Geoff Wolf, EVP Client Strategy
“Data” has become the darling of the marketing world recently as information technology and database marketing really hit their strides in business (Check out the Target Marketing July 2012 cover story, “Are You Ready for Big Data?” to brush up on your consumer data know-how if this topic hasn’t been on your radar screen).
Marketers now know more than ever about their customers and their shopping behavior. We also have extremely powerful technology to drive a mind-boggling number of calculations in record time.
However, caution is in order as data do not, by themselves, provide solutions. Data must be interpreted, organized and combined with other resources to truly add value. Let’s look at four ways other resources can be added to database marketing to provide a competitive edge when most marketing teams are now solely focused on data.
1. Rules
The way we interpret the data matters. One of the most important elements that guide the interpretation of data is the rules around how we define and interpret data. Rules help both define the manner in which the data is organized and provide consistency in reporting over periods of time.
To do: Get other members of your team involved when creating rules for data understanding and reporting. Management and marketing team members must be at the table as the data is organized and defined.
2. Understanding Customer Behavior and Your Brand
Every brand has unique elements and it is important to understand the key performance indicators (KPIs) that drive success for your brand story.
The usual “best practice” priorities for KPIs may need to be restructured to reflect your customer behavior. An example that comes to mind is one brand learned that the amount of time customers were engaged with the brand was directly linked to their lifetime value. In this case, an “engagement” data element was created and was ranked higher than recency when predicting conversions.
To do: Write down your brand story and list the key data elements that are important to that story.
3. ROI Parameters
Using the P&L to establish value is an advanced marketing practice. One way this is done is as a risk management exercise.
Let’s say you are testing a new marketing channel where setting risk parameters is very important. Data and certain KPIs can be used to set and monitor milestones as investment is committed during the testing phase.
Search is a good example. To test a new search channel, you can use geographic data to test the investment in a controlled environment. A proven and favorable area where the brand is strong has a better chance for success than a broader one. By using “geo” data elements, you can limit the risk of a new investment into search marketing by making sure it works in your best area first.
To do: Get a member of your financial team at the table with the data analysis group.
4. The Art of Marketing
Think of this as leveraging the “gut” of the brand passionistas: The founders of a business or the merchandising person who wears the brand story around 24/7 often have a sixth sense about the consumers who drive success.
An example is a business that was driven by quotes. Strategy and data had always been organized around generating and converting quotes. However, the founder of the business felt, in her gut, that this was not totally correct.
She observed during her interactions with the customers that people were testing out the company with small orders first. Only after being “wowed” by their excellent customer service were they placing the larger orders and becoming loyal customers. Using new data elements, this “theory” was tested over time and proven to be correct. Subsequently, the data collection and rules that existed were reorganized around the new KPIs.
To do: Ask the founder or person who wears the brand story around what they are thinking and test new approaches to data and reporting where it makes sense.
At the end of the day, the leading brands combine advanced database marketing with a much larger team including many other resources to help define, organize and report on data. This is how success is being created in today’s complex and fast-changing marketing environment.
Putting Your Resources to Work
Data resources can help drive marketing success by offering visibility of the upside different strategies offer. Let’s look at a marketing plan that is set at 1,000,000 in circulation and will generate leads at 4.6 percent and then orders at 0.44 percent response rate from there.
The plan calls for 202 orders. Is it best to invest in increasing the response rate or the circulation quantity? Assuming the greatest number of orders is the objective, the charts below exhibit that there is a greater upside in an investment in a larger circulation (607 orders) than in strategies to increase the response rate (244 orders).
Data resources are a key part of any marketing strategy. Having the data team available as plans are developed is important to allow for all the complexities of today’s marketing challenges to be addressed. It also is more efficient to be able to consider all the angles of a marketing plan in a single session, where possible.
Tags: analytics, Customer Behavior, data, Geoff Wolf, Strategy