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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 www.prophet.com 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. 2 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 ([email protected]) is Senior Partner at Prophet, a strategic brand and marketing consultancy that helps its clients win by delivering inspired and actionable ideas.