The Marketers Reality: Analytics to Exploit Constant Change
Friday, 2nd December 2011
The world has become increasingly connected over the last decade with the residual effect of this connectedness spawning new vehicles for communication, data transfer and customer choice that would not have been imagined in the days of database marketing in the mid 1990s.
Thomas Friedman, New YorkTimes journalist and renowned business author, observed that even as recently as six years ago, Facebook was a twinkling in Zuckerberg’s eye; Twitter was something birds did; clouds were in the sky; skype was most likely a typo and Linkedin was more likely to trigger thoughts of a prison sentence
This recent proliferation of connectivity and data coupled with current economic, customer, budgetary, technology and real-time forces buffeting the marketing function has meant direct marketing – engaging in direct communication with customers - built on a foundation of data, analytics and insight, is the difference between winning and being a distant memory. US-based Caesars Entertainment Corporation, the world's largest casino entertainment company with over 70,000 employees, has embedded this data-driven approach into its corporate DNA; with the Chairman, Chief Executive Officer and President, Gary Loveman famously commenting, there's only three ways to get fired from this company, theft, sexual harassment or not using a control group.
Trends shaping the new world of direct marketing. The global economic situation continues to impact availability and cost of credit, slowing local business investment and jobs growth, which negatively impacts consumer confidence and leads to a preference of saving over consumption. Sales slow and marketing budgets are down-sized.
Coupled with the slower growth conditions, customer empowerment through connectivity has driven a change in expectation of service and value from each brand interaction. With this empowerment, customers are not as easily sold to; therefore the ability to sense and respond to them at their time of interaction with your brand becomes increasingly important.
Riding the new world wave. Differentiating your organisation is driven by your ability and efficacy in aligning to customer needs, listening more attentively, and sensing and responding. Your organisation’s maturity in the collection and analysis of information that underpins the ecosystem of your products/services, competitors and customers will ultimately determine your relative success to your peers. Those organisations that can more effectively sense and respond to customers’ changing needs and preferences in this constrained economic environment will outperform those who can only react.
The more successful organisations increasingly use a greater breadth of information to understand the inherent opportunity within their existing customer base. They are taking a fresh look at their customers from a holistic perspective considering:
- value (current and potential),
- socio-economic status,
- cost to serve,
- originating channel,
- service channels and inbound contact reasons,
- product/service usage history,
- share of wallet, and
- risk of dormancy/attrition.
Additionally, contacts and connections (other customers, employees and networks) are analysed to determine how best to communicate from an outbound perspective but also to feed intelligence to the front office to support sales and service activity.
In most cases technology is required to automate, calculate, gather and disseminate outcomes from the rich data streams available to your organisation. Analytics professionals transform these outcomes into insights ready for marketing action in much the same way as a specialist surgeon interprets an x-ray and test results using past experience and advanced skills. So are your direct marketing efforts the picture of health or in need of surgery?
A New World Direct Marketing Health Check
Gauge the health of your direct efforts through the following five steps:
Step 1 - Benchmark and measure your direct marketing performance. Most direct marketers instinctively measure performance (one of the great benefits of direct) but make sure you’re measuring the things that will make a difference to your business – not just those things that are easily measured. It may mean a combination of calculations. Benchmarking is important but tends to only be possible with those measurements in common use. Make sure your results are on par or better than industry averages (where relevant) but more importantly directly align to the organisation’s objectives.
Step 2 - Review the alignment with your organisation’s customer, marketing and product strategy. Are your direct efforts furthering the strategy or just a carbon copy of what was done last year? Is direct bringing in revenues but not from the customer segments the strategy specified? Does your advertising talk about treating customers as individuals but direct campaigns lack differentiation and personalisation? Are you working in alignment with the sales channels? Is that latest ‘shiny’ technology direct campaign killing it in the coolness stakes but not delivering to the strategy? Poke, prod, disassemble and take an honest view - then realign as necessary.
Step 3 - Assess your capabilities in terms of team, skills, use of data, technology and feedback capture. Do you have the right mix of creative, strategic and analytic thinkers? External specialists with niche skillsets can improve your direct efforts if they are treated as part of the team. Are there holes in knowledge and insight that additional data feeds could fill? Is your channel approach still appropriate for your targets and customers? New and updated technology is now a matter of course but new doesn’t necessarily equal better. Critically examine your technology setup to identify possible areas of strategic improvement and add that to a tech watching brief. Does customer feedback feed into your marketing efforts in a closed-loop framework or is it siloed and treated in isolation, depriving you of critical customer insight?
Step 4 - Check how integrated your direct marketing function is with available channels and campaigns. Customers expect you to know them – no matter the channel or campaign. Customers only see one brand and expect the same experience regardless of channel. Direct campaigns that ignore customer information provided through another channel are considered badly at best and affronting at worst. Does your contact centre know the offer in the latest direct campaign and which customers received it? Are you inadvertently sabotaging your marketing success with a less than holistic view?
Step 5 - How much feedback, learning and iteration are you doing? Are you working with the front-office to learn from the customer contacts stemming from your outbound efforts? Do you frequently conduct response modeling? Are you able to test, learn and change within waves of campaigns to cater for differing response behaviours to each campaign cell? With constant external change, how often do you re-examine your customers through a granular lens?
Now look at the dollars. Knowing your relative financial contribution to the organisation will strengthen the case for protecting (and potentially growing) budgets, contribute to the culture of understanding the importance of collecting information and provide early warning signs of poor performing campaigns so that funds can be diverted to higher achieving activity. Campaigns devised from comprehensive analysis have driven multiples in response to historic attempts to change customer behaviours. A recent Aberdeen Group Report entitled ‘Analytics for the CMO: How Best-in-Class Marketers Use Customer Insights to Drive More Revenue’ demonstrated the stark difference between best-in-class and laggards:
Analytics driven campaigns out-perform logic and business rules as this recent Australian example shows:
Deloitte worked with a consumer brand to analyse the channels of communication and interaction used by its customer today, distinguishing the type of customer using each channel and the cost impact by channel.
Comprehensive customer data was captured to support the analysis including demographics, tenure, products held, average revenue, value, usage and spend patterns and how they engaged and communicated with the organisation. Clustering and artificial intelligence techniques were then used to distinguish 16 clusters of customer behaviour. This deep understanding of the behavioural needs of customers has supported the design of campaigns to migrate these customers online and realise rapid time to value for the organisation.
Insights feed campaign design. Insights that fed the campaign design included how heavily customers were using the online channel, what other channels they were using and the main reasons for these interactions. The analysis enabled the prioritisation of customers as high, moderate and low adopters as an immediate source of focus and momentum for the organisation to direct activity. The analysis has been successfully used to create targeted communications aimed at changing customer behaviour across channels, the preliminary campaign results have more than doubled response rates when compared with historic performance.
In a constantly changing and challenging environment, leading organisations will take a more granular view of the customer to drive direct marketing effectiveness, and will revisit and refresh this view at regular intervals to track behavioural changes over time. Put yourself in the position not to dread the finance ‘budget review’ meeting, demonstrate the lift you are delivering through insight driven campaigns with the reassurance of facts and figures that would make any CFO smile.