5 Obstacles to Marketing Intelligence - Part I


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First part of the 5 Obstacles to Marketing Intelligence in organizations

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5 Obstacles to Marketing Intelligence - Part I

  1. 1. 5 Obstacles to Marketing Intelligence What Stops Us From Achieving Marketing Greatnesshttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  2. 2. In the first 2 lectures, I gave you an  introduction to what marketing  i d i h k i intelligence is and how it can change the  way marketing is done in our companies.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  3. 3. Now, we will start to look at what keep  Now we will start to look at what keep organizations from achieving greatness  through marketing intelligence through marketing intelligencehttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  4. 4. I am sure you are starting to wonder  why I haven’t defined marketing  h h ’ d fi d k i intelligence, metrics or any other terms  related to the topics we are discussing?http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  5. 5. Examples and understanding is  a ays be e a a de always better than a definition. ohttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  6. 6. A small test for you working  professionals: f i l Talk to your marketing department  about how they do their marketing…http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  7. 7. Then ask them about marketing  Then ask them about marketing intelligence and analytic marketing and  watch their eyes glaze over. watch their eyes glaze overhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  8. 8. While most marketers can easily explain  what they are doing in terms of  what they are doing in terms of marketing activities, very few can  explain what intelligent marketing or  explain what intelligent marketing or analytic marketing would look like.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  9. 9. In the process, 5 key roadblocks or  obstacles were identified that keep  obstacles were identified that keep marketers and organizations from  adopting a marketing intelligence  adopting a marketing intelligence position.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  10. 10. What Are The 5 Obstacles?http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  11. 11. Obstacle 1:  Obstacle 1 Getting Started ghttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  12. 12. We don’t know how.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  13. 13. We don’t have the right metrics.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  14. 14. The problem is not too little  Th bl i t t littl data, but too much that isn’t  , useful.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  15. 15. We don’t know where to start.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  16. 16. Obstacle 2:  Ob t l 2 Causality yhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  17. 17. There are too many confounding  factors – meaning that too many  f t i th t t campaigns overlap making cause  p g p g and effect impossible.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  18. 18. There is a time delay between  y the marketing campaign and a  customer action. ihttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  19. 19. Awareness campaigns do not  p g directly results in sales, but our  CFO wants to see a financial ROI. CFO t t fi i l ROIhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  20. 20. Obstacle 3:  Ob l 3 Lack of Data  Lack of Datahttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  21. 21. We are a business‐to‐business  (B2B) company and sell  (B2B) d ll indirectly. As a result, we don t  indirectly. As a result, we don’t know who our customers are.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  22. 22. We can’t collect customer data  W ’t ll t t d t due to privacy issues. p yhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  23. 23. Obstacle 4:  Ob t l 4 Resources and Toolshttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  24. 24. We don’t have the time and/or it  W d ’t h th ti d/ it costs too much.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  25. 25. We don’t have the tools and/or  / systems to support analytic  marketing. k tihttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  26. 26. We are marketers and can’t  communicate with information  technology (IT) people. t h l (IT) lhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  27. 27. IT builds systems, but they are  y , y not the resources and tools we  need. dhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  28. 28. Obstacle 5:  Ob t l 5 People and Change p ghttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  29. 29. We don’t measure because we  W d ’t b don’t want accountability. yhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  30. 30. Our incentives are all for  O i ti ll f marketing activity, not results. g y,http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  31. 31. We don’t have a culture of  W d ’ h l f measurement.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  32. 32. We don’t have the skills for  W d ’t h th kill f analytic marketing. y ghttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  33. 33. Our organization is resistant to  g new ideas, such as analytic  marketing. k tihttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  34. 34. Marketing is creative; imposing  g ; p g metrics and process will kill  creativity and innovation. ti it di tihttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  35. 35. Breaking Down the 5 Obstacleshttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  36. 36. Obstacle 1:  Getting Started—Focus on  G tti St t d F Collecting the Right Data and  g g Create Momentumhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  37. 37. http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  38. 38. Royal Bank of Canada started  their journey toward marketing  th i j t d k ti intelligence by working with their  g y g own resources.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  39. 39. “You have to look at what you do  today and think… “How can I do  t d d thi k “H Id this better, cheaper, faster and  this better, cheaper, faster and smarter?”http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  40. 40. Every year around IRA  yy contribution time, the sales force  at RBC was given a list to call. t RBC i li t t llhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  41. 41. The average yield per sales  person was 1 – 2 1 2 people out of  l t f 10 accepting the offer accepting  10 accepting the offer accepting the offer being made by RBC.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  42. 42. The RBC marketing team built a  Th RBC k ti t b ilt model to rank and score the list  based on the potential to  contribute more than US$ 5,000  ib h US$ 5 000 to an IRA. to an IRA.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  43. 43. The model involved analyzing  y g more than 1 million customers,  for 12 months of data, and score  f 12 th f d t d t e to d t e top 50,000 them to find the top 250,000  that would potentially  contribute. ibhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  44. 44. While the size of the dataset  seems intimidating, possibly  i ti id ti ibl solving the problem for 10, you  solving the problem for 10, you can solve the problem for 1,000.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  45. 45. At RBC, collecting the relevant  At RBC ll ti th l t data to do the scoring required a  g q great deal of manual legwork, 6  months of effort and  h f ff d approximately US$ 100,000. approximately US$ 100,000.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  46. 46. The goal was to generate a  g g targeted list of the top 25  customers to call.llhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  47. 47. The results were impressive. 8 out of 10 customers called  accepted the offer.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  48. 48. But….http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  49. 49. It took time for the sales force to  I k i f h l f realize the value of the new list. realize the value of the new list.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  50. 50. In the first year, only 25% of the  I th fi t l 25% f th sales force participated. p p In the third year, 75% were  I h hi d 75% participating.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  51. 51. Due to the success of this small  D t th f thi ll experiment, RBC was able to  p , build a business case that  brought them a US$ 4 million  b h h US$ 4 illi marketing initiative. marketing initiative.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  52. 52. What did we learn? Wh t did l ? You don’t need 100% data and a  multimillion dollar infrastructure  l i illi d ll i f to get started. to get started.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  53. 53. The key question: What 20% of data will give you  What 20% of data will give you 80% impact?http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  54. 54. http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  55. 55. Walgreen’s Pharmacy Walgreen’s Pharmacy is a  US$ 59 billion annual  $ revenue pharmacy  company with 6,850  stores across the United  Stateshttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  56. 56. Walgreen’s Geo‐Spatial The geo‐spatial picture shows dots  that are customers and where they  live and are coded by shape  live and are coded by shape depending on which of the three  Walgreen’s stores they shop. The  Diamond customers shop at The “Diamond” customers shop at  Store 1 The “Square” customers shop at  Store 2 The “Star” customers shop at Store  3http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  57. 57. http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  58. 58. Walgreen’s Marketing Strategy Walgreen’s has always marketed  using flyers in newspapers They pay based on zip codes (the  They pay based on zip codes (the dashed line in the map) The marketing manager noticed  something very interesting  the  something very interesting – the circle is two miles in radius and  after looking at the pictures, he  noticed that there are no dots for a  store more than two miles from  any store. The conclusion – if you live two  miles from a pharmacy store, you  probably don’t shop there.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  59. 59. At this point, Walgreen’s treated  each locale equally – equal dollar  hl l ll l d ll amounts in each zip code across  amounts in each zip code across the United States.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  60. 60. But the data shows that if there  is no store within two miles of  i t ithi t il f the zip code, customers do not  the zip code, customers do not shop at the storehttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  61. 61. Based on this understanding,  B d thi d t di Walgreens stopped spending  g pp p g advertising dollars in all zip codes  without a store within two miles  ih i hi il of the zip code of the zip codehttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  62. 62. Total cost of collecting the data  g and creating the plots – US$ 200,000. US$ 200 000http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  63. 63. Impact to sales revenues – 0http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  64. 64. Impact to marketing was a cost  p g savings of more than US$ 5  million illihttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  65. 65. “We started with simple Excel  p spreadsheets that contained the  advertising circulation  d ii i l i distributions by zip code. It was  distributions by zip code. It was not hard to get the advertising  data into the software.”http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  66. 66. The technology – a PC, ESRI map  gy , p and graphing software and a  data set of Excel spreadsheets d t t fE l dh thttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  67. 67. The bigger challenge was  changing Walgreens’ business  h i W l ’b i p process to use analytic marketing  y g insightshttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  68. 68. The mistake they made was too  y many changes too quickly that  made people uncomfortable.  d l f bl Within a few weeks, things had  Within a few weeks, things had returned to the old way of doing  things.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  69. 69. So they started small….http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  70. 70. They found one Store Operations  VP and a district manager that  VP d di t i t th t were willing to try doing things  were willing to try doing things different.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  71. 71. They showed them the pictures  y p and explained that it didn’t make  sense to spend US$ 80,000 in  t d US$ 80 000 i ad e t s g a p code e advertising in a zip code five  miles from a store to generate  US$ 20,000 in sales. $ i lhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  72. 72. After 5 experiments, Walgreens’  cut US$ 300,000 off the bat in  t US$ 300 000 ff th b t i advertising cost and showed that  g the approach really worked.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  73. 73. With the win, they set up a  process to review the marketing  process to review the marketing spending with each district  manager throughout the United  States.  Stateshttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  74. 74. Overcome Obstacle 2: Causality— Conduct Small Experiments http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  75. 75. There are too many possible causes  There are too many possible causes of anything you measure to identify  a single cause and effect;  o e app g a e g ca pa g s overlapping marketing campaigns  makes it impossible to tell what’s  working and what’s not working! working and what’s not working!http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  76. 76. The “answer” is one of taking a  systematic and disciplined  i d di i li d approach to marketing campaign  approach to marketing campaign execution.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  77. 77. Conduct small experiments,  isolating as many variable as  i l ti i bl possible to see what works and  possible to see what works and what does not.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  78. 78. While we know that most  marketers are aware of this  approach, you will be shocked to  h ill b h k d t learn that almost 70% do not use  ea t at a ost 0% do ot use experiments to pilot test  marketing campaigns k i ihttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  79. 79. Why?http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  80. 80. Most marketing organizations’  g g reward systems are based on  activity, not results. ti it t lthttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  81. 81. http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  82. 82. Harrah’s Entertainment regularly  g y designs experiments to quantify  the impact of its marketing. th i t f it k tihttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  83. 83. It designed an experiment  targeting two groups of frequent  t ti t ff t slot machine players in Jackson,  slot machine players in Jackson, Mississippi.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  84. 84. The experiment had two groups  Th i th dt – a control group with a standard  g p marketing offer and a test  marketing offer called “The  k i ff ll d “Th Challenger Challenger”http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  85. 85. Harrah’s Offers Control Group “The Challenger” The ChallengerA $125 package of a free room,  $60 in free casino chips, no two steak dinners, and $30 in  hotel room and no steaktwo steak dinners and $30 in hotel room, and no steak free chips at the casino dinner Gaming Activity Significantly  Gaming Activity Significantly Gaming Activity unchanged Higherhttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  86. 86. Harrah’s Entertainment tested  the experiment across other US  geographies. hihttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  87. 87. As a result, Harrah’s was able to  A lt H h’ bl t cut the budget for this type of  g yp marketing by more than 50% and  increase the performance of the  i h f f h marketing.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  88. 88. Why does this Wh d thi experiment work? phttp://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled
  89. 89. By limiting who gets the  experimental offer addresses the  i t l ff dd th causality issue and there is a  y minimal time delay between  executing the campaign and  ti th i d obtaining the results of the  obtaining the results of the campaign.http://emagine‐group.com Brand Focused, Socially Active, Digitally Enabled