Marketing Analytics3


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Marketing Analytics3

  1. 1. M ARKE T ING ANALY T IC S M ARKE T ING ANALY T IC S ROI I ited by being point-in-time and backward n chasing new measurement and looking. Both of these approaches deliver analytic initiatives to address ROI, Is Not significant value by filling important in- too many marketers are missing the formation gaps, however a great opportu- more important goal of building nity exists to combine the depth and im- measurable and repeatable approaches to Enough mediacy of the data warehouse approach marketing effectiveness. with the causal analysis of mix modeling. As a result, marketers are often build- A few marketing innovators have ing systems that assess efforts after the already begun to implement this in- fact, but do not provide the means to tegrated vision. An OTC drug marketer manage them. Instead, they should focus has taken the first steps, with encourag- on building well-instrumented “marketing ing results. They have consolidated their Measurement is effectiveness systems” to both under- marketing information in an up-to-date stand and control the impact of marketing data mart, and overlaid causal models and programs while continuously improving only one step in forecasting tools. These tools support a overall results. structured process of performance evalua- A marketing effectiveness system, building marketing tion, simulation and course correction. as such, is not a technology solution. This “system” of people, process, data It is a structure in which information effectiveness. and tools has empowered management to feedback is built into marketing programs, diagnose business performance in a more customer touch-points and the business timely and objective manner, forecast process overall, with standing analytics By sales, understand sales variance, validate and processes to enable informed deci- strategic actions, and manage budgets sions and actions. John Nardone and marketing tactics more optimally. The More than a measurement or analyt- and Ed See result is increased accountability and the ics approach, a marketing effectiveness Marketing Management freedom to focus on marketing innovation system requires a coordinated effort that with greater confidence. enables measurement, diagnostics, and Analytics, Inc. Similarly, another CPG marketer has the ability to anticipate the likely results begun to re-align its organizational struc- of different scenarios in order to make ture and processes to react more quickly informed decisions. to the more timely and provocative infor- Through structured feedback loops, Many organizations are already mak- mation being provided from their new sys- causal models and scenario-planning ing progress by pursuing more complete tems. A major airline has begun measuring tools, marketers understand what is hap- and timely data, combined with better the impact of its mass-marketing efforts pening in their businesses, why it is tools and processes to interpret and act against its customer-value segments, and happening, and are able to act upon the upon it. In industries that have direct a financial-services provider is optimizing information with predictable results. Ide- relationships with the end consumer, the relationship between its mass-market- ally, all stakeholders share consistent and companies are deploying data warehouses, ing and direct-mail acquisition efforts, in on-demand access to this information so campaign management and analytic sys- real time. These examples represent the that collaborative decisions can be made tems to help marketing teams understand earliest impact of market-leading efforts. quickly and efficiently. and manage customer value at the indi- Such efforts will expand and accelerate in To be sure, many challenges lie in vidual and segment levels. These systems the next two years, providing significant measuring the right things, establishing require investment, but offer continuous competitive advantage to the early leaders. valid causal models, and making the orga- feedback into the marketing process. For all the promise of the early suc- nization’s decision processes and controls In industries that lack individual cus- cesses, we’ve also seen the negative impact clear and easy to operate. But if there is a tomer data, marketing mix and price-elas- of poorly designed metric and measurement sound change management process and an ticity modeling have become cornerstones programs. Such programs are ineffectual appropriate level of organizational maturi- that inform marketing-plan development. at their best; at their worst they may en- ty to support the effort, these challenges These analytic techniques provide valu- courage perverse and destructive behavior. can be addressed and overcome. able guidance, but they are usually lim- 12 THE HUB
  2. 2. How mature is your organization’s use of analytics? For instance, we have observed how These examples underscore the need Maturity models are used to quickly one CPG marketer’s focus on marketing to approach the challenge of marketing assess an organization’s capabilities ROI at the expense of other measures has effectiveness carefully. Building a func- and determine the most appropriate stifled innovation within their marketing tional marketing effectiveness competency initiatives for advancement. teams. Over time, brand managers became requires a comprehensive planning effort, Exploration of seven diagnostic areas increasingly risk averse as their performance but the benefits are worth the effort. By appraisals were influenced by changes in following a series of simple program steps, can accurately place organizations in their brands’ annual ROI report cards. Only most organizations can achieve the re- the following marketing analytics ma- after several years of tepid top-line growth quired alignment of people, process, data turity model (see Chart 1 on the left). has management reduced the importance and technology and realize significant ◆ Analytics Scope of the ROI scores to encourage more ex- year-on-year improvement in their mar- What is the focus of the analytics? perimentation. keting effectiveness. Are there true analytics or just re- Another cautionary tale: One retailer Five Steps to Success porting? What efforts are focused systematically shifted resources over a on advertising, the brand, the cus- As marketers begin to undertake period of years from brand-equity-based tomer, sales and profits? enterprise marketing effectiveness initia- advertising into pricing and promotional tives, there are five keys to success: marketing in an effort to increase market- ◆ Business Objectives and Impact ing ROI. For the first few years, the tactic 1. Understand the current state of your At what level do the marketing seemed to work, as marketing ROI scores marketing-decision processes. As the analytics and business objectives increased. But it soon became clear that first step to building new marketing align? while the efficiency of marketing-driven effectiveness core competency, it is im- sales had increased, the baseline sales were portant to understand the current state ◆ Typical Metrics falling fast. This marketer had won a short- of how the organization actually oper- Are metrics clearly tied to desired term ROI battle, but was losing the war. ates to make and implement marketing business results? Are the causal ➜ relationships between the measures and outcomes clearly understood? ◆ Major Marketing Analytic Activities Level 5 How are the analytics being used? Are they used to justify decisions Profitability Pros ct tab ROI after the fact, or are they used to en ility ea ed Mar ts : Ef oun ing drive decisions? Do the analytics In rea sed nefi s t es se Ac ke support forecasting? Supply/de- Level 4 In crea Be iv mand chain integration? c Customer Converts fe ◆ Organizational Participation s d In c What skills and groups contribute cr Level 3 to the process? Efficiency Experts ◆ Studies and Research What data and information is bought, tracked and used? Level 2 Brand Builders ◆ Services and Tools Used How is data managed? What tools CHART 1 are used? Which services are bought Level 1 and which are in-house? Marketing Analytics Agency Hostage Maturity Model ➜ 13 THE HUB
  3. 3. Are your organization’s c. We leverage our analytic models within our re- 1. Do you have all the information you need marketing porting system so we can track against them in to support your marketing decisions? real time. analytics a. I rarely feel like I have all I need. helping you b. I feel pretty good about half the time. 7. Does your marketing system automatically win in the report against key performance indicators c. Most of the time, I have enough to make at the brand, category and portfolio level? good decisions. marketplace? a. No, no and no. Take this quiz 2. For each reporting period, do you mobilize b. Some of the brand information is automated, to find out staff across marketing, research, IT and but the portfolio level is not. finance to assemble data and create reports? where you c. We automatically report against the cumulative stand. a. That’s standard operating procedure. impact of our programs at the brand, category and portfolio levels. b. Some standard reports are automated, Marketing Effectiveness but there is always a lot of custom work. 8. Can you relate brand metrics, consumer seg- c. Most of the reporting is automated. ment data and market performance over time? 3. Are you frustrated with data from multiple a. Only with great effort. It is a custom analysis sources that do not tie together? every time. a. Yes. We spend too much time on reconciliation. b. We can overlay trend data, and that is some- b. Sometimes, but we have learned to live times helpful. with uncertainty. c. We have models that link brand metrics and c. Our systems are cross-validated. They usually tie. consumer segment data to market performance, and can use them for all sorts of causal and predictive analysis. 4. Do you find that reports provide good information, but are not timely enough to effect programs in the field? 9. Are your forecasts accurate? a. By the time we read most programs, a. Define accurate? they are already finished. b. We usually get within an acceptable margin b. Occasionally we get an early enough read of error, but there is the occasional disaster. to impact a program in flight. c. Forecasting is an organizational strength. c. We not only track programs continuously, we have a process to act upon the data. 10. Does your marketing information allow you to anticipate market and competitive moves 5. Do you skip analyses that you know before they happen? would be helpful, because they are a. I’m lucky to get accurate data on last quarter. too time consuming or painful to do? b. We have good current data, but it rarely a. Happens all the time. helps anticipate the future. b. I avoid pulling in IT and finance, Quiz c. We routinely run simulations to anticipate the but sometimes have no choice. potential impact of market, trade or competi- c. It is easy to pull together data from tive actions. throughout the organization. Scoring: Give yourself one point for each choice #1, two 6. Does your organization understand how points for each #2, and 3 for each #3. all of their data fits together to represent If you scored 25 or above, consider your organization an ➜ key marketing levers? innovative marketing leader. a. We have a lot of data, but it is not integrated If you scored between 18-24, you are hanging with the ➜ into a meaningful picture. pack, but have no competitive advantage in this area. b. We have modeled some of the key data If you scored 17 or less, you are likely being trumped by ➜ relationships, but our data is not reported your competition, though you probably won’t find out against them in an ongoing manner. about it for several months. 14 THE HUB
  4. 4. reality will require that organizations will ➜ decisions. What are its existing core sure that the key stakeholder groups buy need to make accommodations. Good pro- into the business case and the timing. competencies? What are the key planning gram management, with comprehensive processes? 4. Determine key success factors for in-process metrics, provides a way to ad- Start by documenting key decision each stage. It is critical to understand just the programs based on reality. processes. Capture how decisions really the issues that will enable or impede suc- Additionally, it’s important that are made, not the idealized process that is cess for each stage, and ensure that the each stage in developing a marketing ef- represented in binders or flow charts. For organization is ready to address them fectiveness competency shows real and each decision, carefully identify who the before moving forward. Typical issues meaningful impact — both from a business decision maker is, and who are key influ- to examine include available leadership, perspective and from a stakeholder and encers. A useful structure to capture and staff skills, technology capability, cul- team perspective. If the program never organize this information is RACI matrix ture, change tolerance, etc. progresses to the next stage, there should (responsible, accountable, consulted and Once weaknesses in the key success be measurable advantage gained for the informed). factors have been addressed, the orga- level achieved. By working forward from 2. Envision an ideal end-state. With nization is ready to move on to the next the current-state baseline, programs can questions identified and the decision re- stage of the roadmap by implementing be structured to insure progressive value sponsibilities clear, capture the critical projects and programs to create the new from readiness to operation. questions that are typically asked by each capabilities. One last key to success is always player to inform the decision. Work back- critical: You will need people with deep 5. Establish measures and metrics for wards to identify the analyses that might expertise in marketing and marketing program success, and for managing be done to answer the questions, and the analysis, and a strong data management roll-out. For each stage, determine the data needed to perform those analyses. competency. You need access to real-life measures of success by which the effort Articulate a vision for the ideal end- experience in applying data tools and will be managed and judged. Along with the state process and identify gaps vs. the technology to the unique demands of end state business goals, in-process met- current state. Are the required data sets marketing. And you will need help with rics should be set for deployment readi- available? Are the analyses being conduct- process design and training to best take ness, roll out, adoption and compliance. ed? Are they being delivered in a timely advantage of the new analytic capabilities Because the steps in developing way so that they can impact the decision as they become available. these sorts of programs are often sequen- process? Through this process, identify With that kind of support in place, tial, it’s important to ensure that each gaps in process, data, and analytics, and and the appropriate organizational com- successive step has been adopted across important barriers to closing the gaps. mitment, you can establish a marketing the full organization and that the true ef- effectiveness capability that is a true 3. Set realistic goals. With a current- fectiveness is gauged before moving for- competitive advantage. ■ state assessment complete and gaps ex- ward. All programs are plans, and as such, posed, organizations can often become quite aspirational. When they have iden- tified significant opportunities for im- provement, they may want to address all EVPs John Nardone and Ed See lead MMA’s Avista line, a the issues at once and leap directly to a new line of consulting, analytic and online services that go be- fully developed ideal state. yond ROI measurement to provide on-demand marketing decision Unfortunately, this is rarely possible. support. Marketing organizations have to build Mr. Nardone’s experience includes brand management roles capabilities in an orderly way, and many at P&G and Pepsico, and pioneering internet marketing and CRM development steps will have significant efforts at Modem Media. Mr. See led major software development prerequisites that cannot be leap-frogged. efforts for IBM, and led business transformation practices as a It is critical to set clear and reachable Partner at Andersen Business Consulting and as a Global Manag- short-term goals, while working toward ing Director at BearingPoint. a more comprehensive, long-term vision. Avista by MMA leverages an integrated marketing database, Roadmap a series of progressive custom-built econometric models and analytic reports to im- milestones or stages and articulate the prove decisions on strategy, plan development, and ongoing pro- anticipated costs and benefits of achiev- gram management. Avista Consulting and Avista Data Solutions ing each goal state. Each step should have insure that marketers have the right organization, process and explicit business value so that if the ef- data to achieve their marketing effectiveness goals. For further fort never progresses beyond that stage, information, please visit the effort stands on its own merit. Be 15 THE HUB