5 obstacles to marketing intelligence - part ii

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5 Obstacles to Marketing Intelligence – IIWhat Stops Us From Achieving Marketing Greatness

Quick Review of Last Week’s Lecture

Last week, we started talking about the 5 obstacles that keep organizations from achieving marketing excellence

We covered the first 2 obstacles and will be moving on the final 3 this week

We will have established the foundations of the course after this lecture and will start moving into the actual analytics and metrics from our next class

So let’s get caught up first…

Obstacle 1: Getting Started

What are some of the reasons that people give for why they are unable to get started?

How do we overcome them?

Obstacle 2: Causality

What is causality?How does it affect our marketing?

As intelligent marketers, how do we counter causality arguments?

The Remaining 3 Obstacles

Overcome Obstacle 3: Lack of Data—

Strategies for Obtaining Customer Data

Many marketers struggle with too much data, rather than not enough

Remember that we covered collection and analysis of the right data in overcoming obstacle 1

But B2B companies have a legitimate data challenge, since these companies do not sell directly to customers

They sell through a channel and do not have direct access to customer transactional data

There are three approaches to overcome this obstacle

Option 1: Channel Partner Data Sharing

Mornings for John Chambers, CEO of the $39 billion Cisco Systems empire, starts with a can of Diet Coke and Cisco’s e-Sales portal

Through this enterprise web application, the senior management can drill down through global sales data that occurred on the previous day by geography, purchasing company/products or sold by a specific sales manager

Now, for those of you unfamiliar with the Cisco sales model, this is a great trick

Cisco sells more than 95% of its products indirectly through value-added resellers

So how does Cisco do it?

Cisco contractually requires its value-added resellers to share customer sales data

Most B2B companies find that requesting customer data from the channel partner is met with a firm ‘‘no way.’’ The partner refuses on the grounds that the data are its property and the source of its competitive advantage.

Cisco requires channel partners to share customer data in order to resell their products

So B2B companies must answer the question:

‘‘What’s in it for my channel partner to share its data?’’

One answer is that B2B companies spend considerable marketing dollars co-marketing with channel partners so shared data analysis provides deep insights into how to radically improve the marketing performance

Now, we need to be clear about one thing – and it’s a big thing - the B2B firm does not necessarily have to know the name and address of the customer; this could be deleted from the shared data file.

What we are interested in is what products or services the customer purchases, and the ability to act upon these data, perhaps through the channel partner

This “disguise approach” works because the channel partner’s concern that if the B2B firm has the customer data, it will want to go direct and cut the channel out of the deal

Option 2:Frequent Drinker Programs

Suntory is one of the largest liquor distillers in Japan and brews a beer called Suntory Malts

It is in the 3rd tier of popularity, in terms of sales revenue and brand awareness

But in the late 1990s, Suntory did something with the Internet that at the time that was particularly innovative

They created a frequent drinker

web site

Now, Suntory, like Cisco, sells all of its beer indirectly through beer distributors, bars, restaurants, grocery stores and vending machines – which makes data collection difficult, if not impossible

So the creation of a website where customers would come to and input the number of beers they drank, given by codes on the bottles, and in return get points was an interesting way to collect data

In return for sharing the data, customers got to purchase silly hats, bottle tops with their name imprinted on it, or the chair that is too uncomfortable to sit in

At the peak of the campaign, Malts reported 300,000 visitors a month to the web site

More importantly, these were high-value customers – the frequent drinkers – and the website enabled the collection of data for direct marketing extremely easy

Now, this worked in Japan because after work office parties involve the mass consumption of alcohol. This would not have worked in the US!

But the idea of a frequent drinker program transcends cultures and geographies…

Welcome to

mycokerewards.com

My Coke RewardsThe website is a loyalty

program for frequent Coke-branded product drinkers

Again, users get points for how many Coke drinks they have and get rewards such as T-shirts, DVDs and discounts with the many partners affiliated with the marketing activity

Whatdowe

learn?

Customer data is a cheapas a T-shirt!

My Coke Rewards enable Coke to have direct access to their “frequent drinkers” and to do direct marketing via e-mail to this valuable customer base

The site also provided a revenue stream for Coke through the paid ads on the site for participating partners

In both of these example, there is a crystal clear value proposition for customer and resellers to share their data

So the question that we ask is:

“What is your value proposition for customers to provide their

Option 3:Use Surveys as a Proxy

for Customer Data

We can also use focus groups and surveys for fine-grained segmentation and target marketing

The idea is to capture the demographics, characteristics, and purchasing habits of your end customer through in-depth market research

We can create survey-based, analytic marketing offers targeting these segments and test them using focus groups and experiments as we discussed in Obstacle 2

Now, I should note that this approach is not as effective as analyzing large customer transaction data sets, it can be a great way to get started if you are a B2B firm

There are many professional service firms that will design, conduct and analyze the survey, but you can start with a free lunch and a gift for participants

The internet has also given us the ability to create and conduct online surveys. For the cost of surveying 10 people in person, you can survey 100 or more online

But there is a problem with the survey model, online or offline – getting people to sign up and participate

The other problem that we discussed was privacy issues because customers can be hesitant about sharing information in fear of how it might be used

One marketer once told a story of their legal department telling them to delete customer data after a specific time period for fear of liability

The reason…

The company did not have a privacy policy and the legal department did not understand what marketing planned to do with the customer data

So, first thing – marketers must clearly communicate the privacy policy both internally and externally about how data will and will not be used

In some cases, there are laws preventing direct data collection of customer data

In the United States, the Health Insurance Portability and Accountability Act (HIPAA) prevents pharma companies from knowing patient prescriptions

While we have to follow these laws, there are ways around them

If you create a website targeting a specific illness, like diabetes, you can provide information and provide community support groups to give product information to customers while gaining customer feedback and insights

The key understanding is simple – always add value to the customer interaction by answering the question “What’s in it for me?” from the customer’s perspective

Overcome Obstacle 4: Resources and Tools—

Build the Infrastructure for Data-Driven Marketing

Infrastructure forAnalytic Marketing

A PC combined with Microsoft Excel makes for an amazingly powerful tool

For infrastructure, this is all most marketers need to get started on the analytic marketing path

But you should know the limitations - Excel 2003 had a limit of 65,536 rows in a spreadsheet, and Excel 2007 has a limit of 1,048,576 rows by 16,384 columns

So if you have a large number of customer, Excel is not going to work as a marketing database, not should it

Now I will provide you with Excel templates for analyzing customer satisfaction data, internet metrics, and calculating financial return on marketing

We can also use Excel to create and manage marketing campaign scorecards

But if you have a large customer database, you will need to use SAS, SPSS or a specialized business intelligence application

‘‘The difference in these requirements is the difference between building a ranch house or the Empire State Building.’’

In short – Think big, start small

and scale up fast

Infrastructure fora Large Firm

Customer Data Collection

Data Storage

Technical Tools

We will spend time talking about this model in later lectures, so I will hold off on going into detail now

Overcome Obstacle 5: People and Change—

Create an Analytic Marketing Culture

What’s the one phrase that we hear more than any other in business when it comes to change?

“I am just a _________ and have no influence to create change.”

90% of employees underestimate their potential to influence others

In previous examples, we have seen that small changes can have big impacts

You have to understand that in the culture of an organization, change starts with you. So start with simple changes that positively impact those around you

Now, we have to understand that creating a analytic marketing or marketing intelligence culture requires more than one person

You have to convince others and the quick win is an essential early step

Find out who the decision makers in your organization are and learn what will convince them to believe in the change

One fact that we need to remember is:

The trouble with change is people

To understand corporate culture, think of it as three major categories: rational, bureaucratic or political

Young MBAs believe that organizations are rational meaning the best idea will win. Experienced managers know that isn’t the truth.

A bureaucratic organization has a very rigid organizational structure, and protocols must be strictly followed in communicating with senior executives

These organizations are militaristic, with the general giving orders from the top, and the commanders ensuring the orders are executed on the front lines

Political organizations have centers of power, with individuals who have kingdoms within the organization, often accompanied by budgetary authority and staff

The best example of a political organization – a university or

center of higher learning

Henry Kissinger once said, ‘‘The reason the fights are so fierce in academia is because the stakes are so low.’’

What are thebest ways to drive change?

‘‘Our marketing budget is being cut by 36 percent; we need to justify our future marketing spending.’’

‘‘We are losing significant market share.’’

‘‘Our discount marketing is killing overall profitability.’’

‘‘We are hemorrhaging customers and don’t know who are the most profitable.’’

‘‘Our competitors are consistently outmarketing us.’’

Create Incentive for Changethrough

Measurement and Behavior

Weight Loss &

Calorie Counting

The point is if you can measure it, you can control it.

For marketers, making metrics and measurement ‘‘public’’ within the organization will incite change

Many organizations incite activity, not results, so the idea is to focus on the metrics that really value marketing

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