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5 Obstacles to Marketing Intelligence - Part II
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5 Obstacles to Marketing Intelligence – II
What Stops Us From Achieving Marketing Greatness
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Last week, we started talking
about the 5 obstacles that keep
organizations from achieving
marketing excellence
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We will have established the
foundations of the course after
this lecture and will start moving
into the actual analytics and
metrics from our next class
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What are some of the reasons
that people give for why they are
unable to get started?
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Remember that we covered
collection and analysis of the
right data in overcoming obstacle
1
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But B2B companies have a
legitimate data challenge, since
these companies do not sell
directly to customers
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They sell through a channel and
do not have direct access to
customer transactional data
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Mornings for John
Chambers, CEO of the $39 billion
Cisco Systems empire, starts with
a can of Diet Coke and Cisco’s e-
Sales portal
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Through this enterprise web
application, the senior
management can drill down
through global sales data that
occurred on the previous day by
geography, purchasing
company/products or sold by a
specific sales manager
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Now, for those of you unfamiliar
with the Cisco sales model, this is
a great trick
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Cisco sells more than 95% of its
products indirectly through
value-added resellers
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Cisco contractually requires its
value-added resellers to share
customer sales data
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Most B2B companies find that
requesting customer data from the
channel partner is met with a firm
‘‘no way.’’ The partner refuses on
the grounds that the data are its
property and the source of its
competitive advantage.
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Cisco requires channel partners
to share customer data in order
to resell their products
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So B2B companies must answer
the question:
‘‘What’s in it for my channel
partner to share its data?’’
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One answer is that B2B companies
spend considerable marketing
dollars co-marketing with channel
partners so shared data analysis
provides deep insights into how to
radically improve the marketing
performance
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Now, we need to be clear about one
thing – and it’s a big thing - the B2B
firm does not necessarily have to
know the name and address of the
customer; this could be deleted
from the shared data file.
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What we are interested in is
what products or services the
customer purchases, and the
ability to act upon these
data, perhaps through the
channel partner
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This “disguise approach” works
because the channel partner’s
concern that if the B2B firm has
the customer data, it will want to
go direct and cut the channel out
of the deal
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Suntory is one of the largest
liquor distillers in Japan and
brews a beer called Suntory
Malts
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It is in the 3rd tier of
popularity, in terms of sales
revenue and brand awareness
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But in the late 1990s, Suntory did
something with the Internet that
at the time that was particularly
innovative
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Now, Suntory, like Cisco, sells all of
its beer indirectly through beer
distributors, bars, restaurants, groce
ry stores and vending machines –
which makes data collection
difficult, if not impossible
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So the creation of a website where
customers would come to and input
the number of beers they drank,
given by codes on the bottles, and in
return get points was an interesting
way to collect data
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In return for sharing the
data, customers got to purchase
silly hats, bottle tops with their
name imprinted on it, or the
chair that is too uncomfortable
to sit in
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At the peak of the
campaign, Malts reported
300,000 visitors a month to the
web site
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More importantly, these were high-
value customers – the frequent
drinkers – and the website enabled
the collection of data for direct
marketing extremely easy
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Now, this worked in Japan
because after work office parties
involve the mass consumption of
alcohol. This would not have
worked in the US!
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My Coke Rewards
The website is a loyalty
program for frequent Coke-
branded product drinkers
Again, users get points for
how many Coke drinks they
have and get rewards such as
T-shirts, DVDs and discounts
with the many partners
affiliated with the marketing
activity
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My Coke Rewards enable Coke to
have direct access to their “frequent
drinkers” and to do direct marketing
via e-mail to this valuable customer
base
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The site also provided a revenue
stream for Coke through the paid
ads on the site for participating
partners
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In both of these example, there
is a crystal clear value
proposition for customer and
resellers to share their data
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So the question that we ask is:
“What is your value proposition
for customers to provide their
data?
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We can also use focus groups
and surveys for fine-grained
segmentation and target
marketing
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The idea is to capture the
demographics, characteristics, and
purchasing habits of your end
customer through in-depth market
research
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We can create survey-
based, analytic marketing offers
targeting these segments and test
them using focus groups and
experiments as we discussed in
Obstacle 2
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Now, I should note that this
approach is not as effective as
analyzing large customer transaction
data sets, it can be a great way to
get started if you are a B2B firm
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There are many professional service
firms that will design, conduct and
analyze the survey, but you can start
with a free lunch and a gift for
participants
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The internet has also given us the
ability to create and conduct online
surveys. For the cost of surveying 10
people in person, you can survey
100 or more online
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But there is a problem with the
survey model, online or offline –
getting people to sign up and
participate
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The other problem that we
discussed was privacy issues
because customers can be hesitant
about sharing information in fear of
how it might be used
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One marketer once told a story of
their legal department telling them
to delete customer data after a
specific time period for fear of
liability
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The company did not have a privacy
policy and the legal department did
not understand what marketing
planned to do with the customer
data
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So, first thing – marketers must
clearly communicate the privacy
policy both internally and
externally about how data will
and will not be used
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In the United States, the Health
Insurance Portability and
Accountability Act (HIPAA) prevents
pharma companies from knowing
patient prescriptions
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If you create a website targeting a
specific illness, like diabetes, you can
provide information and provide
community support groups to give
product information to customers
while gaining customer feedback
and insights
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The key understanding is simple –
always add value to the customer
interaction by answering the
question “What’s in it for me?” from
the customer’s perspective
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Overcome Obstacle 4:
Resources and Tools—
Build the Infrastructure for Data-
Driven Marketing
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For infrastructure, this is all most
marketers need to get started on
the analytic marketing path
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But you should know the limitations
- Excel 2003 had a limit of 65,536
rows in a spreadsheet, and Excel
2007 has a limit of 1,048,576 rows
by 16,384 columns
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So if you have a large number of
customer, Excel is not going to
work as a marketing
database, not should it
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Now I will provide you with Excel
templates for analyzing customer
satisfaction data, internet metrics,
and calculating financial return on
marketing
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But if you have a large customer
database, you will need to use
SAS, SPSS or a specialized
business intelligence application
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‘‘The difference in these
requirements is the difference
between building a ranch house
or the Empire State Building.’’
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We will spend time talking about
this model in later lectures, so I
will hold off on going into detail
now
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What’s the one phrase that we
hear more than any other in
business when it comes to
change?
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You have to understand that in the
culture of an organization, change
starts with you. So start with simple
changes that positively impact those
around you
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Now, we have to understand that
creating a analytic marketing or
marketing intelligence culture
requires more than one person
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Find out who the decision
makers in your organization are
and learn what will convince
them to believe in the change
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To understand corporate
culture, think of it as three major
categories: rational, bureaucratic
or political
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Young MBAs believe that
organizations are rational
meaning the best idea will win.
Experienced managers know that
isn’t the truth.
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A bureaucratic organization has a
very rigid organizational
structure, and protocols must be
strictly followed in
communicating with senior
executives
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These organizations are
militaristic, with the general
giving orders from the top, and
the commanders ensuring the
orders are executed on the front
lines
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Political organizations have
centers of power, with
individuals who have kingdoms
within the organization, often
accompanied by budgetary
authority and staff
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The best example of a political
organization – a university or
center of higher learning
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Henry Kissinger once said, ‘‘The
reason the fights are so fierce in
academia is because the stakes
are so low.’’
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‘‘Our marketing budget is being cut
by 36 percent; we need to justify our
future marketing spending.’’
‘‘We are losing significant market
share.’’
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‘‘Our discount marketing is killing overall
profitability.’’
‘‘We are hemorrhaging customers and
don’t know who are the most
profitable.’’
‘‘Our competitors are consistently
outmarketing us.’’
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For marketers, making metrics
and measurement ‘‘public’’
within the organization will incite
change
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Many organizations incite
activity, not results, so the idea is
to focus on the metrics that
really value marketing