Introduction to Marketing Intelligence - Part I

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Introduc)on to Marke)ng Intelligence Adding Real Value to Your Marke)ng Department


“Every week, I have to go to a gun fight, the senior execu)ve leadership mee)ng, and I am )red of going to a gun fight with a knife.”


Marketers are struggling with their budgets and are constantly being asked to do more with less.


For marketers, the challenge of providing concrete results is amplified since brand and awareness are “fuzzy” and are not directly related to sales revenues


During this course, I will give you examples of 252 companies that make up over US$ 53 billion of annual marke)ng spending

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Marke)ng Intelligence Framework


Some Food For Thought


55% of the marke)ng execu)ves surveyed reported that their staff does not understand essen)al marke)ng metrics


80% of organiza)ons do not use marke)ng intelligence


What you will learn in this course is that this can all be changed without a major investment in )me or resources by focusing on measuring the right metrics in the right way


This course is intended for anyone in marke)ng who wants to significantly improve their marke)ng performance and jus)fy marke)ng spending


Now, we could talk about the 50 to 100 metrics applicable to marke)ng, but I will talk about 15 that are really important


I will teach you how to use these metrics to quan)fy the value of marke)ng and radically improve marke)ng performance


Why is marke:ng intelligence so difficult for many organiza:ons?


Reasons range from “we don’t know how” to the challenge that branding and awareness marke)ng ac)vi)es are fuzzy and don’t directly impact sales revenues in a short )me period


Interna)onal Data Corpora)on (IDC) es)mates that data storage is growing at 60% annually, which tells us that stored data is doubling every 20 months


The Different Scopes of Intelligence


The Marke:ng Divide


A Story of 3 Electronic Retailers


One day, the CMO of Best Buy was asked – Who is your primary compe)tor?


You would think that he would answer – “Circuit City,” but instead he said – “Wal-‐Mart”


What?!?! Walmart?


Wal-‐Mart is the world’s largest retail chain; and with amazingly efficient supply chain and economy of scale, driving price and margins to the bare minimum


But why not Circuit City? He said – “They just don’t get it.”


Circuit City’s marke)ng strategy was to constantly run sales. Yes, this drew customers to the stores and drove sales revenues, but compe)ng with Wal-‐Mart – running sales actually lost the business money – nega)ve profitability!


Circuit City went bankrupt and was liquidated in January 2009


Why is Best Buy different? How did it survive?


A significant amount of the marke)ng budget is spent on demand genera)on marke)ng – designed to get customers into the stores


But Best Buy spends more money on branding, CRM and infrastructure to support Marke)ng Intelligence


Best Buy also keeps score – measuring the results of marke)ng ini)a)ves to op)mize its marke)ng ac)vi)es


Best Buy marketers analyze customer purchasing characteris)cs and demographics on a store-‐by-‐store basis.


How did that help?


They iden)fied one segment in certain geographies that they called “Jills”


“Jills” are soccer moms who may be working but also run the family. She also makes the primary electronics purchasing decisions for the household


How did the “Jills” help Best Buy?


Best Buy customized the marke)ng in specific stores where there were a significant number of “Jills” in the surrounding popula)on


This meant specialized in-‐store adver)sing, direct mail and changing the product mix to appeal to them, which lead to a large percentage increase in these store’s sales revenue


Marketers that “get” marke)ng have a compe))ve advantage and those who do not gradually lose market share and/or profitability un)l they are swallowed by compe)tors or go out of business


Some Sta:s:cs


There is an existence of a divide between market leaders and

followers


What Do We Know From Our Research Ø  53% of organiza)ons do not use forecasts of campaign return

on marke)ng investment (ROMI), net present value (NPV), customer life)me value (CLTV), and/or other performance metrics

Ø  57% do not use business cases to evaluate marke)ng campaigns for funding

Ø  61% do not have a defined and documented process to screen, evaluate, and priori)ze marke)ng campaigns

Ø  69% do not use experiments contras)ng the impact of pilot marke)ng campaigns with a control group

Ø  73% do not use scorecards ra)ng each campaign rela)ve to key business objec)ves prior to a funding decision.


A majority of marke)ng organiza)ons do not have professional processes in place to manage marke)ng and that most do not use marke)ng metrics in their day-‐to-‐day marke)ng ac)vi)es


The divide is even more pronounced when we look at marke)ng organiza)ons’ use of data


How Marke)ng Uses Data Ø  57% do not use a centralized database to track and analyze

their marke)ng campaigns Ø  70% do not use an enterprise data warehouse (EDW) to track

customer interac)ons with the firm and with marke)ng campaigns

Ø  71% do not use an EDW and analy)cs to guide marke)ng campaign selec)on

Ø  80% do not use an integrated data source to guide automated event-‐driven marke)ng

Ø  82% never track and monitor marke)ng campaigns and assets using automated sonware such as marke)ng resource management (MRM)


The goal of this course is to give you transparent metrics, tools, examples, and a road map to actually do data-‐driven marke)ng and apply marke)ng metrics in your organiza)on


The Metrics And Why They Are Important To Marketers


‘‘Half the money I spend on marke)ng is wasted—the problem is I don’t know

which half.’’ -‐ John Wanamaker


‘‘Half the money I spend on marke)ng is wasted, but today I know which half: TV adver)sing.’’


The Metrics That Work Ø  Non Financial Metrics –  Brand awareness –  Test-‐drive –  Churn –  Customer sa)sfac)on (CSAT)

–  Take rate

Ø  Financial Metrics –  Profit –  Net present value (NPV) –  Internal rate of return (IRR)

–  Payback –  Customer life)me value (CLTV)


The Metrics That Work Ø  New Age Metrics (Internet

Metrics) –  Cost per click (CPC) –  Transac)on conversion rate (TCR)

–  Return on ad dollars spent (ROA)

–  Bounce rate – Word of mouth (WOM) (social media reach)

Ø We will have an in-‐depth discussion of Internet marke)ng best prac)ces

Ø Give mul)ple examples of how to use the Internet to radically improve marke)ng performance


2008 Porsche Turbo Cabriolet New Product Launch



The Product Launch Ø  A stamped ‘‘raw’’ metal plate was delivered to exis)ng Turbo Cab owners to coincide with the press announcement of the new product launch

Ø  The mailing provided personalized log-‐in creden)als and encouraged visits to the web site with: ‘‘The raw Porsche 911 Turbo Cabriolet awaits your color selec)on.’’

Ø  On the web site, the customers chose their favorite color and ordered a personalized Turbo Cab poster


The Product Launch Ø  The design of the campaign, integrated with the Internet web site, enabled end-‐to-‐end tracking

Ø  There were 2,700 unique log-‐ins with an average session )me of almost 15 minutes, and 5,670 posters were ordered

Ø  Interes)ngly, there was also a significant WOM component, with nearly 500 send-‐to-‐a-‐friend invita)ons

Ø  The campaign overall had a 30 percent response rate, and 38 percent of Turbo Cab buyers during this period received the mailer


The Product Launch Ø  The response rate and )me on site is truly amazing given the high cost of the product -‐ $130,000

Ø  Target demographic: busy execu)ves, lawyers, and doctors.

Ø  This example is that the direct-‐mail marke)ng was designed for measurement and was integrated with the Web, enabling the capture of customer response data and iden)fying poten)al leads


Customiza)on and marke)ng intelligence can have a significant and measurable performance impact for both small and large firms


DuPont Tyvek HomeWrap &

NASCAR


DuPont Tyvek HomeWrap Ø  DuPont Tyvek is a well known US

brand Ø  The product is successful because of the innova)ve proper)es of the product and the marke)ng strategy that DuPont used

Ø  Tyvek has a unique property that keep liquid water from passing through making it extremely durable

Ø  Tyvek is used in packaging, protec)ve apparel, envelopes, covers, graphics and home construc)on

Ø  It is extremely useful in the construc)on industry where it is wrapped around the building frame to keep mold and mildew out while protec)ng homes & buildings from water damage



The Challenge Ø Marke)ng Intelligence and marke)ng metrics start with the principle of keeping score for all major marke)ng ac)vi)es

Ø  This is challenging, since the adver)sing is designed to brand Tyvek by crea)ng awareness for the product and an emo)onal atachment that your home is safe with Tyvek

Ø  In addi)on to the print marke)ng, DuPont used the sponsorship of Jeff Gordon in NASCAR.


NASCAR Ø  NASCAR is an extremely popular sport in the United States

Ø  It’s also very interes)ng from the marke)ng perspec)ve

Ø  It is the #1 in-‐person atended spor)ng event and the #3 most watched sport in the United States

Ø  Almost 80 million people regularly watch NASCAR

Ø  Combined with F1, auto racing is the #1 live event in the world today


Jeff Gordon Ø  DuPont also sponsors Jeff Gordon Ø  Has won the NASCAR

Championship 4 )mes Ø  ESPN rates him the 8th most

recognized sports figure in the United States


Car Branding


Ac)va)on Campaign Ø  Campaign included pain)ng Jeff Gordon’s car with a Tyvek “TV panel” on the back for a race in Kansas & TV adver)sing blanketed the Kansas area during the race to build customer awareness

Ø  Primary focus of the campaign was on three groups: – Retailers – Builders – Specialists in Construc)on


The Poster Sent to Distributors


The Offer Ø  The offer was for an ‘‘ul)mate race weekend’’ luxury box for the race and opportunity to actually meet Jeff Gordon

Ø  Awards went to –  top 24 retailers across the country who sold the most DuPont products

–  top 24 builders who bought the most DuPont products

–  top 24 specialists who signed up the most new and exis)ng retailers


The Results Ø 438 retailers signed on

– 202 new and 236 exis)ng – 186% sales increase during the promo)onal period


The Weakness of the Measurement Ø A weakness of the marke)ng measurement was that the impact of the brand and awareness component of the marke)ng was not captured par)cularly well

Ø Tyvek logo that is visible on all new construc)on that uses the Home Wrap product

Ø The following was posted on the www.NASCAR.com blog:


My favorite NASCAR memory includes our favorite driver, Jeff Gordon, and my son, Logan. When Logan was two, we would drive by new housing developments and he would tell us which houses were Jeff Gordon’s.


We didn’t put it together for a couple of months, but every )me we would walk by or drive by a new housing development Jeff Gordon almost always had a house there.


Finally, we realized our two-‐year-‐old was matching the DuPont Logo from Jeff Gordon’s racecar with the DuPont House Wrap logo (Tyvek) on the new homes. Kudos to DuPont for its brand.


The takeaway is that the Tyvek Home Wrap campaign primary objec)ves were designed to be measured; DuPont marke)ng was keeping score, and the pre-‐post change in number of pallets shipped jus)fied future marke)ng investments.


The Difference Between Leaders & Followers


If you ask CMOs how they spend their budget, you most onen hear the percentage spent on TV, print, Internet, direct mail, telemarke)ng, and so on.


But this breakdown is not par)cularly useful, since it does not tell us what these organiza)ons actually do with their money.


What is the intended outcome of the marke)ng?


We want to know what marke)ng investments are actually intended to do or achieve?


We define 5 buckets of funding based on achieving different goals and objec)ves – such as demand genera)on, branding/awareness, customer rela)onships, shaping markets and infrastructure.


The 5 Buckets in Detail Ø  Demand Genera:on – marke)ng ac)vi)es to drive revenues

in a rela)vely short )me period aner the campaign –  Sales, coupons and events

Ø  Branding & Awareness – marke)ng ac)vi)es drive awareness and can include sponsorships, naming rights to events or proper)es, and adver)sing specifically for awareness, not promo)ng an upcoming sale

Ø  Customer Rela:onships – marke)ng focuses on crea)ng a personal link to the customer that drives loyalty and engagement –  Thank you notes aner purchase and loyalty programs such as concierge shopping services


The 5 Buckets in Detail Ø  Shaping Markets – ac)vi)es designed to make the market

more recep)ve to your products or services, through 3rd party recommenda)ons –  Analyst rela)onships for B2B firms and social media blogging to influence percep)on

Ø  Infrastructure – investments into technology and training to support the marke)ng team –  Enterprise Data Warehousing (EDW), analy)cs and marke)ng resource management sonware to support marke)ng intelligence func)ons


How Do Marketers Allocate Budget?


The Difference – Leaders & Followers


The Difference – Leaders & Followers


What Do We Know? Ø  The Marke)ng Divide Is Real! Ø  There is a Significant Difference Between Leaders & Followers Ø  Leaders spend less on demand genera)on marke)ng and

more on branding, customer rela)onships, and infrastructure to support marke)ng intelligence

Ø  Leaders have processes in place to op)mize marke)ng management – it’s not done ad hoc

Ø  Leaders have significantly beter sales growth and financial performance compared with the followers

Ø  And no surprise, key marke)ng processes of leaders include metrics to keep score and marke)ng intelligence


Using Metrics to Deal With Hard Economic Times


When the economy gets tough, senior management’s reac)on is to aggressively cut costs – but they use a hatchet instead of a scalpel – causing significant impact on both short and long-‐term performance


Marke)ng may seem like an easy cost-‐cuxng target due to the difficulty with which its returns are quan)fied – but when you understand the link between investment into marke)ng and performance during and following a recession.


In a study covering 16 different industries from 1980 – 1985, results showed that firms that maintained or raised their adver)sing expenditures during the 1981 – 1982 recession averaged significantly higher sales growth during the recession and the three years aner.


By 1985, sales of companies that took an aggressive adver)sing approach during the recession had risen by 256% over those who lowered or failed to maintain their adver)sing spending


In the 2001 technology industry recession, Intel invested $2 billion in new chip manufacturing facili)es and aggressively marketed new dual-‐core technology in order to grab market share from compe)tor AMD


In 2008, three years into a recession in construc)on, Johnson Controls rolled out a new ad campaign con)nuing its ‘‘Ingenuity Welcome’’ effort. The campaign, which included significant print and online adver)sing, demonstrates Johnson Controls’ efforts to build energy-‐efficient environments for customers.


The First Step – Defining the Marke:ng Intelligence Strategy


The Framework


Know Yourself – Figure out which data are important

using the 80/20 rule: ask what is the 20 percent of data that will give 80 percent

of the value?


Know Your Customers – Fine-‐grained segmenta)on, which then leads ul)mately to customer targe)ng and data-‐driven marke)ng ac)vi)es.


The Closing


In 1974, bar code scanners were introduced in retail, and for the first )me this enabled the tracking of individual consumer product purchases at the point of sale


This technological innova)on spawned ‘‘marke)ng science,’’ the idea that marketers could quan)fy marke)ng using analy)c principles


Today, the Internet and cell phone networks are enabling the next leap in data collec)on of customer interac)ons with marke)ng


Now is the best and most exci)ng )me to be in marke)ng


The new data-‐driven approaches and infrastructure to collect customer data are truly changing the marke)ng game, and there is incredible opportunity for those who can act upon the new insights the data provides

Documents

Introduction to Marketing Intelligence - Part I