Retail, Big Data and the Transforming CMO
CMOs (and their ranks of retail marketers and agencies) are working to bring creative-driven and data-driven marketing and advertising together in order to deliver relevance to consumers, drive stronger sales and discover deeper insight into audiences.
The fact is that CMOs are increasingly being measured on campaign performance and contributions to the bottom line. The catalyst here is what we call the “Data of Desire” – as in the data that helps us understand the desires of our customers so we can better market to them. After all, CMOs in retail and beyond have always been responsible for shaping what to market and how to market it. Now, by accessing vast amounts of consumer and customer data, they can know each customer as an individual, and therefore, they can engage each customer as an individual.
To do so, retail marketers face two distinct questions: First, if a deeper understanding of each customer creates more opportunities for value creation and sales, what can marketing best offer that the customer will actually value and utilize? Second, what kind of "system of engagement" must be built to deliver it? This is about systematically selecting whom to market to, what to offer them, and how to serve them best. By individually tailoring content, loyalty programs, promotions and personalized experiences at each touch, marketing becomes a service. Part of the goal of this service, so to speak, is to create data attraction strategies that enable marketers and advertisers to find this elusive data of desire in the midst of a flood of big data coming in as different types from a multitude of different channels.
So, how does the retail industry become more scientific in order to better understand their customer’s desires and then tie them to predictive elements that help marketers drive the right message to the right person at the right time for the right price?
Before we can answer that question, let’s consider the following:
In the 2011 IBM CMO Study, we asked CMOs what are the top issues that they have where they feel it is impacting marketing’s ability to deliver against their business objectives. The top issues identified are:
- Data explosion – they know that there is a lot of insight that they could gather based on how individuals are interacting with content on the web in addition to what their own transactional and historical data could be telling them about their customers. But, how can they even capture all these different types of data for fast and efficient analysis?
- Social media – this particular source of unstructured data is a treasure trove if CMOs know what they’re looking for and when and where to look for it.
- Growth of channel and device choices – CMOs know that the growth of options for customers means growth in ways of communicating with their customers – both in and out of the store or website – and they know that it also means that consumer attention is being fragmented across these devices. So, how do they deal with this “migration of attention” and enable clear, consistent messaging that speaks directly to their customers and prospects?
In short, CMOs around the world feel underprepared in the critical areas required for relationship deepening.
Furthermore, IBM kept the conversations with marketers going in the 2012 State of Marketing Study in which we learned that 34% of the marketers we surveyed still manually analyze attribution through spreadsheets. It’s no wonder they are challenged to accurately report on campaign ROI or fully recognize the value of digital media… they can’t find it amongst all the data they are learning to deal with because they are dealing with it using severely outdated methods – or worse – they aren’t using the data at all.
The good news for advertisers is that more than 50% of them said that they will still significantly increase their media spend across all channels this year and 71% believe integration across owned, earned and paid channels is important. I see a few other interesting results in this study as well. For example, only 21% currently run mobile marketing and advertising tactics as part of their integrated campaigns and less than 1 in 5 leverage online data to make one to one offers in traditional channels. Clearly, there’s room for channel adoption and growth.
OK, so… now what?
The opportunities lie in helping CMOs make the most of big data and then drive strong insights and relevance from it so they can drive more traffic to their online and brick & mortar stores. But, the real question is: do CMOs even know what big data REALLY is?
There are three different ways in which people tend to define big data these days:
- Industry analysts and popular media define big data as an opportunity or a new class of problems that didn’t exist before. They believe that harnessing this data gives organizations new capabilities and an ability to get ahead of their competitors.
- Technologists define big data as a new means of solving problems that could not be addressed using “old technology”. They tend to use the 3 V’s (Volume, Variety and Velocity) to describe characteristics of data and suggest new systems that enable advanced data management and analytics.
- Data scientists tend to define big data as a new methodology or a different way of thinking about data and gleaning insights from it.
However, I think CMOs don’t necessarily see this same view when defining big data. I believe CMOs look beyond the 3 Vs to see those 4 Rights I mentioned earlier: Right Message, Right Person, Right Time, Right Price. Each one of those essential marketing goals to drive campaign performance and ROI requires a system of engagement that maximizes the value of data at every touch.
But how is today’s transforming CMO actually applying big data? Let’s answer that by imagining the world of marketing and advertising in the era of Big Data:
- CMOs need to effectively transform petabytes of raw data into useful information that can influence marketing processes and predict customer preferences with accuracy. They want to see dramatic reductions in processing time for complex marketing campaigns - decreasing time from hours to minutes.
- They need to rapidly measure the effectiveness of every variable in a marketing campaign including website selection, ad placement, creative, format, cost and more in real time. The fact is that if they understand every element driving movement through purchase funnel; they can improve conversion rates and lower CPAs.
- They need big data analytics that enable them to use all possible information from every aspect of campaign and they need to apply predictive analytics to uncover trends across thousands of data points and gain unprecedented visibility into consumers. The results here are simple: decreased costs and increased revenues equals a happy CMO.
As we’ve established, big data drives big insights which help build a clear picture of each customer as an individual. With that, CMOs, marketers and retailers can make better decisions about balanced media and marketing mix that will serve customers more completely—based on critical elements such as customer needs and likely next action – so they can do more than just shape desire… they can predict it.
For more information on this subject, check out Dave Laverty’s presentation from the recent AdExchanger Human Centered Automation conference in NYC.