivery. Part of the plan will be a timeline with a cushion for the unexpected delays and problems that will inevitably come up. In addition, your plan must include a list of deliverables and most importantly the KPIs that will tell you if you have been successful or not. It is vital that you determine your success metrics at the start and that they are consistent with your objectives.
Once a plan has been developed, reviewed and agreed upon, you need to follow it. So often interesting findings in the data try to lure me away from my objectives. It’s as if the data is populated by sirens calling to me as they did Odysseus, as he tried to return home to Ithaca. I don’t mean you should ignore interesting findings if they merit exploration but you have a choice. You can revise your plan to reflect them or make exploration of these interesting findings part of a subsequent project or phase. Be sure to fulfill your original objectives before moving onto something else.
An interviewer once told me he was thinking of creating a loyalty program and wanted to know what he should do. Loyalty programs can be a valuable tool for driving revenue and fostering customer loyalty as I have written about here. As I noted in another post, they can help you make smart marketing and merchandising decisions.
However, a loyalty program needs to be grounded by your business needs. Ask yourself first:
- What am I trying to achieve? Do I want to improve customer retention, drive revenue or encourage customers to purchase multiple products and services from my company?
- How will I measure success? What metrics will I use to measure if I am achieving my goal and can I track those metrics on an ongoing basis?
- Will my program be public or private? Some luxury brands enroll customers in loyalty programs based on their spending habits and reward their best customers without letting them know they are in a loyalty program.
- Will my program have tiers? Explicit tiers can encourage customers to stretch and reach the next level.
- How will I reward my customers? It is important that customers value what they receive in return for their loyalty.
There are significant financial considerations to any loyalty program so Finance will need to be involved in the development and design of the loyalty program. But these questions will begin the dialogue about what the loyalty program should look like. Once you have it in place, you should monitor the program’s health.
Customers want to tell others about their experiences with your products and services. Are you listening?
With text analytics you can quickly convert their unstructured feedback into data that can be analyzed for insights whether they be customer complaints about service, information about product defects or praise for a great customer experience. This information can be used to quickly address problems and learn more about your customers.
There are a variety of Text Analytics tools available. They will automatically categorize the text. However, you will want to tailor the algorithms to capture key words for your industry or region. If you have ever visited the Boston area, you may have been surprised by the number of times that the word “wicked” is used in conversation. “Wicked” in this area is used to mean very as well as bad or evil. Similarly, your industry might have lingo that is special like “BOGO” which means “buy one get one”.
Text Analytics tools will also enable you to extract key words or concepts. For example, you might want to capture your brand or products and see what people are saying about them. They will also determine if the sentiment is positive or negative.
Overlaying what your customers are saying with their attributes – their loyalty, lifetime value and experience with your brand – will enable you to understand and compare feedback across customer groups. This will help you prioritize and tailor your response. Combining customer data with customer feedback will provide a context for what your customers are saying.
One of the reasons I enjoy being a member of a book club is that I get introduced to books I would not have chosen myself. The current book club selection is Flight Behavior by Barbara Kingsolver which is the story of what happens to the residents of a small Appalachian town when Monarch butterflies unexpectedly migrate to their town. Imagine my surprise when I read an excellent definition of the old adage, “correlation is not causation” in this novel.
The book before this one was A God in Ruins by Kate Atkinson. The term chi square automated interaction detection appears in this novel about a World War II Halifax Bomber pilot, Ted Todd. It is usually abbreviated to CHAID. For more information on the technique, click here.
I wonder what will be in the next book!