Data Driven Marketing Fundamentals
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In today’s hyper competitive, digital world, organizations that use data driven marketing give themselves a fighting chance. No brand is secure just on brand equity alone. Just look at Kodak, Pan Am and Research in Motion (Blackberry). Executives who embrace DDM give themselves the possibility of being relevant to their customers. And, at the end of the day, that is what your customers want most from you.
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Data Driven Marketing Fundamentals
- 1. Data Driven Marketing September 17, 2012 iSummit Bernie Borges, CEO Find and Convert
- 2. Three Eras of Modern Marketing • Creative era • 1960’s and 70’s • Advertising centric • e.g., The Marlboro Man, Where’s the Beef? • Direct era • Database marketing direct to the consumer • 1% conversion rates = profitability •Relevance era • A relevant message to each customer segment in the relevant channel
- 3. It’s All About Relevance • 1978 consumers 2,000 ad messages/day • 2007 consumers 5,000 ad messages/day • 2010 consumers 16,000 ad messages/day 95% open rates possible 5% with highly open rate typical relevant with irrelevant messaging messaging
- 4. The Cost of Irrelevant Messaging • 64% of consumers say promotional offers dominate both email and traditional mail everyday • Only 41% view these as relevant communications • Of the 91% of consumers that opt out of brand’s emails 46% defect from the brand due to irrelevant messaging
- 5. The Cost of Irrelevant Messaging • 41% of consumers say they would consider ending a brand relationship owing to irrelevant promotions • An additional 22% say they would defect from the brand relationship due to irrelevance • 58% of brand’s marketing content is not relevant to potential buyers, reducing brands’ chances of a sale by 45%
- 6. The customer is in control and knows it!
- 7. The Power of Data Driven Marketing The data (precision) marketing framework relies heavily on several key factors, starting with the collection and analysis of data. Analyze and Model Determine Deploy Objective Measure
- 8. Why Brands Don’t Do Data Driven Marketing (DDM) • Difficulty collecting relevant data about customer preferences and behaviors • Difficulty acting on customer data to predict customer needs and propensity to purchase • Difficulty executing highly relevant messages/offers that align with customer interests • Difficulty measuring results
- 9. DDM Business Results • Increased revenue • Customer retention •ROI in marketing expenditure
- 10. Forces Behind DDM • Economics • Consumers affected by down economy scrutinize purchases • Customer loyalty is more important to brands than ever before • Marketing budgets are under heavy scrutiny in C suite
- 11. Forces Behind DDM • Intensifying competition • Lower barriers of competitive entry in digital age • Competitors experimenting with social media, email, content, behavioral marketing campaigns •The WOW factor…Consumers expect to be wowed…
- 12. Forces Behind DDM • Advancing technology • Business analytics • Marketing automation • Marketing optimization
- 13. It’s All About the Customer Relevance will close the chasm between creative and direct marketing, leveraging customer insights to produce truly valuable content and communication that engages the buyer through highly relevant customer touch points.
- 14. Tesco Clubcard A Lesson in Customer Retention via DDM
- 15. Tesco Clubcard Objective: Customer retention and loyalty Analyze and Model Determine Deploy Objective Measure
- 16. Tesco Clubcard Gather data: Clubcard sign up, transactional touchpoints. Clothing Banking Analyze Food & Wine and Model Telecom/Electronics Entertainment Healthcare Recycling House & home Home efficiency Travel Determine Deploy Motoring Objective Measure
- 17. Tesco Clubcard Analyze & Model: 10% of data gives 90% accuracy. Relative price Finer food: 19% Branding Analyze Healthy eaters: 17% Ethnicity and Model Traditional: 15% Convenience: 9% Mainstream: 24% Price sensitive: 16% Determine Deploy Objective Measure
- 18. Tesco Clubcard Strategize: Develop relevant messaging strategies. Customer retention Customer reactivation Analyze Customer growth and Model Determine Deploy Objective Measure
- 19. Tesco Clubcard Deploy: Using DDM Tesco offers tailored/relevant promotions based on customer’s behaviors. Analyze and Model Determine Deploy Objective Measure
- 20. Tesco Clubcard Measure: DDM allows results in sales lift. 16 million members Across 12 countries. Analyze and Model 20 to 40% overall redemption rates! Quarterly vouchers = 98% redemption rate! Determine Deploy Objective Measure
- 21. Moneyball Marketing at Tamp Int’l Airport Objective: Attract more direct routes to major cities 1 new non-stop air route to major city has $154 M economic impact, 1200 jobs.
- 22. Moneyball Marketing at Tamp Int’l Airport Objective: Attract more direct routes to major cities 35% of Pinellas hotel guests rented cars in Orlando Tampa, St. Pete, Sarasota effective buying rate of $96B TPA is within 1 hour drive for 3.5 million people
- 23. Moneyball Marketing at Tamp Int’l Airport Objective: Attract more direct routes to major cities More than 30 Tampa Bay companies do business with Switzerland. 24 Swiss companies like Nestle SA, Credit Suisse Group AG and Zurich Financial Services that have subsidiaries in Tampa Bay. Many European travelers fly to Orlando but end up in Tampa Bay: 35 percent of Pinellas beach-goers rented cars in Orlando.
- 24. Moneyball Marketing at Tamp Int’l Airport Tampa International Airport has secured new daily routes to Cuba and Switzerland this year. British Airways also added two flights a week and now flies daily.
- 25. DDM: A Matter of Survival
- 26. Sources Precision Marketing by Sandra Zoratti, Lee Galagherhttp://precisionmarketingbook.com/
- 27. Sources CMO Council, Why Relevance Drives Response and Relationships; Using the power of Precision Marketing to better engage customers, 2009. Michael Cannon, Nine Silver Bullets to Increase Marketing’s Relevance, Silver Bullet Group, Walnut Creek, CA 2010 The Economist, A Special Report on Managing Information, February 2010. Jenny Davey, Every little of data helps Tesco rule retail, Sunday Times (London), October 4, 2009 Tampa International Airport playing its own version of “Moneyball,” to bring in new business, Tampa Bay Times, September 2, 2012
- 28. Bernie Borges CEO, Find and Convert Transformational Digital Marketing bernie@findandconvert.com http://www.findandconvert.com Strategy Execution Results Support
Hinweis der Redaktion
- In this presentation - Data driven marketing – I plan to use material (sourced and with permission) from Precision Marketing, one of the best books on this topic.
- While the creative era gave rise to some memorable ad campaigns, they became less effective as marketers turned to direct marketing using database marketing tactics with a “1%” mentality. Today, the consumer has revolted. The 99% we reach with an irrelevant message gets angry and goes online to tell the world about how a brand just messaged something totally irrelevant. Today we live in the relevance era. Consumers expect brands to know more about them, and message them relevantly. It’s relevance or die!
- At the end of this presentation if you take away one principle it should be this: DDM is all about relevance. As consumers, the volume of messages we get each day continues to grow each year. As marketers, if we deliver highly relevant messages, we can enjoy positive results. If we fail at delivering relevant messages, the consequences are severe.
- The stakes are high. The cost or consequence of delivering irrelevant messaging is the relationship with our customer. Recent survey data supports that consumers are willing to sever brand loyalty ties when delivered irrelevant messaging.
- Unfortunately, most brands are not yet getting this right. And, as a result brand defection is high, due mostly to delivery of irrelevant messaging. When a 40 year old woman in San Francisco is sent the exact same message as a 40 year old woman on Des Moine, Iowa, the brand mistakenly assumes the relevance is the same. And, it’s not.
- The truth is the customer is “mad as hell and they’re not going to take it anymore!” And, that is because the customer is in control. All we have to do is tweet our dissatisfaction, or post it on a brand’s Facebook page, or post it on a forum and the brand’s customers see the complaints. We live in an open communication, digital world where the customer is in control.
- The way for marketers to increase their chance of winning and keeping customers in the digital age is through data driven marketing. And, it starts with the collection of data from customers.
- Although, the DDM tools have been available for decades, most brands have not adopted a DDM mindset yet. The reality is that until recently the tools were mostly limited to large organizations with large budgets. But, in recent years, small and midsize companies have access to DDM tools, which levels the playing field. Essentially, a $10M company can steal market share from a $10B company with smart DDM practices. The customer defection rates I shared a moment ago prove this out.
- DDM marketing produces the results all brands want, more revenue, customer retention and loyalty, and ROI on marketing expenditure. If more organizations practiced DDM, the average tenure of a chief marketing executive would be more than 22 months. In fairness to the CMO though, it takes a village. IT must cooperate in allocation of resources to license, implement and support DDM technology tools. DDM is inherently dependent on technology tools, supported by an analytical mindset.
- Let’s look at the forces of DDM. The first one is economics. Consumers want the best bang for their dollar. They are less loyal to brands who don’t deliver the best bang. And, the C suite is scrutinizing every dollar of marketing spent.
- The next one is intensifying competition. In the digital age it’s easier for competitors to make inroads in almost any industry. Oracle saw Salesforce go from a scrappy startup to a serious threat in CRM software. Google saw Facebook encroach on their turf with the world’s most popular social network despite three attempts by Google to compete. New marketing paradigms allow competitors to reach and engage consumers like never before. And, the consumer that is wowed (in a relevant way of course) develops brand loyalty, provided the wow is backed up with a quality product.
- The third force is advancing technology. The market for business analytics, marketing automation and optimization is growing very rapidly. IBM alone has invested $11B in recent years in acquisitions to be well positioned to capitalize on a $200+ billion market. As technology continues to become available to marketers to reach their customers in very relevant ways, businesses are allocating budget for it as they increasingly understand the need for such technology to use DDM to micro target customers with relevant messaging.
- Again, this all amounts to becoming a marketer of relevance. Reaching and engaging customer segments with messaging that is meaningful and of interest is the winning formula.
- Let’s look at an example of DDM. Tesco is the largest consumer goods retailer in the UK, comparable to Walmart in the U.S. Let’s look at how they leveraged their Clubcard to launch a DDM strategy.
- In the 1990s Tesco recognized a problem with customer retention and set out to focus on the problem using a DDM approach. Once the objective was clearly established it was time to gather data about their customers.
- Tesco launched a loyalty program under the Clubcard concept. Clubcard is a familiar loyalty program used by many retailers. As consumers purchase more they earn points that can be redeemed through vouchers. The Clubcard enrollment process collects baseline information about the consumer including demographics such as gender, single or married, kids and some dietary preferences. Clubcard is offered across many consumer categories. Transactional data allows Tesco to profile their customer.
- Tesco uses about 20 different dimensions to create a meaningful description for the type of products purchased by Clubcard members. Through analysis of voucher usage, Tesco was able to analyze customer behavior so they could send highly relevant messages. For example, a customer who has never purchased wine would not be sent wine offers. But, a wine customer may get offers for specific types of wine, base on their purchase history.
- Tesco offers relevant vouchers to repeat buyers of a product category to maintain loyalty and retention. If a customer stops buying a particular product, Tesco offers a “please come back” voucher. Using predictive analytics Tesco offers vouchers to cross sell relevant products such as a garden hose to a customer who has purchased other lawn and garden products in the past.
- Tesco carefully makes relevant offers that reflect the customer’s previous buying behavior, being careful not to make offers that will not be relevant to each customer segment.
- DDM has allowed Tesco to build customer loyalty and very impressive voucher redemption rates, allowing it to grow to be one of the largest consumer retailers in the world. .
- Next, let’s look at how Tampa Int’l Airport uses DDM to attract new airlines.TPA’s objective about a year ago was to attract more airlines with direct routes to major cities. The economic impact of direct routes is substantial - $154 million and 1200 jobs.
- After pouring through a lot of data, TPA official learned that 35% of guests in Pinellas county rented cars in Orlando. That meant that tourists were flying into Orlando with an interest in visiting Florida beaches. With a powerful buying rate in Tampa Bay, TPA officials decided to pitch their airport to Edelweiss, a popular Swiss airline with direct routes between Orlando and Zurich, Switzerland.
- The pitch to Edelweiss was entirely based on data. TPA officials showed them that more 30 Tampa Bay companies do business in Switzerland and that 24 Swiss companies have subsidiaries in Tampa Bay, and how many European travelers fly to Orlando end up in Tamp Bay to visit the beaches.
- The end results was that Edelweiss Airlines cancelled their Orlando to Zurich flight and instead launched their Tampa to Zurich flight. In the past year. DDM has resulted in TPA landing flights to Cuba, Switzerland and UK.
- In today’s hyper competitive, digital world, organizations that use data driven marketing give themselves a fighting chance. No brand is secure just on brand equity alone. Just look at Kodak, Pan Am and Research in Motion (Blackberry). Executives who embrace DDM give themselves the possibility of being relevant to their customers. And, at the end of the day, that is what your customers want most from you.