On April 7, 2015, the American Marketing Association took a shot at data-driven marketing. We all know the era in which live (big data anyone?), but are not always sure of the best path toward marketing Nirvana. The AMA turned the mike over to Robert Mattson and Svetla Yankova both from Telerik.
The underlying theme was the need to focus on creating a prospect stream based on value, not simply volume.
Mr. Mattson started his presentation with a picture of Times Square on New Year’s Eve. He presented an interesting scenario – he likened the CEO’s perspective of what marketers do to the expensive fireworks going off; he further likened what our bosses think marketing does to one of the expensive digital ad signs gracing the square. However, the truth is we are one of the million people in attendance. We are tasked with identifying the right people to hand out our leaflets too. Bear in mind we could distribute our message to many people, but the question remains would they even care about who we are?
Let’s face it: we are in a world of diminishing returns. The average global click-through rate for paid search is only 2%; only 42% of those who register for a webinar actually attend; and the average direct mail or print advertising close rate is only 1.7%. If you are in positions 6 – 10 on a search engine you can expect a 3.73% response rate. Noise is all around us, with only a fraction actually coming from our direct competitors.
Can we become more efficient in our prospecting? The funnel below is typical for most marketers. Our focus traditionally has been on generating volume at the top end. But the presenters asked us to question that rationale.
Two concepts were embraced. First, let’s look at Technological Determinism. Think Apple releasing the iPad. The sheer market muscle of Apple and the cult of Steve Jobs combined to create a market need for the iPad. In contrast, take the approach known as the Social Construction of Technology – a bottom-up approach where the market need bubbles up to the level where an organization can run with it. These concepts coincide with the shift from the production era to the sales era and to the current customer era. Our customers and prospects are empowered with information, and it is our job to deliver on the promise of the right product at the right time.
In this current era, we, as marketers, have ramped up our ability to communicate our message across multiple channels, yet we have not fully mastered the ability to personally communicate our message to customers and prospects of value.
The key to unlocking the vault lies within a critical evaluation of the data we currently use. Historically we have done well with the X and Y axes in the graph below, but we have shied away from the Z axis of effectively assigning value to our efforts. We have shied away because the process of assigning value is not easy. A multi-channel approach combined with a non-linear customer journey increases the difficulty of the process even more.
Where can we find those data points that will help us generate “value”? Asking questions is the first step. We should be asking questions such as:
- How do we define a customer of value?
- Where do we find them?
- What are our success metrics?
- How do we approach the customer experience?
We also need to shift our thinking to a longer-term perspective, but taken in short-term steps. This will require marketers to move beyond instant gratification into a realm that incorporates data from sales, finance and customer lifetime value measures, in addition to click-through rates. The graphic below highlights the movement from response-based decision making, typical of many marketing departments, to a profitability-based model. This latter stage incorporates costs from departments outside of sales, such as customer service and account management. Costs from these downstream departments add to the ultimate cost to acquire and retain a customer.
Key takeaways – we need to encourage our marketing brethren to think longer-term. We can temper this change by offering short-term success metrics. Moving toward data-driven marketing will require input, and perhaps input from organizational departments that we may or may not be friendly with. Regardless, if we can move in the direction of decisions based on profitability we can lead our organizations to market mastery.