The Power of Data Analytics in Marketing
Okay, so I went ahead and did it. I wrote about Big Data. If you are a marketing professional like me, data is something that didn’t used to be part of the marketing vernacular but now, it must be.
I don’t know what else to call this Data Revolution other than what most other people are calling it, Big Data. What else would you call it? Bigger Data, Obese Data? What? I had the same problem.
Through my experiences of working with marketing databases, statistics and web analytics, I realized how essential it is to learn how to derive insights from the numbers. Quite simply, data drives better decisions and lets you tell a very good story. Data however is worthless unless you are able to understand it.
So, what exactly is Big Data?
The term “Big Data” refers to a digital phenomenon that includes storing, analyzing and extracting information from large data sets. Researchers Danah Boyd and Kate Crawford simply describe this idea as “drawing on large data sets to identify patterns in order to make economic, social, technical and legal claims. Good definition.
Data is general has become a big issue over the past decade in particular because the amount that simply exists and continues to grow exponentially. According to The Economist, the information management industry is lucrative and growing at 10% each year, nearly 2x faster than the software business.
This spike in data surplus is largely due to the increase speed, storage and ubiquity of digital data, especially with the rise of internet-enabled and sensory technology such as mobile phones and computers. Technology has grown in quality and has become cheaper to store large amounts of data. Humans are also interacting with the data at an increasing rate, which allows businesses to make sense of what the driving forces are behind human behavior and demand. The concept of the “Internet of Things” (IOT) refers to the idea of connecting literally everything to the Internet; it’s pervasiveness is here will likely not diminish anytime soon. According to ABI. Research, between 30 and 50 billion devices will be connected to the Internet by 2020.
Although, having the internet connected to everything can become virtually and perpetually annoying. Steve Smith in his latest Mediapost blog, wrote some of the problems with the “Internet of Things”. In particular, that objects get voices and fake personalities. Can “things” replace people in the future. Maybe.
How does this impact customer relationship management (CRM)?
Embracing data from a business perspective has many benefits for those willing to invest time, resource and energy to it. From a customer relationship (CRM) perspective, insights about the consumer are incredibly valuable and help provide real-time business data. This in turn, can boost performance and form the basis for a unique competitive advantage such as new products and services. Leveraging data can also allow for better management decisions (instead of subjective plays), provides a more accurate assessment of the market segment (s) and precise information about customer buying behavior. The benefits are vast for companies that adopt a customer value based approach, where the focus is on meeting customer needs versus addressing large market segments. These include decreased marketing costs, increased profits (and ROI), and reactivation of dormant customers, amongst many more.
And where in the world does all the data come from?
Lots of places as it turns out. IBM has this very lovely infographic below that details some examples - email, transactions, social media, photos and videos, and the list goes on. There are plenty of behind the scenes data wizards who are extracting your data and learning all about your behaviors, wants and desires. Look around you and you will start to notice more. Humans are bleeding data points every time we use a credit card, buy a book on Amazon, turn on the TV….
Challenges are a great opportunity for growth and differentiation
This abundance of data is not however without challenges. It can be very overwhelming, especially for enterprises who don’t have ability to leverage the data or lack the wherewithal on how to manage and make sense of it. Maintaining databases of information, software and knowledgeable staff is expensive and expertise is scarce.
In addition to the storage issue and lack of data experts, other potential shortcomings include fraud, security, privacy, intellectual property and standardization. It is estimated that only about 5% of data is structured or standardized so analyzing and interpretation becomes impossible for the other 95% of billions of types of data. From a CRM perspective, inaccurate data or complete absence of it means that there are some missed opportunities to establish a competitive edge and make more informed business decisions. This data problem could cost more long-term and effectively diminish the ability for businesses to thrive and maintain a competitive advantage.
B2B organizations have used this as an opportunity to develop solutions to these data headaches and fill the need to solve this problem; it’s paying off for them so far. In the past few years, large enterprises such as SAP, Microsoft and IBM have taken note of the recent data deluge responded with solutions for businesses that lack the knowledge or ability to interpret the information.
The growing proof of the profitable impact from good customer relationships will further continue to drive growth of the CRM industry. Brad Wilson, CMO of Travelocity, who is a big proponent of Big Data, maintains that today companies have the luxury of listening to customers and using the data to respond to customer needs, which has positive impact on the bottom line. He maintains that brands should “build an intelligent infrastructure that allows you to delight your customers across all owned touch points from website, to call center, to mobile and email.”
In the future, I think “Big Data” will no longer be considered “Big Data” but rather just “Everyday Data”. Over time, more sophisticated and user friendly tools and systems will be available to simplify the process and provide more value at the enterprise level. In addition to the large data players like SAP and IBM, smaller data and analytics firms have popped up over the last few years.
On the consumer side, I don’t think we will ever be comfortable with the “big brother is watching” idea but as time goes on, people will be more open and demand transparency from more organizations that collect and use this information.
From the business and marketing perspective, leaders in every sector will have to work to understand the implications of big data and this doesn’t just mean the data analysts or CIO’s, but also marketing professionals and CMO’s. McKinsey reported that there will be shortage of talent necessary for companies to truly take advantage of the data and by 2018; the US could face a shortage of 140,000 to 190,000 people and as many as 1.5 million analysts/managers with the deep analytical skillset to use the data in order to make effective decisions.
Marketers today need to be able to communicate data insights effectively and clearly to internal team members as well as external customers. In order to achieve long-term value, it is essential for companies to evolve their business approach to focus on selecting the appropriate customers, shape interactions and optimize future customer value. It will be important to properly hire the right marketing and business professionals with the right data and analysis expertise in order to effectively respond to consumer change, marketplaces, and technology. This will only protect and benefit the organization and establish strategic competitive differentiation in the long-term.
