Number crunching

A day in the life of a marketing manager can look like the opening titles of The Matrix: cascading numbers everywhere, and none of them making sense.

Today marketers can capture more and more data from just about every touchpoint in the brand-customer interaction, but do they know what to do with it?

It seems the answer for many marketers is still 'not really'. "You can have the most fancy system in place," says Proximity ID managing director Angela Day, "but it means nothing if all it does is provide lots of raw customer data."

So marketers face a search for meaning, a search not as deep as the philosopher's quest but a tough job nonetheless - turning mountains of data into workable insights.

Retail management software provider AdvanceRetail helps retailers collect detailed customer data across multiple locations. The hardest part, according to managing director Mark McGeachen, is extracting value from the data.

"In retail there are huge numbers of customers," says McGeachen. "The sheer volume of data means there's a big risk of information overload."

"A core role of marketers," says Day, "is to identify how best to roll up or translate some of these data facts into meaningful insights to drive relevant customer communications."

Sometimes that role can be filled at marketing manager level; sometimes a specialist is needed. Melanie Archibald, client services manager in Datamine's Wellington office,says there's a shortage of good quality data analysts. "It's a tight recruitment market, so a lot of [existing analysts] are finding they just don't have the resource to do customer reporting," she says.

The skill shortage is leading to a lack of understanding in the marketplace on how to get the best business insights from data, says Archibald. "It either gets put in the too hard basket or the timing shifts year-on-year," she says."[Marketers] end up putting up with what they've already got."

The marketers who aren't satisfied with the status quo are finding help from a variety of quarters. Specialist data analysis companies like Datamine are obvious candidates, as are CRM software providers. But direct marketing agencies are also joining the fray in the effort to tame data.

Robbins Brandt Richter (RBR) recently launched its new Dataguru service in response to marketers' demands for usable insights from data. Information has been transformed from a supporting to a leading role in the organisation" says RBR CEO Trevor Moodie. "The era of the chief information officer as the powerbroker of data has ended and we've reached a critical transition point of information ownership."

Moodie says the new owners of data are senior management, and they're demanding accountability for achieving a positive and significant return on investment.

"We take the information and feed it back into the organisation in a usable form," says Moodie, "not just for marketing, but for the whole company."

RBR's founding partner Mary Robbins says that while, five years ago, there was a chasm between marketing and IT, now there's a gap between senior management and the information they need.

"Five or six years ago the trend was definitely IT having the information and marketing not being able to access it," she says. "In the last three years or so we've seen a frustration at the senior level (CEO and above) of just not getting the information packaged in a way that's aligned with their business objectives."

Is it a technical issue or a management issue? Robbins tends towards the latter saying in one case a marketer was willing to outsource their database (at a cost of $50,000 per month!) because internally, IT and marketing were speaking different languages.

"By working through the two teams' concerns," says Robbins, "the problems were resolved with customer knowledge retained in-house (and utilised) by the client."

It's a significant change in business model - from DM agency to something resembling management consulting - but RBR's transformation has been in response to clearly expressed needs from clients.

"The client always thinks their problems are particular to them," says new RBR general manager Rod Strother, "but it's a worldwide need. Companies are information-rich and knowledge-poor."

Moodie points out that DM agencies are perfectly positioned to offer more high-level strategic insight because they are already at the execution end of data, so know more accurately what kind of data is needed practically.

AdvanceRetail, too, is finding its role stretching from a software provider to an almost consultancy role. McGeachen says a business process analysis, once an optional part of the sales process is now mandatory, because clients often feel that some out-of-the-box software will solve all their data issues. Unfortunately, it's not always true.

"Sometimes we tell clients they shouldn't use AdvanceRetail, based on the results of the information we've collected," he says.

The company also helps clients analyse and use the information gathered through their software.

"CRM and loyalty programmes are seen as the silver bullet," says McGeachen, "but often clients don't realise the full cost of running such a programme and managing the data."

Instead of pushing a CRM programme at customers, collecting data can help marketers to stand back and see what customers are saying.

McGeachen uses the example of Saks in the United States, where chief information officer Bill Franks has set up a 'listening system' to collect customer feedback from the point of customer engagement - in store, on the phone, and by email. In a retail conference in Chicago earlier this year, RetailWire.com reported Franks as saying retailers need to "listen to what customers are telling us and then actually do those things they wish".

The common goal for marketers is to achieve something like one-to-one communication; this is also what increasingly savvy consumers expect. BNZ Credit Cards' award-winning 'tailored plan card launch' was a campaign involving over 1000 letter and response form variations, with different offers based on past usage habits.

"This campaign was probably the most complex DM campaign launched in New Zealand at the time, providing cardholders with numerous options including card design, a variety of payment terms or rewards," says Gary Woodham, CEO of Datamail Group, one of the suppliers involved in the campaign.

While the BNZ case is outstanding, Woodham says it's anything but typical. "In many cases, while customers have provided an organisation with an immense amount of information about themselves, their habits and preferences, organisations often struggle to use this data to effectively communicate on the basis of that information," he says.

The ideal, of course, is a single customer view. Steve Shearman, managing director of technology provider Touchpoint, says, "A large part of the work we do today is replacing databases from websites and marketing departments with a single prospect or customer database."

While the web has provided marketers many opportunities to gather detailed customer data, often that data has been kept separate from other customer data. Shearman posits that single databases are the first step in managing data.

"If the [resulting] database doesn't allow you to access the data easily, execute, or report on campaigns, it's a waste of money," he says. Databases need to not ony provide information for analysis but also be usable in a campaign situation.

Shearman gives the example of Kea New Zealand, an organisation that promotes NZ businesses with an offshore focus. Kea approached Touchpoint with an individual database for each regional chapter, plus a database behind its website (www.keanewzealand.com).

"In effect," says Shearman, "you had an organisation where the business was the database - the people - but no one could get any value out of it."

Touchpoint migrated all the data into a single database and provided managed access to all network members through the web.

"We also provided integrated tools so they can communicate with the database through email, and the members can communicate and interact with each other," says Shearman.

Centralisation is also helping in the area of logistics. Contract Logistics, a joint venture between New Zealand Post and DHL, recently took over delivery of ACP Media's 52 magazines. With more than 40 million copies distributed every year, that's no mean feat.

Previously ACP had handled magazine distribution internally through its subsidiary Netlink Distribution Company, which holds a retail market share of over 50 percent for logistics and distribution.

The new arrangement sees Contract Logistics handling all the distribution of ACP magazines, an arrangement which meant Netlink's database and ordering systems had to be integrated with those of Contract Logistics.

Real-time ordering enables Netlink to reduce wastage and be more responsive to customer needs.

The partnership also meant that Netlink's North and South Island distribution systems were combined into a single nationwide operation.

Archibald says that while a single database can solve many problems, it can't overcome bad management practice.

"It's not necessarily about bringing data together into one database," she says. "It's about getting all the different functional areas on one page, all communicating with each other and interacting with their customers in the same way, so they can build faith in their overall collective brand."

Robbins says it's okay to have multiple databases as long as they talk to each other at appropriate times. "The key thing is the central single customer view," she says.

Archibald says one solution to disparate databases is to create a datamart, or internet hosted database, into which information from several databases is merged for a specific purpose.

"We have done this for several of our clients in the banking, finance and retail sectors," she says. "It resolves any data quality issues, getting it all sorted out in one go and enables the client to have direct web-based access into useful, accurate regular information about their customers."

While some marketers may shy away from having their database on the internet, Archibald says it's not only cost effective but also enables far superior management reporting to aid decision-making, without impacting on existing internal systems.

Marketers are increasingly becoming aware of how data can be used in everyday customer interaction as well as carefully planned campaigns. Customer-facing staff can both collect and use data - if they're given the tools.

Woodham says getting data to work effectively requires investment both in budget and in "the skilled resources capable of delivering effective data management".

A key part of that development is a commitment company-wide and never-ending adherence to strict data standards.

Jane Treadwell, a consultant with Knowwhere Consulting, says many problems arise from organisations having no set conventions on how to name information or where to save it.

"If your staff cannot easily find the information they need to perform their roles, they cannot meet organisational or client needs," she says.

Treadwell quotes recent US research, which suggests that corporate America is estimated to spend as much as 15 percent of annual revenue mismanaging documents.

"With documents accounting for up to 45 percent of labour costs, it means that for every $1 that a company spends for a final document, $10 is spent to manage the process associated with its creation," she says.

Day says the real challenge is making sure frontline staff know and understand the importance of the information they collect.

"If frontline staff can identify [segments], the experience they deliver will be different," says Day. "The hurdle is about internal education - there is a fair assumption that people won't use information if it doesn't seem relevant and useful to them. [But] if it makes my job easier to know that the next person I see is a type A person, I'll use it."

Day says if marketers can show the impact on the business of treating different customers according to segments, frontline staff can grasp how they contribute to the bottom line.

It's also important to let the whole organisation know whether campaigns work, so staff members understand the difference they make to the organisation.

McGeachen says staff performance monitoring is just one unexpected way data can be used in conjunction with behavioural research. He says the research collected by Saks' 'listening system' resulted in the retailer letting go of several million-dollar sales people because while they achieved high sales, they did not win recurring customers. "In other words, the customer would spend a lot on the one purchase, but then never come back again," says McGeachen.
"It was a tough call," he says, "but repeat customers are more important to them than one-time sales."