Recently a client asked me an interesting question: How would you start analytics in an organization? The question was interesting from many perspectives:
1. What exactly is analytics and does the name describe the function?
2. How should one go about starting doing the work that analysts are supposed to do?
3. Where should the Analytics team report-is it part of a marketing team or somewhere else?
4. What kind of issues should analytics try and solve?
5. How much money needs to be invested to really make Analytics work?
My experience across both Retail & Retail banking has been that it is best to start small, very small! A lot of analytics can be done on an excel sheet and does not require a PhD in statistics to do. The simpler the analysis the “lesser” is the barrier in implementing the call for action that emanates from it. So my first suggestion to anyone starting out this kind of work is to follow the well know “KISS principle”(Keep it simple stupid). The most important next step from here is to choose the business area where you want to make an impact. I would go for the counter intuitive bit here and try to make your analysis work for a business unit that is not doing so well. Businesses doing very well, have a lot of competing ideas clamouring for a share of the credit. It’s in the businesses that need help, that you will find maximum support.
And finally I would say that choose business themes that are close to the CFO’s heart! The CFO’s support for analytics is probably the most critical part of what you would do-this forms the building blocks on which you can scale up your efforts in the years to come! I have often come across situations where organization seem to believe that investing in top end statistical resources and buying high end technology is enough to extract value from analytics. The truth is vastly different and I strongly believe that embedding simple ideas and focussing far more on execution is critical for an organization to succeed in analytics based strategy.
Here is a very interesting article that talks about how organization structure is the key ingredient that allows success in large CRM program implementations. Read this Mc Kinsey article here: Turbocharging Marketing
Stronger customer relationships have grown increasingly vital to companies vying for competitive advantage in today’s complex, multi-channel marketplace. Many proactive players, acknowledging the need for greater focus on strengthening customer relationships, have invested millions of dollars in the databases and technology required to support a customer-centric approach. In spite of their efforts, many have failed to elevate CRM performance to their targeted level. — McKinsey & Company, “Marketing Organization: The Key to Turbocharging Customer
IBM did a study across CIO’s of over 2500 CIOs in 78 countries
and across 19 industries. The objective
was to understand how can today’s CIO make the biggest impact on behalf of the
entire organisation? Largely CIO’s spoke about what they are doing to achieve
three primary goals: to make innovation real, raise the ROI of IT and expand
The findings really struck me, as the key message pointed
to exactly the type of problems we at Cequity, help organizations tackle every
A few important points from the survey(as quoted from the
- When asked to
identify their visionary plans for enhancing their enterprises’
competitiveness, business intelligence and analytics was the top answer,
selected by 83 percent of our sample. A Media and Entertainment CIO in
Belgium told us better business intelligence will “bring marketing
analysis to a higher level, to improve buying behaviour and increase
advertising ROI. Many others agreed that they seek information-led
innovation based on information as an asset. “Facts drive decisions,” said
an Insurance CIO. “Plans for imbedded analytics need to enable data
capture at the customer touch point.”
- CIOs have
typically made data collection a top priority. Yet even when data exists,
no CIO can take its availability for granted. Just 67 percent of High-growth
CIOs said data is readily available for relevant users, versus 51 percent
of Low-growth CIOs. “The benefits of making information available are
beyond comprehension,” an Education CIO in Saudi Arabia told us. Many CIOs
admitted that their users can’t always access the information they need in
a timely manner. A Government CIO in the United States noted:“Data is
readily available to users, but it’s tough to find if you’re a novice”.
- Some of the key
findings of the India PoV of the CIO study 2009 are: 70 per cent of Indian
CIOs are integrating business and technology to promote innovation for the
entire organisation as compared to 47 per cent of global CIOs; and 64 per
cent Indian CIOs proactively push IT as an innovation element compared to
55 per cent of global CIOs.
- One key area
where global CIOs rank ahead of Indian CIOs is around proactively crafting data into actionable information.
However, this is also an area which both global and Indian CIOs have
ranked as number one for their visionary plans for future.
Some thoughts basis this:
Analytics is often spoken about as a strategic
area. But what are the elements required to really embed analytics into the corporate
strategy. I think you need the following:
mindset towards data based decisioning from top-typically CEO
Aggressive CFO questioning marketing spends
Strategic CTO/CIO who creates the enabling environment
importantly you need a passionate evangelizer-in either marketing, finance or
customer operations. Typically a senior person in these functions who
passionately believes in data led decision making
e) Data is there but is awfully difficult to put
together for analytics. Smart companies are able to create “Data capability” by
bringing disparate data streams together –first manually and eventually into a
troubled economy is forcing corporate leaders to re-evaluate their spending
plans across the board and marketing is not exempt. In reducing marketing
budgets, corporate leaders face a difficult set of choices: How much is too
much? Are we negatively impacting impacting Revenue producing potential with
these choices is particularly difficult if the marketing team lacks a
systematic method of measuring the effectiveness and efficiency of marketing
spending and a proven method to link marketing spending to business outcomes.
According to Fred,all
marketing investments do at least one of three things:
1. They change customer perceptions
in a way that encourages them to buy more.
2. They provide temporary monetary
incentives for customers to buy more.
3. They make the brand more
available so customers can buy more.
budget cutting and planning for an economic downturn are never enjoyable, they
can provide an opportunity for inserting greater rigor, and better capabilities
and metrics to make marketing investments more effective in the long run.
Fred Geyer and Chiaki Nishino have to say about ‘Making Marketing Smarter
Amidst the Cuts’.http://www.prophet.com/downloads/articles/geyer-nishino-smarter.pdf
this is doing is creating a much greater focus on Marketing accountability.
Suddenly the CMO’s are talking to the CFO’s.
2009 Association of National Advertisers (ANA)/Marketing Management Analytics'
(MMA) Marketing Accountability Survey, which surveyed 95 senior-level marketers
in June, revealed some surprising results. Despite a 75 percent decrease in
marketers' marketing budgets this year, as well as 65 percent who said they
were expected to drive more sales with the same or lower budget, marketing
accountability programs have taken on a greater significance.
those findings include:
1. An increase in cross-functional
marketing accountability teams. Thirty-two percent of respondents said their teams
included representation from marketing, finance, and research, up 22 percent
2. An increase in speaking the
language of finance. Thirty-eight
percent agreed that marketing and finance share common metrics (up
significantly from 27 percent).
3. Use of more sophisticated
analytics to determine marketing budgets. Seventeen percent of respondents said they use
"what if" scenarios at different budget levels to determine sales and
profits--more than double the response from the 2008 survey.
4. A greater use of predictive
Forty-three percent of respondents said they use customer lifetime value models
as an accountability technique, up from 27 percent in the prior year's study.
My take is the following:
1. Have you created a set of metrics
along with your CFO to measure the effectiveness of your marketing?
2. Is someone from your Finance team
actively measuring your investments in a way that creates joint ownerhip?
3. Are you measuring both short term
and longer term results- as an example a bank may measure short term impact of
a promotion on Credit card spending and also evaluate whether in the longer
term the credit card customers behaviour changed in terms of increased
profitability(larger ticket sizes, more revolve etc)?