All the talk about how direct mail has run its course, the superiority of email ROI, and how influential print inserts are (relative to TV ads) is simply not very helpful. What do those who put out these research findings expect us to do? Move our entire marketing investment to the new or better investment vehicle?
If you want to put 100% of your marketing budget in print inserts because it’s better than TV, or shift 100% of your direct mail investment into email because of its higher ROI, that’s fine with me. Especially if you’re one of my competitors. Cuz’ you’re going to fail faster than Asafa Powell runs the 100 meter dash.
The issue isn’t direct mail vs. email or print inserts vs. TV, but how much of each should we do. The firms that succeed will be those that figure out the right mix. If you’re a marketer, there are three questions you need answers to:
1. What’s our current mix?
2. How did we arrive at that mix?
3. What should the mix be?
I know of firms that are deploying statistical models to attempt to answer the last question. I’m not saying that they should stop what they’re doing, but I guarantee you that if they don’t answer #2 (and #1, for that matter), their models won’t be successful.
Here’s why: Because today’s investment mix is often the result of politics, historical spending levels, budget negotiations, outdated market assumptions, ineffective or non-existent testing approaches, and, in general, an absence of strategic thinking.
When they try to implement the model’s results, because they have no handle on how much is actually being spent on what and by whom, the spending mix won’t change the way the model says it should.
In other words: Garbage in, garbage out.
In a white paper titled Competing On Analytics (which ultimately became a book of the same title) Tom Davenport wrote:
Virtually every major company uses some form of statistical or mathematical analysis, but some take analytics much further than others. [One attribute] of firms that compete on analytics: Widespread use of not just descriptive statistics, but predictive modeling and complex optimization techniques.”
Davenport is spot on. But getting there isn’t going to be easy, and I don’t think that a lot of firms really understand the cultural changes needed to get there.
Technorati Tags: Marketing, Analytics
If marketers can’t answer question 1 within 5 mins then they should resign.
If the can’t answer question 2 within another 5 mins then they ought to consider their positions
If they’re not thinking about question 3 then they should consider a new job.
And you’re so right about the cultural changes that are required. Statistical models (in which I specialize) are nothing more than a useful input to the process. Statistics is backward looking and we need to remember that. The key cultural thing for me is teaching companies how to use analytics to make better informed decisions
I agree with Ron and John.
Last year I witnessed as a business paid £500,000 for a piece of analysis that showed them how to save £20million in wasted DM in twelve months – nice deal! Did they save it? – like hell they did!
The reasons are simple and common. Their people didn’t have the skills required to implement, their structure and culture prevented it and by the time the key decision makers “got it” the opportunity was largely lost.
Organisations like this take longer to slow down and change course than the EXON Valdez. Meanwhile they are drowning in data as they try to drink from the firehose.
Some would clearly be better off not collecting and analysing data at all, seeing as they they can’t do anything with it. The money they save would at least see them through a bit longer as they prepare for the invitable. But what we really need are better marketers and a new business model that puts marketing in the driving seat.