MultiChannel / Omnichannel Mayhem – CAO Solution

Well, the deluge of comments on the Managing MultiChannel Mayhem post was underwhelming for such an important idea, and I bet I know why.

You thought the system of checks and balances on communicating properly with customers was overly complex and unwieldy.  You could not imagine a self-correcting marketplace of permission within your company that would boost Marketing Productivity and the bottom line.

You’re right, it probably won’t happen at the company you are working at now, even though it’s the right way to go about it.  So let’s look at an alternative that might achieve the same result, shall we?

Even when this kind of marketplace system is set up, there are a couple of problems worth mentioning.

The first is a “black market” in permission to avoid the scrutiny of ROMI.  Channels / divisions can “cheat” in a number of different ways – using backdoor customer contact trading agreements, withholding / hiding customers, keeping and re-using copies of lists, etc.

It takes a lot of enforcement and a lot of effort, unless the company was born into this marketplace mode of thinking, and has a centralized customer database.  Then people tend to play fair, which happens at a lot of pure DM companies.  It’s just the mindset; Database Marketing people play it by the numbers – win, lose or draw.  Nobody fears analytics; failure is a learning experience to them, they say “Bring it On!”

The other cheating problem you run into is data torture by the analysts in each channel or division.  In a marketplace model, everybody wants to win, so there is incentive to bend the rules at every turn to produce stats that push your channel or division ahead of the others.  Modify the definition of a customer slightly, for example.  Stretch or compress time periods.  Intentionally use data that has not been cleansed.  Take advantage of slippage in the data update process.  All of that good stuff.

So what’s the answer, how do we solve the MultiChannel Mayhem problem?  How do we correctly implement the Interactive Customer Marketing triad of Relationship MarketingMeasuring dis-Engagement, and Control Groups, but avoid the cheating problems that go on with the Marketplace approach?

Here’s the answer: Every MultiChannel Company involved with at least one Interactive (always on) medium needs a Chief Analytics Officer (CAO), independent and reporting directly to the CEO, with all the senior analysts in the company reporting directly to this CAO.

Really.

One of the things you find out when trying to apply the permission marketplace concept is you need lots of standards and a way to enforce them.  So you have to build this CAO capability / authority anyway, and rulesets to manage the whole thing.  Then everybody still tries to cheat the marketplace but with a CAO sometimes they get caught – usually only after the deed was done.  That’s Suboptimal.

So, to address that, the next phase of the marketplace fix consists of dragging all the analysts that matter out of all the silos, and having them report directly to the CAO, creating a giant Research & Analysis group (R & A).  Then you easily have standards and controls for everything across all the marketing silos.  Standard definition of a customer.  Standard definitions of customer dis-Engagement and defection.  Standard definition of ROMI.  Standard data cleansing and list pull procedures.  Standard data update sequences.  Standard implementation of Control Groups.  All of it.

And then, magically, the importance of the complex marketplace idea actually goes away.  Because with an independent CAO and R & A group reporting directly to the CEO, you get all the benefits of the marketplace without the marketplace itself.

The CAO only has one directive from the CEO – maximize profit.  Allow the strong Customer Marketing ideas to blossom and the weak Customer Marketing ideas to fail.  It’s the same result as the Permission Marketplace, only with a lot less complexity.

Here are some direct benefits of this approach:

1.  If you have at least one always on, interactive channel, you cannot measure the success of marketing without using Control Groups.  Let’s say you want to implement them.  How are you going to keep other channels / divisions from stomping on your controls and destroying your tests if anybody can access the database at any time and pull contact information for Customer Marketing Programs?

It’s impossible.  You need centralized control of the database and one entity pulling the contact data so that tests are flagged, controls are flagged, and as a result extracts for contact are pure and free from the outside influence of any other direct-to-customer marketing efforts.

2.  There is something quite magical that happens when you put many analysts, each specializing in a different piece of the business, together in the same space reporting to the same person.  They talk to each other.  They go to lunch together.  They discover things the business would never know about otherwise.  Linkages.  Correlations.  Root Causes.  Because much of the analytical gold is buried not in a silo, but across and through a silo into others.

There’s really no way to put a value on the kind of exploration and discovery that can occur when you put many smart people, each concentrating on a different piece of the business, in a group reporting to one person, who in turn reports directly to the CEO.  Standards are clear and alliances are to the customer truth, not to the marketing silo.

I can hear the wailing already on the centralization of analysts.

“Jim, analysts are always more productive and have a better understanding of the channel if they report to and live with the other channel people”.  Personally, I don’t think that’s true; I know of very successful centralized groups that have great knowledge of the units they cover.  And from a management perspective, the reality of analytical oversight is you don’t want the analysts to become best friends with the folks whose work they are analyzing.

Without the analysts physically near each other, I think you miss out on much of the analytical synergy.  With the communication tools we have today, it’s just not clear to me why a great analyst cannot have intimate knowledge of a channel just because they report elsewhere or even live elsewhere.

As I said, the highest ROI analytical gold is often found understanding what happens between and across silos – since when the analysts are each in a silo, this cross-border work is rarely pursued and tends to be undiscovered.  You want to encourage a “world view” of the company at this senior analyst level, not a silo-specific view.

I mean MultiChannel, by definition, means across channels, right?  Who is responsible for that analysis?

And I’m not just talking about “customer” analysts.  If I had my way, I’d have sales, customer, merchandise, supply chain, service, fulfillment – all of the senior analysts – in the same tank to encourage this world view.  You can always have operational analysts in the silo itself – your future senior analysts.

Think about it.  Who is doing cross-silo analysis at your company?  An analyst in a silo?  Right.  Who is going to figure out a check-buyer Marketing Program is not working because they are shredding checks over in Customer Service?

But if physical location is truly important, fine, the reporting relationship – the loyalty / trust chain to the CEO – is the most important part of this idea, not the physical location of the analyst.  The reason this is so important is these folks need to be protected from the inevitable pressure and flack that will be coming at them from silo heads, if the CEO is really looking for the truth.

3.  With the centralized analytical setup, rather than the trading complexities and vagaries of the Permission Marketplace, you simply have smart people who play by the numbers controlling Marketing access to the customer.  So you’re the Catalog Division and you want to mail to new customers of the TV Division?  Fine.  We’ll let you try that a few times, and if it looks like an incredibly bad idea financially, then we simply won’t let you do it any more.

In other words, the message from the CEO to the CAO on down through the R & A Group is this: Folks can test anything they want.  But we will not allow channels / divisions / Marketing silos to interfere with anybody else’s test programs, and we will not allow channels / divisions / Marketing silos to intentionally and repeatedly destroy customer value.  That goes for every business unit and Marketing silo, regardless of who they are or where they are from.

When you get to this point, you know Customer Marketing is actually being run by the numbers.

What does this analytical culture look like in practice?

You can still have your own analysts in your silo, that’s fine.  Each silo with analytical folks gets a standardized, clean data feed to work from – minus contact information if that is what is required to stop cheating – from R & A.  Same data set for everyone.  Nobody from outside of this R & A group pulls from the customer database.

And as far as any contact data to be used for Marketing, programs that will actually touch the customer, you get your lists from the R & A group, and you get your customer marketing campaign results from the R & A group.  You can track things on your own, sure.  But the final bottom line analysis on customer impact / ROMI comes from R & A.

Any kind of Marketing Success analysis from outside R & A is not used for significant decisions.  If you are trying to argue budget, priorities, people, program success, Strategy, whatever at the senior level, analysis from outside the R & A group doesn’t even make it through the door.  And this has a really interesting effect on senior people.

They actually start making very large and significant decisions based on the data.  Why?  Because they trust the results.

Perhaps for the first time in the history of the company.

Think about it.  If every silo creates their own results, then why would a senior exec really trust them?  These senior folks are not stupid.  So as long as the decisions being made are not that important, as long as the company doesn’t really “live and die by the numbers”, it’s OK to have self-produced, un-audited, un-controlled, “who cares if this is reality” numbers.

Because the numbers don’t really matter.

If you are serious about running a company by the numbers, and that company has any interactive, always on components, you need a R & A Group that is completely independent of any channel or Marketing silo.

Otherwise, you can’t trust any of the Customer Marketing analysis.

Interactivity is, indeed, different.

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