Download Building A Marketing Analytics Capability

Building A Marketing Analytics Capability
Prophet’s senior partner for Analytics James Walker has
been leading a book project over the last few months
looking at The Future Of Marketing Analytics. We’ve
interviewed over 40 CMOs, analytics leaders, business
school professors, and leaders of analytical-software
vendors. The conclusions are coming together, and we
should be ready to publish in the fall, but there are some
early learnings around The 8 New Rules of Building A
Marketing Analytics Capability.
1. Dancing With Ambiguity
Often, analytics is incorrectly confused with mechanics.
Different analyses, different data sets, consumer
research, etc. will often give different answers. There is
not a mechanical solution that means analytics can be
used blindly. Instead, there is an art to combining the
different pieces of evidence. Building a marketing
analytics capability needs to take this “evidence”-led
approach, not just work with data and analytics like a
blind-watchmaker. Analyses can sometimes appear to
be contradictory, but this notion of embracing apparent
ambiguity is fundamental to building a marketing
analytics capability in the 21st century. You can’t get
stuck expecting marketing analytics to be black and
white. At the heart of creating this capability is figuring
out how you reconcile conflicting information – do you
choose a winner, average the results, dig deeper? New
marketing analytics capabilities have to break the silos of
Research (typically serving a marketing function) and
customer analytics (typically serving a CRM or
commercial type function) and embrace the ambiguous
answers that come from different types of analyses. The
interviewees emphasized the importance of being
“grown up” enough to cope with nuances of conflicting
data and analyses.
2. Meta Models
There are too many point solutions looking at one aspect
of the market mix individually. Going forward, you need
to build meta models that absorb different vendors’
individual effectiveness/targeting models for different
media, e.g., digital, TV, Salesforce, promo, retail, web
etc. Media models need not be huge data and equation
integration exercises – it can be as simple as building a
spreadsheet to attack an everyday problem, but include
in that all the coefficients you have from different point
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solutions. Consumer research and customer analytics
can be combined in your “spreadsheet” to create overall
meta models that break silos.
3. Analytics As A Creative Force, Not Just A
Decision Support Tool.
In creating a marketing analytics capability for the 21st
century, you can’t just be thinking of analytics as a
decision support tool. It’s not a question of asking the
analytics oracle, “Hey, should I increase my price, which
customers should I target?” Analytics should be helping
with innovation, and it should be answering questions
you’ve not asked. This is quite a philosophical step
change to how most companies think about analytics.
Use analytics creatively, feel set free by analytics to
explore new ideas and innovate, and to look at the world
through fresh lenses. Often, our interviewees identified
how analytics had “stumbled” across one small insight
that had created massive transformational leverage.
4. Tear Down The Analytics Dept
There is no point in creating an analytics dept in the
basement. 21st century marketing analytics capabilities
are all about empowering the whole organization with
tools and an analytical mindset. Marketers should have
desktop tools that allow them to create their own
analyses. Analysts in the basement are forgotten about.
A distributed model of marketing analytics is how to
achieve analytical leverage in your organization. The
majority of interviewees felt that analytics and research
departments worked against the interests of actually
getting analytics acted on, and creating an analytically
powered organization.
5. New Data
21st century marketing analytics embraces new data. For
example, car companies now have real customer
behavior data from car black boxes. What really is
journey length, how are cars driven? What’s the
difference between weekdays and weekends? What are
the differences between special journeys and everyday
journeys? It’s the same for Telco ad Financial Services.
Usage data is now marketing data. Analysis of this new
source of data is incredibly powerful. If you combine
“new data” with a distributed model of who does the
analytics, and see analytics as a creative force not just a
decision support tool, then you can begin to create
marketing analytics capability that will transform your
organization. See if your organization can create a
champion who seeks out new data, perhaps card usage
data, call pattern data, or bill payment data, and you
harvest that data for marketing insights.
6. Big Data Is Actually Quantum Data
There is a lot of talk about big data. But in truth, what
large amounts of customer data actually enables you to
do is more and more finite analyses. Creating an
analytics capability can be about being super-local;
targeting by cohort of customers; analysis of individual
marketing campaigns against individual people. When
thinking about creating a marketing analytics capability
now, you need to be thinking of these small and detailed
analyses and have folks in charge of detailed thinking,
thinking at a disaggregated level. This change also
means a slightly different mindset for analytics. Analytics
helps every hour, everyday with small decisions…
analytics can’t just been seen as something that is
“saved” just for big decisions (not that it should be about
decisions at all, in fact) but is a mindset that analytics
impacts everything, everyday.
7. Technology. CMOs will soon spend more on
technology than CIOs!
A large amount of investment in technology is required
to realize the distributed model of analytics across
marketers, and to realize the complexity of meta models
and navigating ambiguity and contradictory readings.
But, the power of analytics as a creative force, that all
marketers at your organization can be empowered by,
can only be realized by given analytics firepower to the
marketing teams. Ok, so technology is not cheap, but
the impact of the right marketing decision over multiyear scenarios can be hundreds of millions of dollars.
Remember, the true cost of a sales rep calling on a
customer is probably around $200; the cost of
advertising can be $50-100 per customer per year or
more. So in the context of the costs of marketing,
investment in marketing technology to make far more
efficient and effective decisions is relatively inexpensive.
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8. Future Focus, And A Market Understanding
of Pace of Change
What makes analytics successful is making a difference
to the business. Understanding the future business
environment is going to matter more and more. How you
define your overall competitive set is important. An
analytics capability has to look very broadly at consumer
behavior, think about who you really compete with, and
have a view on the future business environment. Many of
the interviewees had realized that they were in dying
industries or industries that would be dramatically
impacted over the next 10 years…financial services
redefined by mobile, retail redefined by e-tail, teleco
redefined by the primacy of content rather than the pipe.
How is the retail gasoline business impact by new fuels,
declining miles driven and increasing fuel efficiency? It
matters at least as much what’s happening in the
marketplace overall. You’re part of an ecosystem of
content and technology, or product and distribution, or
your credit card being one of 10 in the customer’s wallet
and each is used for different types of occasions. These
ecosystems are rapidly evolving, so your future is
incredibly different to your past.
There are many other themes (e.g., you may be looking
at far too many marketing metrics) coming out of the
research. We look forward to releasing more snippets
over the summer, and to publishing The Future Of
Marketing Analytics in the fall.
James Walker (jmwalker@prophet.com) is Senior Partner
at Prophet, a strategic brand and marketing consultancy
that helps its clients win by delivering inspired and
actionable ideas.