Introduction to Marketing Intelligence - Part I

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Introduction to Marketing Intelligence
Adding Real Value to Your Marketing Department

“Every week, I have to go to a gun fight,
the senior executive leadership meeting,
and I am tired of going to a gun fight
with a knife.”

Marketers are struggling with their
budgets and are constantly being asked
to do more with less.

For marketers, the challenge of
providing concrete results is amplified
since brand and awareness are “fuzzy”
and are not directly related to sales
revenues

During this course, I will give you
examples of 252 companies that make
up over US$ 53 billion of annual
marketing spending

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Marketing Intelligence Framework

Some Food For Thought

55% of the marketing executives
surveyed reported that their staff does
not understand essential marketing
metrics

80% of organizations do not use
marketing intelligence

What you will learn in this course is
that this can all be changed without a
major investment in time or resources
by focusing on measuring the right
metrics in the right way

This course is intended for anyone in
marketing who wants to significantly
improve their marketing performance
and justify marketing spending

Now, we could talk about the 50 to 100
metrics applicable to marketing, but I
will talk about 15 that are really
important

I will teach you how to use these metrics
to quantify the value of marketing and
radically improve marketing
performance

Why is marketing intelligence so
difficult for many organizations?

Reasons range from “we don’t know
how” to the challenge that branding and
awareness marketing activities are fuzzy
and don’t directly impact sales revenues
in a short time period

International Data Corporation (IDC)
estimates that data storage is growing at
60% annually, which tells us that stored
data is doubling every 20 months

The Different Scopes of Intelligence

The Marketing Divide

A Story of 3 Electronic Retailers

One day, the CMO of Best Buy was asked –
Who is your primary competitor?

You would think that he would answer –
“Circuit City,” but instead he said –
“Wal-Mart”

What?!?!
Walmart?

Wal-Mart is the world’s largest retail
chain; and with amazingly efficient
supply chain and economy of scale,
driving price and margins to the bare
minimum

But why not Circuit City?
He said – “They just don’t get it.”

Circuit City’s marketing strategy was to
constantly run sales. Yes, this drew
customers to the stores and drove sales
revenues, but competing with Wal-Mart
– running sales actually lost the business
money – negative profitability!

Circuit City went bankrupt and was
liquidated in January 2009

Why is Best Buy different?
How did it survive?

A significant amount of the marketing
budget is spent on demand generation
marketing – designed to get customers
into the stores

But Best Buy spends more money on
branding, CRM and infrastructure to
support Marketing Intelligence

Best Buy also keeps score – measuring
the results of marketing initiatives to
optimize its marketing activities

Best Buy marketers analyze customer
purchasing characteristics and
demographics on a store-by-store basis.

How did that help?

They identified one segment in certain
geographies that they called “Jills”

“Jills” are soccer moms who may be
working but also run the family. She also
makes the primary electronics
purchasing decisions for the household

How did the “Jills” help Best Buy?

Best Buy customized the marketing in
specific stores where there were a
significant number of “Jills” in the
surrounding population

This meant specialized in-store
advertising, direct mail and changing the
product mix to appeal to them, which
lead to a large percentage increase in
these store’s sales revenue

Marketers that “get” marketing have a
competitive advantage and those who
do not gradually lose market share
and/or profitability until they are
swallowed by competitors or go out of
business

Some Statistics

There is an existence of a divide
between market leaders and
followers

What Do We Know From Our Research
 53% of organizations do not use forecasts of campaign return
on marketing investment (ROMI), net present value (NPV),
customer lifetime value (CLTV), and/or other performance
metrics
 57% do not use business cases to evaluate marketing
campaigns for funding
 61% do not have a defined and documented process to
screen, evaluate, and prioritize marketing campaigns
 69% do not use experiments contrasting the impact of pilot
marketing campaigns with a control group
 73% do not use scorecards rating each campaign relative to
key business objectives prior to a funding decision.

A majority of marketing organizations do
not have professional processes in place
to manage marketing and that most do
not use marketing metrics in their day-
to-day marketing activities

The divide is even more pronounced
when we look at marketing
organizations’ use of data

How Marketing Uses Data
 57% do not use a centralized database to track and analyze
their marketing campaigns
 70% do not use an enterprise data warehouse (EDW) to track
customer interactions with the firm and with marketing
campaigns
 71% do not use an EDW and analytics to guide marketing
campaign selection
 80% do not use an integrated data source to guide automated
event-driven marketing
 82% never track and monitor marketing campaigns and assets
using automated software such as marketing resource
management (MRM)

The goal of this course is to give you
transparent metrics, tools, examples,
and a road map to actually do data-
driven marketing and apply marketing
metrics in your organization

The Metrics
And Why They Are Important To Marketers

‘‘Half the money I spend on marketing is
wasted—the problem is I don’t know
which half.’’
- John Wanamaker

‘‘Half the money I spend on marketing is
wasted, but today I know which half: TV
advertising.’’

The Metrics That Work
 Non Financial Metrics
– Brand awareness
– Test-drive
– Churn
– Customer satisfaction
(CSAT)
– Take rate
 Financial Metrics
– Profit
– Net present value (NPV)
– Internal rate of return
(IRR)
– Payback
– Customer lifetime value
(CLTV)

The Metrics That Work
 New Age Metrics (Internet
Metrics)
– Cost per click (CPC)
– Transaction conversion
rate (TCR)
– Return on ad dollars
spent (ROA)
– Bounce rate
– Word of mouth (WOM)
(social media reach)
We will have an in-depth
discussion of Internet
marketing best practices
Give multiple examples of
how to use the Internet to
radically improve marketing
performance

2008 Porsche Turbo Cabriolet
New Product Launch

The Product Launch
 A stamped ‘‘raw’’ metal plate was
delivered to existing Turbo Cab owners
to coincide with the press
announcement of the new product
launch
 The mailing provided personalized log-
in credentials and encouraged visits to
the web site with: ‘‘The raw Porsche
911 Turbo Cabriolet awaits your color
selection.’’
 On the web site, the customers chose
their favorite color and ordered a
personalized Turbo Cab poster

The Product Launch
 The design of the campaign, integrated
with the Internet web site, enabled
end-to-end tracking
 There were 2,700 unique log-ins with
an average session time of almost 15
minutes, and 5,670 posters were
ordered
 Interestingly, there was also a
significant WOM component, with
nearly 500 send-to-a-friend invitations
 The campaign overall had a 30 percent
response rate, and 38 percent of Turbo
Cab buyers during this period received
the mailer

The Product Launch
 The response rate and time on site is
truly amazing given the high cost of the
product - $130,000
 Target demographic: busy executives,
lawyers, and doctors.
 This example is that the direct-mail
marketing was designed for
measurement and was integrated with
the Web, enabling the capture of
customer response data and
identifying potential leads

Customization and marketing
intelligence can have a significant and
measurable performance impact for
both small and large firms

DuPont Tyvek HomeWrap
&
NASCAR

DuPont Tyvek HomeWrap
 DuPont Tyvek is a well known US
brand
 The product is successful because of
the innovative properties of the
product and the marketing strategy
that DuPont used
 Tyvek has a unique property that keep
liquid water from passing through
making it extremely durable
 Tyvek is used in packaging, protective
apparel, envelopes, covers, graphics
and home construction
 It is extremely useful in the
construction industry where it is
wrapped around the building frame to
keep mold and mildew out while
protecting homes & buildings from
water damage

The Challenge
 Marketing Intelligence and marketing
metrics start with the principle of
keeping score for all major marketing
activities
 This is challenging, since the
advertising is designed to brand Tyvek
by creating awareness for the product
and an emotional attachment that your
home is safe with Tyvek
 In addition to the print marketing,
DuPont used the sponsorship of Jeff
Gordon in NASCAR.

NASCAR
 NASCAR is an extremely popular sport
in the United States
 It’s also very interesting from the
marketing perspective
 It is the #1 in-person attended sporting
event and the #3 most watched sport
in the United States
 Almost 80 million people regularly
watch NASCAR
 Combined with F1, auto racing is the
#1 live event in the world today

Jeff Gordon
 DuPont also sponsors Jeff Gordon
 Has won the NASCAR
Championship 4 times
 ESPN rates him the 8th most
recognized sports figure in the
United States

Car Branding

Activation Campaign
 Campaign included painting Jeff
Gordon’s car with a Tyvek “TV panel”
on the back for a race in Kansas & TV
advertising blanketed the Kansas area
during the race to build customer
awareness
 Primary focus of the campaign was on
three groups:
– Retailers
– Builders
– Specialists in Construction

The Poster Sent to Distributors

The Offer
 The offer was for an ‘‘ultimate race
weekend’’ luxury box for the race and
opportunity to actually meet Jeff
Gordon
 Awards went to
– top 24 retailers across the country
who sold the most DuPont
products
– top 24 builders who bought the
most DuPont products
– top 24 specialists who signed up
the most new and existing retailers

The Results
 438 retailers signed on
– 202 new and 236 existing
– 186% sales increase during the
promotional period

The Weakness of the Measurement
A weakness of the marketing
measurement was that the
impact of the brand and
awareness component of the
marketing was not captured
particularly well
Tyvek logo that is visible on
all new construction that
uses the Home Wrap product
The following was posted on
the www.NASCAR.com blog:

My favorite NASCAR memory includes
our favorite driver, Jeff Gordon, and my
son, Logan. When Logan was two, we
would drive by new housing
developments and he would tell us
which houses were Jeff Gordon’s.

We didn’t put it together for a couple of
months, but every time we would walk
by or drive by a new housing
development Jeff Gordon almost always
had a house there.

Finally, we realized our two-year-old was
matching the DuPont Logo from Jeff
Gordon’s racecar with the DuPont House
Wrap logo (Tyvek) on the new homes.
Kudos to DuPont for its brand.

The takeaway is that the Tyvek Home
Wrap campaign primary objectives were
designed to be measured; DuPont
marketing was keeping score, and the
pre-post change in number of pallets
shipped justified future marketing
investments.

The Difference Between Leaders &
Followers

If you ask CMOs how they spend their
budget, you most often hear the
percentage spent on TV, print, Internet,
direct mail, telemarketing, and so on.

But this breakdown is not particularly
useful, since it does not tell us what
these organizations actually do with
their money.

What is the intended outcome of the
marketing?

We want to know what marketing
investments are actually intended to do
or achieve?

We define 5 buckets of funding based on
achieving different goals and objectives –
such as demand generation,
branding/awareness, customer relationships,
shaping markets and infrastructure.

The 5 Buckets in Detail
 Demand Generation – marketing activities to drive revenues
in a relatively short time period after the campaign
– Sales, coupons and events
 Branding & Awareness – marketing activities drive awareness
and can include sponsorships, naming rights to events or
properties, and advertising specifically for awareness, not
promoting an upcoming sale
 Customer Relationships – marketing focuses on creating a
personal link to the customer that drives loyalty and
engagement
– Thank you notes after purchase and loyalty programs such
as concierge shopping services

The 5 Buckets in Detail
 Shaping Markets – activities designed to make the market
more receptive to your products or services, through 3rd party
recommendations
– Analyst relationships for B2B firms and social media
blogging to influence perception
 Infrastructure – investments into technology and training to
support the marketing team
– Enterprise Data Warehousing (EDW), analytics and
marketing resource management software to support
marketing intelligence functions

How Do Marketers Allocate Budget?

The Difference – Leaders & Followers

What Do We Know?
 The Marketing Divide Is Real!
 There is a Significant Difference Between Leaders & Followers
 Leaders spend less on demand generation marketing and
more on branding, customer relationships, and infrastructure
to support marketing intelligence
 Leaders have processes in place to optimize marketing
management – it’s not done ad hoc
 Leaders have significantly better sales growth and financial
performance compared with the followers
 And no surprise, key marketing processes of leaders include
metrics to keep score and marketing intelligence

Using Metrics to Deal With Hard
Economic Times

When the economy gets tough, senior
management’s reaction is to
aggressively cut costs – but they use a
hatchet instead of a scalpel – causing
significant impact on both short and
long-term performance

Marketing may seem like an easy cost-
cutting target due to the difficulty with
which its returns are quantified – but
when you understand the link between
investment into marketing and
performance during and following a
recession.

In a study covering 16 different industries
from 1980 – 1985, results showed that firms
that maintained or raised their advertising
expenditures during the 1981 – 1982
recession averaged significantly higher sales
growth during the recession and the three
years after.

By 1985, sales of companies that took an
aggressive advertising approach during
the recession had risen by 256% over
those who lowered or failed to maintain
their advertising spending

In the 2001 technology industry
recession, Intel invested $2 billion in
new chip manufacturing facilities and
aggressively marketed new dual-core
technology in order to grab market share
from competitor AMD

In 2008, three years into a recession in
construction, Johnson Controls rolled out a
new ad campaign continuing its ‘‘Ingenuity
Welcome’’ effort. The campaign, which
included significant print and online
advertising, demonstrates Johnson Controls’
efforts to build energy-efficient environments
for customers.

The First Step – Defining the Marketing
Intelligence Strategy

The Framework

Know Yourself –
Figure out which data are important
using the 80/20 rule: ask what is the 20
percent of data that will give 80 percent
of the value?

Know Your Customers –
Fine-grained segmentation, which then
leads ultimately to customer targeting
and data-driven marketing activities.

The Closing

In 1974, bar code scanners were
introduced in retail, and for the first time
this enabled the tracking of individual
consumer product purchases at the
point of sale

This technological innovation spawned
‘‘marketing science,’’ the idea that
marketers could quantify marketing
using analytic principles

Today, the Internet and cell phone
networks are enabling the next leap in
data collection of customer interactions
with marketing

Now is the best and most
exciting time to be in marketing

The new data-driven approaches and
infrastructure to collect customer data
are truly changing the marketing game,
and there is incredible opportunity for
those who can act upon the new insights
the data provides

Introduction to Marketing Intelligence - Part I

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Introduction to Marketing Intelligence - Part I