5 Obstacles to Marketing Intelligence - Part II

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5 Obstacles to Marketing Intelligence – II
What Stops Us From Achieving Marketing Greatness

Quick Review of Last Week’s Lecture

Last week, we started talking
about the 5 obstacles that keep
organizations from achieving
marketing excellence

We covered the first 2 obstacles
and will be moving on the final 3
this week

We will have established the
foundations of the course after
this lecture and will start moving
into the actual analytics and
metrics from our next class

So let’s get caught up first…

Obstacle 1:
Getting Started

What are some of the reasons
that people give for why they are
unable to get started?

How do we overcome them?

Obstacle 2:
Causality

What is causality?
How does it affect our marketing?

As intelligent marketers, how do
we counter causality arguments?

The Remaining 3 Obstacles

Overcome Obstacle 3:
Lack of Data—
Strategies for Obtaining
Customer Data

Many marketers struggle with
too much data, rather than not
enough

Remember that we covered
collection and analysis of the
right data in overcoming obstacle
1

But B2B companies have a
legitimate data challenge, since
these companies do not sell
directly to customers

They sell through a channel and
do not have direct access to
customer transactional data

There are three approaches to
overcome this obstacle

Option 1:
Channel Partner Data Sharing

Mornings for John
Chambers, CEO of the $39 billion
Cisco Systems empire, starts with
a can of Diet Coke and Cisco’s e-
Sales portal

Through this enterprise web
application, the senior
management can drill down
through global sales data that
occurred on the previous day by
geography, purchasing
company/products or sold by a
specific sales manager

Now, for those of you unfamiliar
with the Cisco sales model, this is
a great trick

Why?

Cisco sells more than 95% of its
products indirectly through
value-added resellers

So how does Cisco do it?

Cisco contractually requires its
value-added resellers to share
customer sales data

Most B2B companies find that
requesting customer data from the
channel partner is met with a firm
‘‘no way.’’ The partner refuses on
the grounds that the data are its
property and the source of its
competitive advantage.

Cisco requires channel partners
to share customer data in order
to resell their products

So B2B companies must answer
the question:
‘‘What’s in it for my channel
partner to share its data?’’

One answer is that B2B companies
spend considerable marketing
dollars co-marketing with channel
partners so shared data analysis
provides deep insights into how to
radically improve the marketing
performance

Now, we need to be clear about one
thing – and it’s a big thing - the B2B
firm does not necessarily have to
know the name and address of the
customer; this could be deleted
from the shared data file.

What we are interested in is
what products or services the
customer purchases, and the
ability to act upon these
data, perhaps through the
channel partner

This “disguise approach” works
because the channel partner’s
concern that if the B2B firm has
the customer data, it will want to
go direct and cut the channel out
of the deal

Option 2:
Frequent Drinker Programs

Suntory is one of the largest
liquor distillers in Japan and
brews a beer called Suntory
Malts

It is in the 3rd tier of
popularity, in terms of sales
revenue and brand awareness

But in the late 1990s, Suntory did
something with the Internet that
at the time that was particularly
innovative

They created a
frequent drinker
web site

Now, Suntory, like Cisco, sells all of
its beer indirectly through beer
distributors, bars, restaurants, groce
ry stores and vending machines –
which makes data collection
difficult, if not impossible

So the creation of a website where
customers would come to and input
the number of beers they drank,
given by codes on the bottles, and in
return get points was an interesting
way to collect data

In return for sharing the
data, customers got to purchase
silly hats, bottle tops with their
name imprinted on it, or the
chair that is too uncomfortable
to sit in

At the peak of the
campaign, Malts reported
300,000 visitors a month to the
web site

More importantly, these were high-
value customers – the frequent
drinkers – and the website enabled
the collection of data for direct
marketing extremely easy

Now, this worked in Japan
because after work office parties
involve the mass consumption of
alcohol. This would not have
worked in the US!

But the idea of a frequent
drinker program transcends
cultures and geographies…

Welcome
to
mycokerewards.com

My Coke Rewards
The website is a loyalty
program for frequent Coke-
branded product drinkers
Again, users get points for
how many Coke drinks they
have and get rewards such as
T-shirts, DVDs and discounts
with the many partners
affiliated with the marketing
activity

What
do
we
learn?

Customer data is a cheap
as a T-shirt!

My Coke Rewards enable Coke to
have direct access to their “frequent
drinkers” and to do direct marketing
via e-mail to this valuable customer
base

The site also provided a revenue
stream for Coke through the paid
ads on the site for participating
partners

In both of these example, there
is a crystal clear value
proposition for customer and
resellers to share their data

So the question that we ask is:
“What is your value proposition
for customers to provide their
data?

Option 3:
Use Surveys as a Proxy
for Customer Data

We can also use focus groups
and surveys for fine-grained
segmentation and target
marketing

The idea is to capture the
demographics, characteristics, and
purchasing habits of your end
customer through in-depth market
research

We can create survey-
based, analytic marketing offers
targeting these segments and test
them using focus groups and
experiments as we discussed in
Obstacle 2

Now, I should note that this
approach is not as effective as
analyzing large customer transaction
data sets, it can be a great way to
get started if you are a B2B firm

There are many professional service
firms that will design, conduct and
analyze the survey, but you can start
with a free lunch and a gift for
participants

The internet has also given us the
ability to create and conduct online
surveys. For the cost of surveying 10
people in person, you can survey
100 or more online

But there is a problem with the
survey model, online or offline –
getting people to sign up and
participate

The other problem that we
discussed was privacy issues
because customers can be hesitant
about sharing information in fear of
how it might be used

One marketer once told a story of
their legal department telling them
to delete customer data after a
specific time period for fear of
liability

The reason…

The company did not have a privacy
policy and the legal department did
not understand what marketing
planned to do with the customer
data

So, first thing – marketers must
clearly communicate the privacy
policy both internally and
externally about how data will
and will not be used

In some cases, there are laws
preventing direct data collection
of customer data

In the United States, the Health
Insurance Portability and
Accountability Act (HIPAA) prevents
pharma companies from knowing
patient prescriptions

While we have to follow these
laws, there are ways around
them

If you create a website targeting a
specific illness, like diabetes, you can
provide information and provide
community support groups to give
product information to customers
while gaining customer feedback
and insights

The key understanding is simple –
always add value to the customer
interaction by answering the
question “What’s in it for me?” from
the customer’s perspective

Resources and Tools—
Build the Infrastructure for Data-
Driven Marketing

Infrastructure for
Analytic Marketing

A PC combined with Microsoft
Excel makes for an amazingly
powerful tool

For infrastructure, this is all most
marketers need to get started on
the analytic marketing path

But you should know the limitations
- Excel 2003 had a limit of 65,536
rows in a spreadsheet, and Excel
2007 has a limit of 1,048,576 rows
by 16,384 columns

So if you have a large number of
customer, Excel is not going to
work as a marketing
database, not should it

Now I will provide you with Excel
templates for analyzing customer
satisfaction data, internet metrics,
and calculating financial return on
marketing

We can also use Excel to create
and manage marketing campaign
scorecards

But if you have a large customer
database, you will need to use
SAS, SPSS or a specialized
business intelligence application

‘‘The difference in these
requirements is the difference
between building a ranch house
or the Empire State Building.’’

In short –
Think big, start small
and scale up fast

Infrastructure for
a Large Firm

Customer Data
Collection
Data Storage
Technical Tools

We will spend time talking about
this model in later lectures, so I
will hold off on going into detail
now

People and Change—
Create an Analytic Marketing
Culture

What’s the one phrase that we
hear more than any other in
business when it comes to
change?

“I am just a _________ and have
no influence to create change.”

90% of employees
underestimate their potential to
influence others

In previous examples, we have
seen that small changes can have
big impacts

You have to understand that in the
culture of an organization, change
starts with you. So start with simple
changes that positively impact those
around you

Now, we have to understand that
creating a analytic marketing or
marketing intelligence culture
requires more than one person

You have to convince others and
the quick win is an essential early
step

Find out who the decision
makers in your organization are
and learn what will convince
them to believe in the change

One fact that we need to
remember is:
The trouble with change is people

To understand corporate
culture, think of it as three major
categories: rational, bureaucratic
or political

Young MBAs believe that
organizations are rational
meaning the best idea will win.
Experienced managers know that
isn’t the truth.

A bureaucratic organization has a
very rigid organizational
structure, and protocols must be
strictly followed in
communicating with senior
executives

These organizations are
militaristic, with the general
giving orders from the top, and
the commanders ensuring the
orders are executed on the front
lines

Political organizations have
centers of power, with
individuals who have kingdoms
within the organization, often
accompanied by budgetary
authority and staff

The best example of a political
organization – a university or
center of higher learning

Henry Kissinger once said, ‘‘The
reason the fights are so fierce in
academia is because the stakes
are so low.’’

What are the
best ways to drive change?

‘‘Our marketing budget is being cut
by 36 percent; we need to justify our
future marketing spending.’’
‘‘We are losing significant market
share.’’

‘‘Our discount marketing is killing overall
profitability.’’
‘‘We are hemorrhaging customers and
don’t know who are the most
profitable.’’
‘‘Our competitors are consistently
outmarketing us.’’

Create Incentive for Change
through
Measurement and Behavior

Weight Loss
&
Calorie Counting

The point is if
you can measure it,
you can control it.

For marketers, making metrics
and measurement ‘‘public’’
within the organization will incite
change

Many organizations incite
activity, not results, so the idea is
to focus on the metrics that
really value marketing

5 Obstacles to Marketing Intelligence - Part II

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