It’s what you do with what you’ve got AMANDA LOHAN – DIRECT MAGAZINE

While the direct marketing industry strives to move away from standalone list marketing to more sophisticated data profiling, the question remains, are we really using data to deepen customer experience, or are we just flogging lists by another name? Amanda Lohan reveals the agency and supplier perspectives on the true extent of data-driven marketing in Australia.

The agency viewpoint

The explosion of online presence has created a wealth of information that can be used to track and understand online behaviour. According to Daniel Wilson, (pictured left) head of data services at Wunderman, Ad Age’s number one Worldwide CRM/Direct Agency for 2010, “For any organisation that is thinking of going into online sales, the tracking and measuring of everything you do online is absolutely critical. There is incredible insight and value that can be drawn from behaviours that people exhibit on your website.”

A number of organisations are already doing this quite well, he says, using behavioural tracking to remind customers of great offers and to try to draw them in to purchase again. He cites Ford as the best example of data and CRM usage, noting that Wunderman have three dedicated resources onsite at Ford to manage and maintain customer data quality. “At a base level, these people ensure that data is entering the system correctly. More recently, Ford have been moving towards data analytics, questioning ‘Who are our customers? What are their behaviours? And how should we be driving decisions from a CRM and DM perspective?’”

Despite the immense opportunities available, Wilson suspects that few marketers are truly “walking the walk” when it comes to letting the data drive their marketing strategy. This, he says, is “mostly because they don’t know where to start, or they don’t know how to start”. But in his view the ‘where’ and ‘how’ of starting out are simple. “Think about what are the most important things that you need to measure for your business and focus on those things first. Once those things are under control and you’re measuring them well, natural curiosity will cause you to ask more questions. This is where it starts to grow and snowball, prompting a greater and greater appetite for understanding and greater appetite for data,” he said.

The companies that are using data to its full potential are often those with large transactional volumes, such as telcos and financial institutions. Regular and frequent touch points with their customers have given these organisations a substantial amount of information about their customers’ spending and consumption habits. This can be actively mined to improve customer experience.

Bill shock counselling

Wilson mentions the example of Telstra who, through data mining, was able to observe that churn increased significantly when customers received a large bill. Now, when Telstra is about to send a customer an unusually expensive bill, it will call up to notify them that their next bill will be larger, to pre-empt bill shock. Needless to say, the strategy has reduced customer churn.

The big banks are also doing this reasonably well, although some of the smaller players are making a name for themselves in the data space. Newcastle Permanent, for example, is using modelling and analytics of its customer base to discern patterns of customer behaviour. It uses this information to cross and up sell. Suncorp is another example of a financial institution that is trying to move towards becoming a more consumer-focused, rather than product-led, organisation. “The reason they’re able to do it quite well is because they have a large number of touch points and data that they can mine and explore further,” says Wilson.

But, while there are some cases where organisations are using data well, Wilson maintains a lot of companies are not. “FMCGs could be using the data that they have better—but they are more concerned about supply chain management and ensuring the product is on the shelf for consumers, rather than determining demand and asking ‘How can we better serve the consumer through utilising the data that we have?’”

He acknowledges that businesses with little to no experience of data-driven marketing can often feel intimidated by the sheer wealth of information available to them. “They see data as being this large overhead… the cost to maintain good quality data can appear quite prohibitive, yet the value you will get from the data, in my experience, usually far outweighs the cost to maintain and collect it.

“For a lot of organisations, it’s about finding someone to partner with to help them along that journey, whether someone like us, or a smaller agency who can scale down to their operation,” he said. While Wunderman is a global agency, largely focused on serving blue chip clients, Wilson says that there are a number of organisations contracting on data services, ranging in scale to serve the full spectrum of Australian business.

It is about identifying the data you already have, taking stock of what is available to you, and starting to ask the appropriate questions; ‘Are there things in our business thkat we can start to measure?’ Asking those first questions, Wilson says, will start you on the path of data-driven understanding.

From the supply side

Kevin Mackin, (pictured below) marketing manager—enterprise marketing management, for Coremetrics, an IBM web analytics and digital marketing optimisation company, raises the idea of marketing attribution. This is a concept that has gained increasing attention in recent years, particularly in relation to online marketing. “There are generally somewhere between four and eight visits to a website before a customer does something,” said Mackin. “There are all these different marketing campaigns targeting people to come to this company’s website. How do you know which of these actually work?”

When it comes to attributing success to an online marketing campaign, Mackin notes that there are a number of ways of counting, including the First and Last Click. This focuses on asking which click started the customer interaction and what was the last thing that happened before the customer converted. While as many as 90 percent of online marketers use the first or last click methods, Mackin says, “the smart people look at the first click, the last click, and the average click to see which marketing campaigns are good for conversion, which are good for acquisition, and drill right down to the product or person level”. This allows the marketer to see the campaigns that are driving real value for the customer, a sale, a booking or the downloading of a whitepaper. This is then attributed back to the right campaign.

“What we’ve described sounds like this hugely expensive complex IT project that takes six to twelve months to implement, and takes up half your company. But, we can have that ready and going in a couple of months for not a whole lot of money,” says Mackin. While the capability can be established in a short period of time, the biggest hurdle is changing the mindset of the people within the company and getting them to actually implement the processes, “This requires some sort of change management within the company for continuous improvement within the marketing process. This is harder than the technology,” he said.

The power of data is generally accepted, but when it comes to what companies are actually doing, most are just using programs to count the number of hits on their website. In Mackin’s opinion, “those guys have missed the entire marketing value of online”. From an Australian point of view, some of the very large organisations have been profiling web visitors and web visits for years. However most of them have done little with the data they have been collecting, “Medium-sized and smaller, more agile, businesses get into understanding the value of profiling online. They take that and really start to run with it. In terms of actual usage, the medium-sized guys are getting more value out of the available technology”.

Data from the cloud

Coremetrics offers software as a service (SaaS), allowing for opt-in benchmarking across industry groups. “If you don’t know the context of the number in terms of what everybody else is doing then you’re only looking at half the story. Because we’re SaaS, we can actually tell you how you’re going compared with your peers. I know that the way we measure a page view, or a sale, or a conversion is the same for all our clients. Consequently, I can take all of that client data and pool it together and generate an average”.

Online data-driven marketing is largely a retail phenomenon, particularly for boutique fashion shops and small-to-medium retailers, “Automating cross selling is the key to this, and you don’t have to spend a million dollars to make that happen. If you have the profiling of the customers locked away, actually turning that on and getting it happening is a relatively straightforward process. It is a mistake to expect that it is hugely expensive. It is all relative to how much value you are going to get out of it”.

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Which test won?

Marketers seeking inspiration as to how to start measuring the results of online marketing should check out Anne Holland’s Which Test Won. It uses the results of AB testing to test your knowledge on the likely success of various online marketing strategies. You might just find the results are different to what you expect, reinforcing the importance of conducting testing rather than just relying on first instinct.

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Amanda Lohan is a freelance writer with degrees in Business Administration and Law. Amanda is the Marketing Manager for Endeavour Training and Development.