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| Posted on 12/11/2008 by
Don Ryan |
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| MORE(TM) Retailers Can Succeed in 2009 |
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As we move into 2009, retailers are going to need a new strategy for retaining their customers, given the current state of the economy. A strategy that should really be considered is around pricing incentives (i.e. discounts). On one hand, incentives will be needed to keep customers shopping and, on the other, it’s important that retailers not give away more discounts than necessary.
Specifically, this implies avoiding a one-size-fits-all approach to discounting, which can be unnecessarily costly. Instead, price discriminating among consumers - making the minimum offer to each individual consumer that will motivate him or her to purchase, or better yet to purchase the kind of high margin item retailers would like to sell - is the way retailers can succeed during difficult economic times.
To develop this capability retailers would need to have a differentiated... 
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| Posted on 11/19/2008 by
Marcy Riordan |
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| Heard On the Streets: Insights on Outsourcing from MAX08 |
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Our marketing analytics forum, MAX08, was chock full of lively discussions on the issues, challenges, and opportunities facing today’s data-driven marketers. What a treat it was to “flock together” with these “birds of a feather,” who all brought unique perspectives from their day-to-day experiences with marketing analytics.
Toward the end of the day, as a crisp early-autumn breeze blew off Boston Harbor, I found myself involved in a conversation that piqued the interest of many of my analytic brethren. We were sharing our experiences with outsourcing, or in particular, “off-shoring” analytic services - mainly to India.
It was interesting, although not surprising, to hear that every person who happened to be involved in the conversation had directly experienc...
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| Posted on 11/06/2008 by
Don Ryan |
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| Virtual Reality |
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Yesterday, I gave a presentation on segmentation as part of the DMA's Virtual Seminar series and was struck by a couple of things. First of all, a large and diverse group of companies signed up for the event, which showed me that there is still intense interest in this topic, as marketers and analysts continue to search for ways to improve the effectiveness of their marketing efforts. Second, since I argued that marketers could generate better results if they used multiple segmentations simultaneously, it indicated that there is a strong desire to find new, more powerful approaches to segmentation, even if it means accepting more complexity.
Frankly, this should come as no surprise because, as I noted in my talk, in a recent study of senior executives the overwhelming majority felt that they had...
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| Posted on 10/23/2008 by
Don Ryan |
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| Consumer Engagement as Leading Indicator |
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At our recent MAX08 forum (http://www.iknowtion.com/max08highlights), there was a very lively and informative discussion dealing with social media, online communities, and the analytics to measure them. Our panelists agreed that traditional market research with an all too frequent emphasis on the weight of the report (“thud factor”) vs. the weight of insights is passé and will never again dominate analytics like it once did.
Larry Weber, chairman of W2 and the Digital Influence Group, commented that, instead, analytics should be and will be a key part of the actual marketing process going forward and will drive a host of decisions about audiences, content, and offers. Another thing he said that caught my attention, as a partisan of behavioral analysis, was that measuring consumer engagement, and not just purchases, is very important to knowing how well a br...
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| Posted on 09/22/2008 by
Don Ryan |
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| MAX08 - Big Success! |
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MAX08, our inaugural marketing analytics forum, was a big success with a sold-out crowd of over 100 participants from more than 30 companies.
We'd like to thank everyone who attended, especially those who came from out of state, and extend a special thanks to our speakers, moderators, and panelists who put on a lively and stimulating event.
We have been very encouraged by the feedback we have received and are glad that so many attendees not only found the program valuable, but also made connections with others in the field, which, of course, was a major impetus behind our decision to sponsor this event.
And if you weren't able to attend, we'd still love to hear from you and discuss your marketing analytics interests.
We hope to see you all at MAX09!
Thanks again to everyone for making this a great event.
Watch this s...
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| Posted on 09/10/2008 by
Bill Duffy |
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| Q&A with Dr. Thomas H. Davenport |
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As we gear up for our big event next week, the Marketing Analytics Xchange (MAX08), we thought it would be fitting to conduct a Q&A with the event’s keynote speaker, Dr. Thomas H. Davenport, to give you all a sense of what the main theme will be. Dr. Davenport is the President’s Distinguished Professor of Information Technology & Management at Babson College and the co-author of Competing on Analytics: The New Science of Winning. Below are excerpts from our recent conversation with Dr. Davenport:
From your perspective, what industries are ahead of the game in terms of leveraging the power of marketing analytics?
The financial services industry has clearly been at the forefront in effectively gathering consumer information to create customizable and unique marketing programs and campaigns. For instance, many credit card rewards programs are ...
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| Posted on 08/04/2008 by
Ken Howes |
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| Who’s Driving the Bus? - Response to a reader’s question |
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Recently, I received a comment on a previous blog post entitled “Who’s Driving the Bus?”. The reader asked a question I am often asked about where to begin when developing a segmentation. Do I start with the data or the business objectives? I hope my response is helpful and please feel free to send along any follow-up questions or thoughts.
Dear Reader,
Thanks so much for your recent comment on my blog post. You raise a very interesting question – and one I have heard more than once before.
More often than not, I find that the main reason why someone “wants the data to tell us” the solution is that they haven’t clearly thought through how they plan to use the segmentation. For if they had, they would clearly want to participate more actively in the solution in order to make sure the resulting clusters cou...
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| Posted on 07/07/2008 by
Don Ryan |
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| Are You Just Adding Hay To The Haystack? |
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I heard a comment recently about information intelligence that I got a kick out of. The comment was “When you are trying to find a needle in the haystack, pouring on more hay will not help.”
Sometimes I feel companies have fallen into this trap and rather than assemble just the data they need to study a problem and solve it, they gather as much data as they can in the hope that they will overwhelm the problem with sheer tonnage of information. Maybe this works from time to time, but I generally feel it is the wrong approach. Too much information can obfuscate a problem rather than illuminate it. Too much information can, in fact, distract the analyst or decision maker from seeing what is truly the key insight(s) and, as a result, paralyze the decision making process or, worse yet, lead to a bad decision. Furthermore, the “gather it (the data) and the answer w...
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| Posted on 06/09/2008 by
Don Ryan |
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| Behavioral Segmentation Leverages More of What You Know About Your Customers |
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Pavlov proved that you could condition animals to act a certain way, preferably a way you wanted them to, through behavioral re-enforcement. And ever since, marketers have been trying to copy the trick. That’s because, while opinions and attitudes matter, behavior matters more. Sure you want your customers and potential customers to think well of your brand and have positive intentions, but in the end you want them to actually do something that generates revenue for your business.
Maybe this is why the emerging field of behavioral economics has garnered so much attention in recent years, and particularly since Daniel Kahneman and Amos Tversky (posthumously) were awarded the Nobel Prize in Economics. Since then, books like Freakonomics and Predictably Irrational, written by other authors interested in personal behavior and decision making, have shot up the best seller lis...
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| Posted on 05/19/2008 by
Bill Duffy |
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| The Analysts Are Coming! The Analysts Are Coming! |
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Not since the Boston Tea party triggered a revolution over two hundred years ago has there been such a stir about another significant “revolutionary” event scheduled to take place on Boston’s waterfront on September 17, 2008.
Mark your calendars because iKnowtion will be hosting the first ever conference exclusively devoted to marketing analytics. The “Marketing Analytics Xchange” (MAX 08) will be held in Boston at the Long Wharf Marriott hotel right in the center of Boston’s historic waterfront district.
We are thrilled to be hosting this inaugural event, which will bring together an impressive array of speakers and attendees from leading companies, academia, and service providers to discuss the latest trends in marketing analytics and decision making.
Many of you (our frequent blog visitors) have been telling us for s...
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| Posted on 05/05/2008 by
Mike McGuirk |
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| What’s Your Win-Rate? |
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What I really mean is, what is your failure-rate? This may sound like a bizarre metric, but successful innovators accept that all new ideas may not turn into 'wins.' In fact, they understand it’s a necessary cost of innovation.
Let’s apply this to the data-driven marketing area.
If you tell me that your company is nearly perfect when it comes to testing your myriad of marketing levers, I will argue that you are under leveraging your businesses test and learn function.
Why?
Because as good as we may be at projecting the needs and motivations of our customers, there is no replacement for putting the test in-market and letting the customers decide. Yes, we need to do all we can to properly inform our market tests, but some level of uncertainty is a reality and it should not impede progress and our need to learn and grow.
The...
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| Posted on 04/22/2008 by
Rafael Bradley |
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| Everyone Likes Validation … of their Marketing Models! |
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Validation of behavioral models is an interesting topic for marketing scientists. For the rest of our colleagues, it probably rates up there with the joke about a lawyer, an engineer, and an econometrician. (If you don’t know that joke, ask me sometime.)
Roughly, model validation is composed of two activities. First, the accuracy of the model is measured by comparing model predictions to known values. Second, the ability of the model to classify marketing prospects into more-desirable and less-desirable groups is assessed. This ability is known as rank-ordering.
On a recent project we used response models to optimize return on marketing investment (ROMI) for a client. The models were developed by a third-party. The models were new and untested, and it was my job to validate the performance of the vendor’s models and develop estimates of the response curv...
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| Posted on 04/08/2008 by
Ken Howes |
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| Who’s Driving the Bus? |
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Statistical models are invaluable tools for marketing. But we need to keep in mind that models are only as good as the marketing input that goes into developing them. Without it, even the most statistically robust models are doomed to failure.
Let’s take cluster analysis as an example. Cluster analysis is a statistical technique that is often used to develop marketing segmentations. It uses complex mathematical algorithms to find groups of customers or prospects that share a similar set of characteristics.
But that’s all it does.
The statistics couldn’t care less about the quality of the underlying data being used. It makes no value judgments as to the importance of each data element or to the potential marketing relevance of key combinations of variables.
And that’s the problem. The statistics may be the glue that holds...
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| Posted on 03/25/2008 |
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| Change is the Only Constant |
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In his book “Marketing Insights from A to Z” Kotler said “instead of seeing a customer in every individual, we must see the individual in every customer." He used this concept to:
• Emphasize the shift in marketing thinking from “maximizing the value of every transaction to maximizing the value of every relationship.”
• Highlight the importance of “database marketing, where we know enough about each customer to make relevant and timely offers customized and personalized to each customer.”
Kotler’s book is one of many that extol the customer relationship management (CRM) approach. This approach can take many avatars such as the:
• Customer loyalty ladder where individuals move up the ladder from suspects to prospects to new customers to regular users to advocates.
• Customer value chain where individuals move up the value chain from low to medium to high, or for those who...
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| Posted on 03/18/2008 by
Marcy Riordan |
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| Lift Modeling – Survival of the Fittest? |
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Last November, I posted a blog entry (Show Me the Lift – November 14, 2007) introducing lift modeling as a statistical technique well suited for answering the age-old question of who to market to in order to maximize incremental sales.
So here’s my follow-up for those of you who live and die on the all important incrementality metric.
Lift modeling has evolved from esteemed predecessors, the response model and the expected revenue model, both of which are far from extinct. I firmly believe that this next generation of modeling is here to stay, because it pinpoints the target we tend to be most interested in: those individuals whose behavior can be changed.
In summary, the progression has gone something like this:
Business question #1: Which customers/prospects will respond to my marketing program? Solution: The Response Model &ndash...
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| Posted on 02/25/2008 by
Don Ryan |
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| Why Bad Things Happen To Good Marketers |
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I’ve been fortunate enough to have worked with a wide range of companies and not-for-profits over my career. For the most part, I’d say that my clients, the majority of whom have been marketing decision makers, have been smart, dedicated, hard-working, and focused on their goals. But while their intentions have always been good, the outcomes from their efforts haven’t always been the same.
So why do bad things happen to good marketers?
Based on the writings of James March, now professor emeritus of Stanford University, there are four limiting factors that plague decision makers. In his book A Primer on Decision Making, March says, “Decision makers face serious limitations in attention, memory, comprehension, and communication.” And he explains:
“Problems of attention…Time and capabilities for attention are limite...
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| Posted on 02/11/2008 by
Don Ryan |
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| How We Doin'? |
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About fifteen years ago I did some work for a relatively prominent regional bank and had the opportunity to spend time with the EVP of deposit products. While we sat in his well-appointed office, he rattled off a slew of monthly statistics from a packet of reports that hit his desk on a regular basis. I imagined him confidentially citing these same facts and figures for a Wall Street analyst or reporter who might be following this institution. Number of new customer households. New deposit volume. Branch traffic. New account openings. And even response rates on prospect and customer mailings. Then, to my surprise, he said to me “Is this any good? Should we be happy with these results or should we be doing better?” It was obvious that he had no context for these statistics, no barometer to tell him whether his bank was outpacing the competition or falling behind.
Pe...
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| Posted on 01/28/2008 by
Don Ryan |
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| The Value of Information |
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A long time ago, in my graduate school days, I was taught that the value of information is the cost of making the wrong decision. Marketers make important decisions all the time and so they are particularly interested in information, not just data. Therefore, it is the job of the analyst to make sure that what is being prepared for the marketer is insight that can be used when making decisions. Giving him or her tons of reports and data summaries without application is usually just a waste of everyone’s time and effort.
To succeed, the analyst should know at the outset of the analysis what questions need to be answered and how the answers will affect decisions being made. This sounds awfully simple, but it takes a particular discipline and collaboration to get right. One way to do this is to create a project summary sheet for both the marketer and the analyst to review a...
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| Posted on 01/15/2008 by
Bill Duffy |
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| Behavior Based Television Advertising – The Next Big Thing? |
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Okay - If there’s one thing we can all relate to, it’s how we each uniquely consume, experience and interact with that most treasured of household appliances, our television set. Who doesn’t set aside at least some part of each day either alone or with family and friends relaxing in our very own front row seat at the big game or getting caught up in the latest escapades of the Desperate Housewives. (not me mind you, but my wife watches).
For sure, “the box” has gone through many changes in recent years, it’s lighter, flatter, brighter and certainly more expensive than the “tube” used to be not so long ago. And of course, there are so many more channels to watch and services to consume over today’s cable and satellite services.
But - while we’re all so aware of those very visible developments taking place in...
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| Posted on 01/07/2008 by
Don Ryan |
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| Moving the Needle |
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As the new year approaches, I find myself thinking about several conversations I’ve had during 2007 with marketing managers who, on the one hand, say they really want to “move the needle” on business performance, but who, on the other hand, are reluctant to deviate too much from what they are doing to achieve those breakthrough successes. I have a feeling this is a common dichotomy.
In my view, the main obstacle is fear of failure and the accompanying risks to their own careers associated with not making their goals. I can understand this hesitancy, but would counter that, if properly explained and planned, a marketing strategy that embraced breakthrough ideas would be welcomed by C-level executives, who want more than anything to find ways of beating the competition and increasing business growth and value.
This is why, when we talk with prospecti...
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