Analytics

Customer Conversations: Identifying Revenue Opportunities Using Customer Analytics

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“We’re not going to make our revenue target for the fiscal year,” declared our customer, a Director of Customer Insights at a global vem-customer-conversations2technology company.  She followed with, “I was barely holding on to key resources this year, and now my budget’s taking another hit!”  I could tell she was feeling tired and discouraged.

After listening a bit more I asked, “What customer analytics could your leadership team use right now that would help close some of the revenue gap, and at the same time demonstrate your team’s value?”  She said, “Last quarter the sales team asked us to conduct a lead aging analysis, which identified some opportunities with the greatest likelihood to convert in the next quarter. They found this very helpful and they are running with it.”  I said, “That’s great!”

Keeping her team’s charter in mind, which is to rank and profile customers by critical dimensions, such as revenue, lifetime customer value, and profitability I returned to my initial question, “What are the burning questions about customers that the leadership team is asking?” Her response, “I don’t know.”

This is a common scenario. With scarce resources, it’s often difficult to get ahead of need – to be proactive in creating value from data. So, we began to brainstorm the kinds of things the leadership team might want to know to help improve the revenue situation.  Since time is of the essence, some of the ideas we discussed revolved around purchase intent behaviors, channels, and touch points that would facilitate near-term revenue generating opportunities.

After we explored the possible questions, I mentioned a customer analytics study that had been conducted not long ago by Aberdeen. The study found that Best-in-Class organizations that leverage customer analytics have a:

  • 35% year over year increase in average order value
  • 43% year over year increase in annual revenue
  • 42% year over year increase in customer profitability,
  • 25% year over year increases in market share growth.

With that in mind, I asked her whether her organization uses metrics such as profit margin, customer value, customer lifetime value, and customer acquisition (quantity, cost and time dimension) to measure the value of her group. She said, “No, we just measure our output, time to delivery of requests, and budget.” I suggested she might want to take a look at these other more outcome-based metrics.

As we closed the conversation, she had some new ideas on how to proceed and how to measure the value of her team. Just as importantly, she acknowledged that perhaps she and her team may have become too reactive in their analytics and reporting, and that they needed to take the lead by using segmentation, predictive modeling, and data analysis to provide business leaders with direction. In today’s environment, many marketers feel they aren’t at liberty to take action.

Our motto, “better to ask for forgiveness than permission.”

This entry was posted in Analytics, Marketing Data, Marketing Strategy.

Translate Data into Business Value with These Four Tips

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In today’s hyper-competitive business environment, where an enormous amount of new data is being generated every day, more and more companies are trying to increase the usability of this data. As Tom Davenport and DJ Patil note in a Harvard Business Review article, “If the information most critical to your business resides in forms other than rows and columns of numbers, or if answering your biggest question would involve a “mashup” of several analytical efforts, you’ve got a big data opportunity,” hence the rise of the data scientist as one of the “Sexiest Jobs of the 21st Century.” These folks are tasked with turning data into actionable insights and these insights turn into knowledge the company can use to make decisions, measure and manage performance. 

This ability to understand the relationship between data and knowledge is essential for marketers that want to be able to tap into the power of data. In 1990, Stephen Tuthill from 3M illustrated the distinction and relationship between data, information, knowledge and wisdom in his “The Data Hierarchy”. To briefly recap, the basic idea is that data, unprocessed facts and figures without any added interpretation or analysis (which is often strings of alpha-numeric or graphic images) carries no meaning.

It is important to remember that whether structured or unstructured, data is at the bottom on the pyramid. It carries no inherent meaning until we begin to synthesize and analyze it and use it toanswer specific questions. Once we begin to organize and sort data, it can then be used to answer a specific question. At this stage we are interpreting the data so that it has meaning and relevance. When we are able to assimilate this information so we can use it to take action or make a decision, we gain knowledge. 

Peter Drucker wrote in The New Realities (also in 1990), that “knowledge is information that changes something or somebody — either by becoming grounds for actions, or by making an individual (or an institution) capable of different or more effective action.” When we process this knowledge and distill out the essential principles, data, information, and knowledge are transformed into wisdom. 

So why do we care about an idea that is over 20 years old? This 20 year old concept can be very helpful as we all try to grapple with Big Data, that mountain of unstructured data being generated from social media, websites, video, store transactions, etc. There are a number of technological issues associated with the capture, storage, and management of “big data”. However, using The Data Hierachy reminds us that the real value of data is in the knowledge and wisdom we can derive from it. This means we need to have the analytical skills and capabilities to identify and relate the patterns found in the data, the information, to our business operations. 

Here are four tips for translating data into business value:

1. Define the specific business question and identify and prioritize the information you need before you dive into the data. Data can be like a siren, dangerous, beautiful and luring. Consider the factors that will impact the quality and use of your data.

2. Itemize the information you will need to achieve the business objective and/or measure your performance.

3. Data and information must be relevant to a specific purpose. Determine what data (unprocessed facts) will be relevant, gather and record it. Data sources may be internal or external; public or limited access; hard or soft; qualitative or quantitative; formal or informal. Take particular care when you use data that has already been processed into information for a purpose different from your own.

4. Prepare to act. Information-driven insight are only as valuable if you act upon. Data of any kind offers organizations the opportunity to derive detailed, timely insights (information) and act on them with greater speed and agility (knowledge). Achieving this type of real-time responsiveness will require organizations to become far nimbler about how you manage business processes and workflows.

Achieving the vast potential from data calls for a thoughtful, holistic approach to data management, analysis and information intelligence. Organizations that take strategic approach to using data, whether they are leveraging the Data Hierarchy or some other paradigm, will be better prepared and positioned to generate business value from their data.

This entry was posted in Alignment, Analytics, Marketing Performance.

Customer Conversations: Taking the Budget Conversation from Effort to Impact

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In a recent conversation with one of our customers, a VP of Marketing at a well-known Imagecompany, we discussed the challenges associated with her leadership’s request to submit the fiscal year’s budget before her team had finished the planning process. “Without a plan”, she asked, “how can the right investment be determined and requested?” Before it was even complete, her budget was under fire, and there was the concern that no matter what number was supplied, the budget could be cut back. Understandably, frustration ensued.

This very situation is an example of why it is so important to build a measurable marketing plan that is directly aligned with business outcomes. Once the outcomes are identified and it is understood which ones Marketing is expected to impact and how, the conversation shifts from talking about activities to talking about business value.

Here is the advice we offered, and perhaps you have some additional thoughts:

  1. Comply with the request. If you can, avoid allocating dollars by activities. Rather, try to allocate the dollars by marketing objective.
  2. Finish the plan, including the required investment. The plan must illustrate the connection between marketing activities and programs, and the marketing objectives and business outcomes.
  3. Use the plan as a scenario analysis tool.
  4. Take the allocated budget and apply it across all the programs, activities, and tasks, indicating where there are variances. This will provide insight into whether you have any funds that can be moved to cover shortages. If you can, and all the efforts are adequately funded, then you are set. If not, you will need to determine if the objective can be accomplished by eliminating certain programs, tasks and activities. This is where the fun part begins.

If you’ve created the plan so that the line-of-sight is clear, the implications to the outcomes will become evident as you allocate funds across the different scenarios. It will also become clear whether slight or major adjustments to activities, programs, or performance targets are required. If major adjustments are needed, or should it appear that the funds are too lean–there just isn’t enough wood behind the arrow to warrant even doing the tasks–you will need to engage in a prioritization conversation.

Which outcomes are more important?

Which objectives are more important?

It may even be necessary to change a strategy or eliminate a business initiative. Or, it may just turn out that the leadership team believes that everything must be addressed and give you the money. Then of course, the onus will be on marketing to deliver, but you will have the means to be successful.

This entry was posted in Alignment, Analytics, marketing, Marketing Accountability, Marketing Effectiveness, Marketing Management, Marketing Performance, Marketing Strategy.

Analytics: The Essential Ace in Every Hand

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None of us would agree to play a card game with cards missing from the deck; we would know that the odds of winning would be significantly diminished. Yet surprisingly, many marketers are willing to implement marketing programs sans analytics.

In the past few weeks I have attended several marketing conferences. At each event, marketers are talking enthusiastically about how to make Web sites, SEO, social media, email campaigns, and mobile better. However, there is very little conversation about how to be smarter. Analytics is an essential card — actually an ace — in every marketer’s deck for enabling fact-based decisions and improving performance, and most importantly, for being smarter.

While the ace alone has value, when played with other cards its power is truly revealed. And when it comes to analytics, the other card is data. Yes — we have all heard the common complaint about the elusiveness of quality data. Unfortunately, data quality has been an issue in organizations for so long that it has now become the ready excuse for why marketers cannot perform analytics. To harness the power of your analytics card, identify your data issues and create a plan to address them.

Another reason that you may overlook this missing card in your deck is that guessing or gut instinct has been working well enough. Unfortunately, this approach may not suffice in the long-term and your “luck” may run out as organizations push to make “smart” decisions. As marketers, analytics is our opportunity to actively contribute to fact-based decisions. Through analytics, marketers achieve new insights about customers, markets, products, channels, and marketing strategy, programs and mix. It also enables marketing to help improve performance, competitiveness, and market and revenue growth.

As the importance of analytics gains momentum, marketers with analytical acumen will be in great demand. According to some resources, the complexities of data analysis and management are becoming so enormous that there is a shortage of people who are able to conduct analysis and present the results as actionable information. Taking the initiative and honing your analytical capabilities will enable you to make sure you have this ace in the deck — and preferably, in your hand.

Most of us are already working with a time and resource deficit. Try to find a way each quarter to bolster you analytical skills. Attend a conference, read a book, take a class, and bring in experts you can learn from. Here are some key analytical concepts and skills to add:

· Quantitative Decision Analysis
· Data Management
· Data Modeling
· Industry and Competitive Analysis
· Statistical Analysis
· Predictive Analytics and Models
· Marketing Measurement and Dashboard

If you can build your analytics strength, you’ll always have an ace in your pocket.

This entry was posted in Alignment, Analytics, marketing, Marketing Accountability, Marketing and Sales Alignment, marketing automation software, Marketing Dashboards, Marketing Measurement, Marketing Performance, Marketing Strategy, Marketing Trends and tagged , , , , , , , , , , , , , , , , , , , .

The Six C’s of a Customer-Centric Marketing and Sales Pipeline

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Just like Sales, Marketing is responsible for managing a predictable, reliable demand generation pipeline with a plan that ultimately produces higher value opportunities and maximizes revenue.

We believe that the traditional approach to the pipeline — Awareness, Interest, Demand, Action —or the more modified version of this pipeline — Awareness, Interest, Consideration, Purchase —is outdated. Why? Because customers are no longer passive recipients or a sidelined spectator.

In today’s environment, customers are actively engaged in the buying process, leveraging a mix of vehicles from search engines to customer generated blogs and reviews, from online communities to social networks, and from broadcast to personalization designed to create engagement and enhance experience. Therefore, how we approach, define and leverage the pipeline must also change.

Marketing and Sales teams have tried to tackle the change by jointly defining what a qualified lead is. This is working for some companies but not all. Why? We have to change how we think about the customer engagement process, not just our terms.

One of the best ways to change our thinking is to alter the language we use to define and describe the customer buying pipeline.  However just addressing our thinking is not enough in the complex, multi-touch, digital marketing world we live in. In addition to shifting the paradigm it is critical that we store all of the information coming in from our customers and prospects so we can track and measure the effectiveness of our marketing efforts, and the best place to do this is in your CRM system.

Perhaps this six step idea of how customers engage will strike a chord with you and will more accurately reflect how Marketing can measure its contribution. These six steps are:

. Contact

. Connect

. Conversation

. Consideration

. Consumption

. Community

These may seem like a new twist on an old idea, but language matters. These labels aren’t about what we do TO a prospective customer, but rather what we do WITH them. These revised labels suggest collaboration between the buyer and your company. Another key difference from the traditional approach is that these labels are behavioral in nature. This makes it easier to define what behaviors for each measurable stage you want to be able to affect and measure. Together, these steps create the string or series of behavioral events most prospects exhibit on their way to becoming and remaining a customer. Let’s briefly examine each of these.

Contact

While awareness is an important factor, what really matters is establishing contact. Prospects may be cognizant of your company and its products and services but until they demonstrate some degree of interest, you may be wasting time and money. Making contact means you need more than a vague idea of the market or customer set, you must have actual contact information. For some organizations, they are just beginning to build their contact database. For others, they have an extensive existing contact database they may be adding to and maintaining.

For most companies, though, this information is stored in their CRM systems, which if set up properly tracks every single customer or prospect you are engaging with.  CRM systems, such as salesforce.com, are the basis for all Sales and Marketing campaigns so when getting ready to contact the people in your database you need to make sure you have a well thought out lead and contact lifecycle built to capture all this contact information.  If your response lifecycle is constructed properly you can “count” the number of people who gave you their contact information and permission to contact them.

Connect

With contact made the next thing is to connect. What is the difference between a contact and a connection? A contact is an observable signal of hello from a person; it doesn’t mean they are eager to get to know you better. A connection suggests at least the virtual exchange of a handshake and the establishment of some type of rapport. You can approach measuring Marketing’s impact on creating connections in much the same way as we measured contacts: the number of connections made, the cost to acquire and maintain, and the rate of conversion from connection to conversation. We’ll be able to use a version of these metrics for each step.

Unfortunately, you can’t tell how deep a well is by measuring the length of the pump handle. That is, just because the connection has been made, doesn’t mean you have a customer or even someone who is inclined to engage in a conversation beyond the casual and polite visit to borrow a thing or two or yack about the weather. It’s about becoming a follower — downloading material from your website, signing up for your newsletter, participating in your webinars, etc. This is why the conversation stage is so important. This is the first stage that truly signals more than a passing interest.

Connection is perhaps the most important stage to track when measuring you marketing.  From a metrics perspective the connection is all about who responded to your campaigns – how many hand raises each campaign produced, how every Marketing campaign contributes to the Sales pipeline of your company, etc.  For this to be as effective as possible tracking the results of these connections in salesforce.com (or whatever CRM solution you use) is very important because it keeps Sales and Marketing on the same page and gives everyone context for the conversation that is about to start.

Conversation

Now we’re talking! That’s the best way to describe the conversation stage. There’s a flow of information back and forth between prospects/customers and you. Both parties are engaged. This is where the rubber meets the road. You cannot acquire a customer that requires a considered purchase without a conversation or series of conversations. Once the conversation is in play, the next step is consideration.

Consideration

We must understand the difference between a conversation and consideration. Just because we have a conversation in play with a customer doesn’t mean you have a qualified opportunity that is seriously considering purchasing from you. Consideration involves customers/prospects applying careful thought to your offer and company and weighing their options. Different marketing vehicles, such as customer references, case studies, and third party white papers, will be deployed at this stage to help the customer/prospect build preference and predisposition toward your offering. At this stage it is possible to determine whether you have an opportunity worthy of sharing with sales.

Time is money so in addition to measuring the time it has taken to move a contact to this stage you can begin to quantify the value of the opportunity as well. We can measure Marketing’s financial contribution to the pipeline.  One of the best ways to quantify Marketing’s contribution to the pipeline is by leveraging weighted campaign influence as opposed to traditional Marketing ROI.  Weighted campaign influence enables marketers to attribute multiple campaigns to every opportunity but also assign different campaigns certain weights, because it is highly unlikely that every campaign touch played the same role in creating an opportunity.  Check out Full Circle CRM’s description of campaign influence to learn a little more about this metric.

Consumption

Even though the opportunity has now moved to the domain of Sales, Marketing still plays a role in converting the opportunity from consideration to a contract to consume or an actual consumption of the product or service. And upon consumption, Marketing can now measure the overall conversion rate, and time, the cost from contact to customer, the cost to acquire, and Marketing’s “win” rate (how many of the Marketing opportunities closed and how this rate compares to the win rate of non-Marketing generated deals).

Leveraging your CRM solution to track your company’s Marketing funnel is a great way to concretely track this.  For example, you can set up reports on your Sales, Telesales, and Marketing funnels inside of salesforce.com to see the results of the handoff between Marketing and Sales as well as the volume, conversion rates, and velocity of leads generated from your campaigns.  You can see where Marketing is effective and where it can be improved.

Community

It would be a shame to stop investing in a relationship that has just begun. A customer is your most important asset. Customers are also your most important advocates. In the world of customer generated content, blogs, social networks, and product reviews, marketing organizations need to focus on developing their customer community, the final C in the pipeline. There are numerous ways to build this community, such as using Facebook and LinkedIn or other social networks to create a means for your customers to engage with you and each other. Hopefully these six key measurable stages for developing, implementing and measuring Marketing’s contribution to the opportunity pipeline offer you a valuable approach for understanding how to measure the engagement of your customers. It also enables a more collaborative conversation with marketing and sales. With a new year on the horizon, now is the time to revisit how you frame your pipeline.

See part one of this conversation at the Full Circle CRM Blog

This entry was posted in Alignment, Analytics, Customer Centricity, marketing, Marketing Accountability, Marketing and Sales Alignment, marketing automation, marketing automation software, Marketing Daily, Marketing Dashboards, Marketing Effectiveness, Marketing Management, Marketing Measurement, Marketing Performance, Marketing Strategy, Marketing Trends, Pipeline Metrics, Product Marketing, social media, sustainability, Uncategorized and tagged , , , , , , , , , , , , , , , , .