5 obstacles to marketing intelligence - part ii

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

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Quick Review of Last Week’s Lecture


Last week, we started talking b t th 5 b t l th t kabout the 5 obstacles that keep organizations from achievingorganizations from achieving marketing excellence


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


W ill h t bli h d thWe will have established the foundations of the course after this lecture and will start moving i h l l i dinto the actual analytics and metrics from our next classmetrics from our next class


So let’s get caught up first…


Obstacle 1Obstacle 1: Getting Startedg


What are some of the reasons that people give for why they are

bl t t t t d?unable to get started?


How do we overcome them?


Ob t l 2Obstacle 2: Causalityy


Wh t i lit ?What is causality?How does it affect our marketing?g


As intelligent marketers how doAs intelligent marketers, how do we counter causality arguments?y g


The Remaining 3 Obstacles


Overcome Obstacle 3: L k f D tLack of Data—

Strategies for Obtaining g gCustomer Data


Many marketers struggle with y ggtoo much data, rather than not

henough


Remember that we covered collection and analysis of the i h d i i b lright data in overcoming obstacle 11


But B2B companies have a l iti t d t h ll ilegitimate data challenge, since these companies do not sell pdirectly to customers


They sell through a channel and y gdo not have direct access to

i l dcustomer transactional data


Th h hThere are three approaches to overcome this obstacleovercome this obstacle


O ti 1Option 1: Channel Partner Data Sharingg


M i f J h Ch bMornings for John Chambers, CEO of the $39 billion Cisco $Systems empire, starts with a can f Di C k d Ci ’ S lof Diet Coke and Cisco’s e‐Sales

portalportal


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


p g

Now, for those of you unfamiliar , ywith the Cisco sales model, this is

t t i ka great trick


Why?


Cisco sells more than 95% of its products indirectly through l dd d llvalue‐added resellers


So how does Cisco do it?


Cisco contractually requires its y qvalue‐added resellers to share

l dcustomer sales data


Most B2B companies find that requesting customer data from the channel partner is met with a firmchannel partner is met with a firm ‘‘no way.’’ The partner refuses on th d th t th d t itthe grounds that the data are its property and the source of its competitive advantage.


Cisco requires channel partners q pto share customer data in order t ll th i d tto resell their products


So B2B companies must answerSo B2B companies must answer the question:q

‘‘Wh t’ i it f h l‘‘What’s in it for my channel partner to share its data?’’p


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


Now, we need to be clear about oneNow, we need to be clear about one thing – and it’s a big thing ‐ the B2B fi d t il h tfirm does not necessarily have to know the name and address of the customer; this could be deleted from the shared data filefrom the shared data file.


What we are interested in is what products or services the

h d hcustomer purchases, and the ability to act upon these data,ability to act upon these data, perhaps through the channel partner


This “disguise approach” works g ppbecause the channel partner’s

h if h B2B fi hconcern that if the B2B firm has the customer data, it will want tothe customer data, it will want to go direct and cut the channel out of the deal


O ti 2Option 2:Frequent Drinker Programs q g


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


It is in the 3rd tier of popularity, p p y,in terms of sales revenue and b dbrand awareness


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


They created a yfrequent drinker

b iweb site


Now, Suntory, like Cisco, sells all ofNow, Suntory, like Cisco, sells all of its beer indirectly through beer di t ib t b t tdistributors, bars, restaurants, grocery stores and vending g y gmachines – which makes data collection difficult if not impossiblecollection difficult, if not impossible


So the creation of a website whereSo 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 g e by codes o e bo es, a dreturn get points was an interesting way to collect dataway to collect data


I t f h i th d tIn return for sharing the data, customers got to purchase silly g p yhats, bottle tops with their name i i d i h h i himprinted on it, or the chair that is too uncomfortable to sit inis too uncomfortable to sit in


At the peak of the campaign, p p g ,Malts reported 300,000 visitors a

h h b imonth to the web site


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


N thi k d i JNow, this worked in Japan because after work office parties pinvolve the mass consumption of l h l Thi ld halcohol. This would not have worked in the US!worked in the US!


But the idea of a frequent qdrinker program transcends lt d hicultures and geographies…


Welcome to

k dmycokerewards.com


My Coke RewardsThe website is a loyalty program for frequent Coke‐branded product drinkersAgain, users get points for how many Coke drinks they y yhave and get rewards such as T‐shirts, DVDs and discounts with the many partnerswith the many partners affiliated with the marketing activity


Whatddowewe

learn?


C t d t i hCustomer data is a cheapas a T‐shirt!


M C k R d bl C kMy Coke Rewards enable Coke to have direct access to their “frequent qdrinkers” and to do direct marketing via e mail to this valuable customervia e‐mail to this valuable customer base


The site also provided a revenue t f C k th h th idstream for Coke through the paid ads on the site for participatingads on the site for participating partners


In both of these example, there i t l l lis a crystal clear value proposition for customer andproposition for customer and resellers to share their data


S th ti th t k iSo the question that we ask is:

“What is your value proposition f id h ifor customers to provide their

data?data?


Option 3:pUse Surveys as a Proxy f Cfor Customer Data


We can also use focus groups d f fi i dand surveys for fine‐grained

segmentation and targetsegmentation and target marketing


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


We can create survey‐based, analytic marketing offers targeting y g g gthese segments and test them using focus groups and experiments as wefocus groups and experiments as we discussed in Obstacle 2


Now, I should note that this approach is not as effective as ppanalyzing large customer transaction data sets it can be a great way todata 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 g ,analyze the survey, but you can start with a free lunch and a gift forwith a free lunch and a gift for participants


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


But there is a problem with the d l li fflisurvey model, online or offline –

getting people to sign up andgetting people to sign up and participate


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


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


The reason…


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


So first thing marketers mustSo, first thing – marketers must clearly communicate the privacy y p ypolicy both internally and t ll b t h d t illexternally about how data will

and will not be used


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


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


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


If you create a website targeting a specific illness, like diabetes, you can provide information and provideprovide information and provide community support groups to give

d i f iproduct information to customers while gaining customer feedback g gand insights


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


Overcome Obstacle 4: d lResources and Tools—

Build the Infrastructure for Data‐Driven Marketing


I f t t fInfrastructure forAnalytic Marketingy g


A PC combined with Microsoft Excel makes for an amazingly

f l t lpowerful tool


For infrastructure, this is all most marketers need to get started on th l ti k ti ththe 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 rows2007 has a limit of 1,048,576 rows by 16,384 columns


So if you have a large number of t E l i t i tcustomer, Excel is not going to

work as a marketing database,work as a marketing database, not should it


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


We can also use Excel to create and manage marketing campaign

dscorecards


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


‘‘The difference in these i t i th diffrequirements is the difference

between building a ranch house gor the Empire State Building.’’


In short –Think big, start small

d l f tand scale up fast


I f t t fInfrastructure fora Large Firmg


Customer DataCustomer Data Collection

Data Storage

Technical Tools


g

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


Overcome Obstacle 5: P l d ChPeople and Change—

Create an Analytic Marketing y gCulture


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


“I j t d h“I am just a _________ and have no influence to create change.”g


90% of employees % p yunderestimate their potential to i fl hinfluence others


In previous examples, we have p p ,seen that small changes can have bi i tbig impacts


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


Now, we have to understand that ti l ti k ticreating a analytic marketing or

marketing intelligence culturemarketing intelligence culture requires more than one person


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


Find out who the decision k i i timakers in your organization are

and learn what will convinceand learn what will convince them to believe in the change


One fact that we need to b iremember is:

The trouble with change is people


To understand corporate culture, thi k f it th jthink of it as three major categories: rational, bureaucratic g ,or political


Y MBA b li th tYoung MBAs believe that organizations are rational gmeaning the best idea will win. E i d k hExperienced managers know that isn’t the truth.isn t the truth.


A bureaucratic organization has a gvery rigid organizational t t d t l t bstructure, and protocols must be strictly followed in st ct y o o edcommunicating with senior

iexecutives


These organizations are gmilitaristic, with the general i i d f h dgiving orders from the top, and the commanders ensuring thethe commanders ensuring the orders are executed on the front lines


Political organizations have gcenters of power, with i di id l h h ki dindividuals who have kingdoms within the organization, oftenwithin the organization, often accompanied by budgetary authority and staff


The best example of a political p porganization – a university or

t f hi h l icenter of higher learning


Henry Kissinger once said, ‘‘The th fi ht fi ireason the fights are so fierce in

academia is because the stakesacademia is because the stakes are so low.’’


Wh t thWhat are thebest ways to drive change?y g


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

‘‘We are losing significant market share ’’share.


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

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

‘‘Our competitors are consistentlyOur competitors are consistently outmarketing us.’’


Create Incentive for Changegthrough

d h iMeasurement and Behavior


Weight Loss g&

C l i C tiCalorie Counting


The point is if pyou can measure it,

t l ityou can control it.


For marketers, making metrics d t ‘‘ bli ’’and measurement ‘‘public’’

within the organization will incitewithin the organization will incite change


Many organizations incite ti it t lt th id iactivity, not results, so the idea is

to focus on the metrics that really value marketing


5 obstacles to marketing intelligence - part ii

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