“I know that half of my advertising dollars are wasted … I just don't know which half.”
This is probably one of the most famous – or at least most frequently used – quotes to reflect the notoriously vague world of marketing. How do you quantify the value of an impression? How much is your brand worth? These sorts of challenging questions have often made it hard marketing departments to be taken seriously at companies with data driven cultures. In short, they didn’t have the same kinds of data assets as departments such as Operations that had inventory and raw materials to track, or Finance with complex transactional and financial systems designed to track every action in a company in monetary terms. How times have changed.
Marketing Analytics Overload
As more marketing spend moves to digital channels, the wealth of data marketers now collect has made it easier than ever to track client behavior. Even with free tools such as Google Analytics, marketers can get a detailed view of prospects’ location, shopping interests, and more. Add this to social media measurement tools, and reporting capabilities through existing transactional systems, and you’ve got access to an unprecedented level of data. You’d think this was a good thing, right? Not necessarily.
With so much data available, it makes it very easy for marketing executives to measure the wrong thing. For instance, you could measure click-through rates of an email campaign, but miss the geographic or demographic correlation of conversion rates for that campaign. Put another way, you may understand how a campaign worked, but miss why it worked.
What Marketers Want to Measure
What you should be measuring will depend entirely on your marketing strategy. However, in a recent survey we conducted, we listed a number of challenges that marketing executives face, how important those challenges were to their job function, and how well they’re able to leverage BI to solve those challenges. So what do marketers want to measure better?
Understanding the Competitive Landscape: developing an understanding of the competitive landscape starts to take us into the realm of competitive intelligence and data mining, which requires access to external data. Done right, though, using business data in a way that competitors haven’t been able to can lead to a major competitive advantage. One example of this is Progressive, who was able to leverage publically available information on drivers’ credit scores to see the competitive landscape in a way other insurance companies couldn’t.
Acquiring and Retaining Customers: understanding one’s customers is probably one of the biggest opportunities for marketers – given that there is so much information that customers provide freely to organizations. Marketers who have a solid understanding of BI are able to leverage not just customer data across channels, they’re also able to better coordinate their internal processes to meet customer demand more effectively (e.g. using demand forecasting to reduce shortages increases customer satisfaction), better manage product lifecycles, and understand lifetime customer value – just to name a few.
Challenges continue to evolve
The challenges marketers face continually evolve as markets and technology change as well. Marketers have come a long way from being able to say “I don’t know which half of my marketing works.” The challenge is, as more companies embrace BI, the harder it becomes for late adopters to eek out any competitive advantage (though they sure can get left behind if they’re the only company in their industry not using BI and advanced analytics).
© DecisionPath Consulting, 2011