Category Archives: Analytics Education

Sense And Respond Marketing

Analytics Education, DataBase Marketing, Marketing / Tech Interface

Ron Shevlin of database marketing powerhouse Epsilon thinks a new core competency requirement for marketers is the “ability to move customers through the buying cycle with a sense-and-respond capability”. This is something I often talk to people about, it’s really a subset of the “I have the data, now what do I do?” problem. Marketers are more familiar with creating campaigns based on nameless, faceless GRP’s than the behavior of real people. And that’s the problem.

I think part of the problem is in segmentation, they simply don’t understand how powerful behavioral segmentation is, how different it is than using demographics – and they lack the ability to ask for / get this information in a format that drives action-oriented thinking. The granularity of “people” as opposed to GRP’s throws them off. With Sense And Respond Marketing, or what I would call Relationship Marketing, you use the Customer LifeCycle to influence messaging which is meaningful to people based on behavior, not demographics. The behavior is the message, not the age, income, make of car, or whatever. Using behavior makes so much more sense when you see an 80 year old on a Harley.

Here’s an example. One thing that happens with interactivity is people tend to “gorge” themselves on something, get tired of it, and move on to the next experience (video games, Friendster). So you have to work very hard to hold on to them. At HSN, we used to listen very carefully to what customers said on the air and reviewed comment trends in customer service every single day. One thing we started hearing was “I’ve only got 10 fingers” which is the customer saying “you are selling too much jewelry”. At the same time, we were looking at the LifeCycle of best customers and found that most of them were fashion buyers who started buying in jewelry – regardless of how old they were or what their incomes were.

So we have customers telling us we sell too much jewelry, and we end up losing a lot of them because they get bored. But at the same time, best customers are created when someone starts buying jewelry and moves into fashion. We have a natural transition from new customer / jewelry to best customer / fashion that some customers found their way to and others did not. Knowing this behavior exists and that it’s very profitable for HSN, can we influence it? Can we get more people to make the jewelry to fashion transition with a marketing campaign of some kind?

Well, the first thing is timing. When to drop the campaign? You can’t drop it on a “date” to all customers, you have new customers coming on each day and they are going through a LifeCycle. However, the data said if the customer did not start buying fashion by the 120th day of their LifeCycle, they would probably never buy fashion. So somewhere in that 90 – 120th day after becoming a new customer, we need to hit them with a “buy fashion” message.

OK, so what is the message?  Well, we know from customer comments (and remote selling in general) that people are reluctant to buy fashion remotely because they are worried about fit. So what would be the easiest fashion item to sell a remote customer? How about something like a running suit, you know, Small-Med-Large-XLarge?

So we put together these special fashion shows geared to “no brainer fit” fashions and had them run at very specific times on the network that we could promote to the customer in advance. We dropped a very simple piece that said, “We’d really like you to try our fashions, here is $10 off, here is when to watch” kind of thing. And we dropped it somewhere in the 90 – 120 day window after the customer’s first purchase. Understand, these pieces went out every week but they went to very specific people with specific behavior who were entering “the zone” of 90 – 120 days after first purchase of jewelry.

And we literally printed money from that point on with this program. For every $1 in cost, we generated $25 in incremental (versus control) profit in the first year of the customer life, every day, day in and day out, as a higher percentage of new customers converted into long-term, highly profitable fashion buyers.

Was that a hard program to design? Not to me, seems completely logical. You have behavior, you know the customer, you have timing points, copy is simple and direct. I think Ron probably had something a little more sophisticated in mind when he wrote Sense And Respond Marketing, but the basic concept is the same (and after all, we were dealing with mainframes and snail mail at HSN in 1994, so cut me some slack!).

So why is it again that people have this “I have the data, now what do I do” problem? I suspect it’s because they may have the data, but it’s not in any kind of actionable report format that generates ideas. GRP Marketers simply don’t know how to ask for the data / can’t get the data in a format that lends itself to creating effective campaigns. And that’s a shame, because it’s pretty simple to have someone do it for you or you can do it yourself.

Do You Read IT Management Magazines?

Analytical Culture, Analytics Education, Marketing / Tech Interface

If not, why not?  Just because you are a marketer?  How then, do you talk to IT people in a language they can (partially) understand and get anything done?  How will you increase the Productivity of your marketing efforts without having a useful dialogue with IT?  If you can’t increase the Productivity of your programs and deliver better results, what will happen is your job will be “absorbed into the Network”, as Regis McKenna would say.

If you are in Marketing Management and are looking for a seat at the strategic table you have to understand some of this stuff.  The CEO, COO, and CFO do; why not you?

At least try to read these magazines:

Intelligent Enterprise – the data / architecture side of Marketing Productivity; Business Intelligence, Data Modeling

Optimize Magazine – More about Business Process Stuff; Modeling, Management, Sensing and Alerting, Six Sigma

BaseLine Magazine – This provides hard core, detailed case studies on Business Optimization.  Amazing stuff, hard to believe they get execs to fess up to some of these giant productivity disasters.  Mostly focuses on operations, but why is operations not of your concern?  Operations impacts the customer, the customer is your main focus (right?).  When you read these cases, imagine how these customer-touchpoint disasters affected the outcome of every marketing program running at the company.

DM Review – this one can be some tough sledding, a lot of it is about systems, but hey, how long are you not going to care about systems?

You will not understand everything these magazines are talking about (especially the last one), but that’s not the point.  The point is to learn what they are talking about, and try to figure out how you can take advantage of it when it happens.

Heck, even help it happen or make sure it happens in a way that is the most productive for marketing.  These magazines are must reads for any marketing person thinking of joining a Business Swat team.

Root Cause: The Five Why’s

Analytical Culture, Analytics Education

There are many marketing productivity situations you will encounter where a change in the metrics, positive or negative, is being caused by something you or your area has no control over. For example, your marketing campaign generated a lot of leads but these leads failed to convert at an acceptable rate. Since this campaign has always generated good leads in the past, you ask yourself, “What happened? What was different this time?”

Upon further research, you find that the leads were of the same quality, but for some reason most of the leads failed to make it to the salespeople they were intended for, and instead went to a brand new salesperson in training. This “process failure” resulted in a low conversion rate, and is the root cause of the campaign failure. Here is the head’s up on root cause: make sure when analyzing campaigns and other metrics that you understand what “failure” you are really dealing with. Relentlessly search for root cause.

Getting to the Root of It All

I often speak about cross-functional teams in the management of the analytical culture, and the concept of root cause is the driving reason for this, as the road to root cause is often cross-functional in nature. Having a cross-functional mentality in place ensures that these complex root cause issues are addressed without finger-pointing. In a good cross-functional team, there is no “blame”, only learning and continuous improvement. If you don’t chase down the root cause of your issues, the problem likely will continue, creating pain for all members of the team.

We can look to the practice of Six Sigma for some help in performing Root Cause Analysis. A popular technique is known as “5 Why’s”. The “surface” problem or “effect” as it is called in Six Sigma is written down, specifically, at the top of the page. Then the team asks, “Why did this happen?” This answer, or “cause” in the language of Six Sigma, is written down underneath the effect. “But what caused this to happen?” is asked, answered and written down under the previous cause, and the process repeats until the team agrees that the “real”, or “root cause” of the problem has been arrived at.

If you solve this last problem, you will fix the root cause, which typically means you will solve all the other “causes” above it.

For some reason, the root cause is often reached around the 5th “Why”, hence the name. You may reach your root cause sooner or later depending on how well the problem is understood and defined in the first place.

Let’s take the example of the lead generation campaign above and run it through the 5 Why’s process:

Effect: The campaign failed to generate leads that converted at an acceptable rate.

Why?

Cause: Because the leads were distributed to a sales person who was in training

Why?

Cause: Because the sales manager who usually distributes the leads was out of town and the only person available to distribute leads did not know the leads are not supposed to go to sales people in training

Why?

Cause: Because there are no rules in place to guide somebody on how to distribute leads when the sales manager is not available

Why?

Root Cause: Because the sales manager has not provided specific instructions on how to distribute leads

Solution to problem of under-performing campaign:

Have sales manager create lead distribution rules and appoint a person to control distribution of leads in her absence. Probably a good idea to appoint someone to control distribution of leads if both the sales manager and the 1st level appointee are unavailable as well, so any “cascade” effect is stopped and campaign budget not wasted.

See how that works? The root cause doesn’t have much to do with web analytics or marketing, but the impact is felt there and as such, the cross-functional root cause for failure should be uncovered and repaired.

Now, as an analyst, you may want to “tweak” the “5 Why’s” process a bit. While useful in getting a discovery process going, particularly in cross-functional team settings, there is a real problem for the analyst. Do you see it?

Here it is: where is the analytical rigor in this process?  For each cause the team agrees to, I would ask for proof or evidence of the causal relationship, or else you might end up going down a dead end road. Examine this proof and determine if it completely explains the relationship between the effect and the cause.