Good data provides the underpinning for good decision making. Yet many firms don’t invest enough time or money in analytics. Instead, they work on gut feel and supposition. Even if your organization is reducing its overall marketing spending, there is a sound business case for investing in marketing analytics.
Many companies still spend colossal amounts of money on “spray and pray” marketing campaigns, which often don’t even use a targeted list, much less a targeted offer. Good analytics enable you to do a better job planning and targeting, resulting in better responses and higher marketing ROI.
For example, we work with a well-known online luxury retailer to develop analytics to help better target marketing campaigns. One particularly successful campaign was focused on female customers who were likely to buy men’s goods. Analytics helped the retailer identify these customers, predict their propensity to buy, and then market to them. These campaigns helped drive a 40-80% increase in purchases among the top deciles.
A Febuary 25, 2010 article in the Economist titled “Data, Data Everywhere,” put it best: “Information has gone from scarce to superabundant.” If you do not separate the wheat from the chaff, you could end up multiplying your data set without reaching meaningful conclusions.
For a top pharmacy retailer, we measured the effectiveness of marketing campaigns. The most crucial part of this effort involved understanding and then filtering through their huge ocean of data. Picking the right variables helped the company calculate campaign ROI and compare efficacy across campaigns. Analytics helped them understand where to begin, and their overall analytics effort has helped them realize revenue increases in their target markets of up to 40%.
Analytics evolution begins with descriptive and inquisitive analysis of information, and then progresses toward predictive and prescriptive insight generation. Organizations that show high analytics maturity have a forward view, maintain high profitability levels, are able to attract more customers and maintain a competitive advantage.
Mu Sigma helped one large computer manufacturer institutionalize the use of analytics across their organization for more consistent, reliable metrics to make better business decisions. In the past, it had been difficult for the company to consistently use analytics across groups and be really confident in the data. Now they apply a global standard approach across regions and departments. This has helped company executives make smarter, more informed decisions — for example, on rolling out or killing marketing programs and campaigns — based on hard data and consistent, reliable methodologies.
Applying analytics in your day-to-day marketing work is no longer a nice-to-have; it’s a must-have. Organizations that don’t have at least basic analytics capabilities will not survive in an era where knowledge is power.
Dhiraj Rajaram is founder and CEO of Chicago-based Mu Sigma, an analytics services firm.