Thursday, March 30, 2006

The death of Excel

This week at a luncheon speech at the Direct Marketing days in Chicago, I talked about the continuous democratization of Customer Intelligence. This trend describes the fact that marketers proliferate their data driven insights in more ways and to more constituents than ever before. I expressed my belief that this is one of the most hopeful trends to improve not just the quality of the marketing services industry but that this will improve the relevance and quality of consumer marketing, too.

One of the key disruptive forces that fuel this trend is what I call: The slow death of Excel. The description of this disruptive force got very strong reaction, positive and negative ones. The mixed audience of academic members and executives of marketing services firms responded that strongly because my observation goes into the crux of how data driven insights are utilized within the service industry and on the client side. The death of excel gets positive response from marketers who are tired of the endless rows of metrics and numbers that they have to look at without clear correlation to a relevant marketing action. It gets negative response from marketers who continue to believe that we have to train even more marketers in how to use statistical methodologies (or just how to understand plain numbers) to get to a more scientific truth of marketing. I sympathize with both reactions.

To understand this trend and my bipolar sympathy for its supporters and opponents, let me dive a bit deeper into Excel’s slow mortality. Just to be clear, Excel is definitely not dead, it is currently used by millions of people, not just marketers, to build basic or very complex data sheets. Additionally it is utilized for a multitude of mathematical functions (sometimes it’s just about additions) to make better use of the input data variables. On the other hand the extensive usage of Excel in almost any business context has created a strong backlash, especially amongst young marketers. This growing antipathy towards Excel starts to hinder the distribution of data driven insights.

For me it’s not about Excel or its slow death but about how we can distribute more Customer Intelligence to more people in the most interesting, interactive, and intuitive manner. And this is where Excel fails. It’s still too complex, too cumbersome, too counter-intuitive to get a broad enough and smart proliferation in the marketing community. I plead to develop more visual, interactive, and intuitive applications that enable the user to play with data to see pattern, not to dig (or better suffer) through a never ending stream of data to identify trends.
Excel is not dead, but maybe we should be more actively looking for alternatives for the marketer community. The constituents within the marketing industry are consumers, too, who would like to have a more iPod like experience when they discuss numbers. Who will develop the iPod of the Excel dominated discourse? I know it will come, it’s probably already here, I just haven’t seen it.

Saturday, March 25, 2006

ROI, or what?

Nowadays you won’t find anymore a single marketer who is not worried about the particular ROI of their marketing programs. This is definitely the reaction by getting constantly asked by their CMO, CFO, and even their CEO about the ROI of a company’s marketing spend. A lot is written about this mounting accountability pressure for all marketers. Interestingly enough, most marketers respond by trying to understand, measure, and monitor the individual ROI of particular programs without too much consideration for the overall value of their marketing investments. They get pretty upset if one program ROI is negative, and try to find the fault either at their In-house creative, their agency partner, or within the executional challenges of that program.

I think this increasing focus on ROI is needed and can generate better programs but it misses one more strategic and long-term more relevant issue: How to understand the overall correlation between marketing spend and related impact and how to identify at which point on this correlation curve is the company’s marketing spend. Generally this correlation curve follows one simple pattern; the more you spend the less efficient your impact becomes (Curve of diminishing return).

I plead for a stronger scientific focus on understanding and computing this spend/impact correlation curve than on investing an increasing amount of time to fix the ROI of one particular program. I am aware of the fact that the overall marketing activities are a sum of all programs, but it is more helpful to understand the impact of all programs in aggregate than trying to optimize one small element. It’s just more helpful to understand first the structure of a forest than trying to grow one particular tree.

Additionally the first step toward understanding the spend/impact correlation does not have to equal impact with sales numbers but can expand the definition of impact. It can be a number of enrolled registrants on a website, or an improved number of awareness. Naturally a second analytical task will be to build a proxy describing the connection between the impact number and incremental company revenue but both analytical challenges (Spend/Impact Correlation and Impact Proxy to Revenue) can be treated and solved separately.

This recommended approach has the advantage that a marketer does not have to focus on all channels, all segments, or all programs but he can select one particular data rich segment and/or channel that facilitates the computing of one preliminary correlation curve. It’s much more productive to start with an easier understandable spend/impact relationship (e.g. DRTV or Telesales) than with the more difficult ones (e.g. Brand TV spend and retention impact). This is still a long and difficult process but it’s a smarter first step than trying to optimize singular marketing programs.

Saturday, March 18, 2006

Marketing Decisions?

In the February edition of the Harward Business Review ( Kenneth R. Brousseau writes about the different decision modes of executives. He distinguishes two key dimensions against which he maps executive decision behavior: Volume of Information (small or large) utilized to inform a decision, and number of options generated (one or several) before taking a decision. His article focuses on explaining the pros and cons of these different decision modes and describes the change of manager’s decision modes while advancing through their career. The more they advance in their career, the more options they are trying to generate before making a final decision.

His well articulated argument challenged me to contemplate how marketing scientists (=data driven marketers) are making marketing decisions. Are they putting enough effort to cultivate these both decision dimensions of decision modes: Volume of information and number of options? I realized that most members of the science affiliated marketer community (e.g. Strategic Planner, Data Miners) have been pretty good in focusing on generating and dissecting an increasing volume of information, but have largely lacked in generating a sufficient number of valid options before taking a decision. Their key focus is coming up with one right decision. I think it’s time that we focus more energy on generating a valid number of potentially successful options than spending most our energy on increasing the volume of digested information.

Interestingly enough most data driven marketer believe that there is one truthful answer to a given challenge, while most creative driven marketers are more used to think in a multitude of options. The creative job is often to produce a number of potentially appealing marketing programs (=high number of options) and are very used to accepting that there is not one right answer. But most likely they lack the interest in analyzing a high volume of information before coming up with interesting options. This reverse mode of decision producers between these two tribes of marketers might explain why the communication between them is so often difficult and sometimes even fully broken.

The success of any holistic marketing team relies on the understanding of these different decision modes while trying to focus more on generating valid options (for the marketing scientists) and on more seriously dissecting available information (for the creative marketer). It’s not about the right or wrong way, it’s about enhancing the existing modus operandi to combine the power of scientific and creative minds.

Monday, March 13, 2006

Dancing and Marketing Science

Last week I went to a dance performance of the “River North dance company” at the Harris Theatre in Chicago (Thank you Tracy!). It was a very amazing display of beautifully choreographed and well-executed dance pieces. Thinking about the artful beauty of this dance scene, I had to acknowledge my ignorance in understanding the very detailed choreography of what I saw. I knew that dance experts in the audience were able to dissect the different moves, and might have been able to recreate the thousands of moves to build a full dance script.

Suddenly it reminded me of the exact discipline of what we data and science oriented marketers are trying to achieve. We attempt to reverse engineer consumer behavior by understanding “Consumer performances” with any available data set that we can leverage. Our work is all about understanding and documenting the consumer script, meaning his behavior post, during, and after product purchase or service consumption. It is really reverse engineering of the full consumer behavior chain.

But real marketers are not just reverse engineers. We try to be more than just expert spectators of a dance performance who are not able to write their own dance piece. Real marketers become choreographers, too. We are really trying to create a living and breathing marketing program in which the consumer acts performances, hopefully as close as possible within the realm of choreographed behavior script.

This is the focal point of where successful marketing and art meets, it’s first about reverse engineering to then enable smarter engineering of a creative end product. That’s why great marketers are in the business of creating interactive art projects. Real marketers are more than just spectators; they are more than experts who can dissect and replicate existing performances. They are creating a new realm for exciting performances. Will we enjoy all marketing performances? It all depends on the quality of choreography.

Thursday, March 09, 2006

Obsolete marekting terms

If you look at the public financial statements of most newspapers, you will see that they list the number of subscribers under the rubric “Home delivery”. It’s a term used for ages, probably since the beginning of newspaper publishing (1st printed newspaper was published in 1605) and the service of bringing the newspaper to your doorstep (most likely introduced in the 19th century). What’s wrong with that?

The term “Home delivery” assumes that newspapers are still in the business of delivering a physical printed copy to people’s home. This term, used in newspapers business discussion every day, does not reflect the dramatic change in the newspaper industry from physical print to trusted content provider in any channel of relevance. Using the term “Home delivery” reflects that a newspaper has not yet begun its transformation of providing a contemporary value proposition: Trusted, local, and relevant News and Editorials. I suggest replacing this obsolete term “Home delivery” with “Subscription” which reflects much better today’s reality of paying for relevant content. A subscriber does not pay solely for a physical delivery of a printed news edition but subscribes to a trusted news brand, independent of channel delivery.
It’s not just a simple word change but forces newspaper to rethink in which business they really are. Sometimes a term change can trigger a much more profound discussion about necessary business transformations. Let me share some other marketing terms that fall in the same category of obsoleteness, and even worse, hindering business to see in which market they really are:
  • “Emerging Media”. This term is supposed to describe new media channels like Mobile phone, In-Store electronic displays, and any other media that seem to be new for the American consumer. I recommend for anyone using this term to travel to Japan and Korea to understand that most of these so called “Emerging Media” are the only way of life that young people in this country know and use with passionate addiction.
  • “Above-the-line and below-the-line advertising”: Born out of the distinction of how agencies did their client billings these two terms are utterly obsolete. After it lost its traditional meaning it was supposed to indicated the importance and higher relevance of Brand TV commercials (=Above-the-line) over other media channels. Today’s world is very different and does not grant anymore this favorable distinction to TV programs, it might even hinder general agencies to reinvent themselves.

I recommend to carefully analyzing marketing terms that we take for granted but that hinder us to see the relevant transformational forces that affect our industry. Technical or expert marketing terms are not just words but construct our reality and determine how we see and understand our world. Maybe you have some favorite obsolete marketing terms, too?

Saturday, March 04, 2006

Tribal identities

How can we Marketers understand consumers in today’s world of stronger fragmentation and ever changing communities? Let’s look at one not very recent but ever evolving trend: tribal identities. Everyone belongs to tribes - It can refer to an ethnicity, it can be interest based, geographically defined, or just being part of the same consumer community (e.g. mac users). Over the last years this phenomena of self selected and consciously chosen tribal identity has fully moved into Cyberspace. Partly due to this transition into the Online world, tribal identities become less and less a political or social phenomena, but more and more a consumer marketing challenge that marketers try to understand better. To build connection between brands and consumers, you need to know the consumer’s tribal identities.

I think the real news is not about consumer tribalism; this has been discussed since the 80s. The more fascinating movement is that consumers have more and more tribal identities. Consumers, especially the younger ones, switch identities happily back and forth between multitudes of identities. You can be a part of your favorite blog communities in the morning, at the workplace you are fine-tuning your baseball team in Fantasy Sports, and at night you are adding content to your identity in

What is the difference of tribal identities to marketers’ traditional understanding of customer segments? Very simple, most companies believe that an individual falls into one particular segment that is identified by a multitude of descriptive attributes. Companies have to realize that this is becoming more and more difficult, since customers are moving beyond a particular segment identity to a multitude of tribal behaviors. Therefore they are very difficult to be clustered into one particular segment. Consumers are just moving too fast and without any regards for a company’s desire to segment them.

Interesting fact is that technology is one of the key drivers of threatening traditional identities while simultaneously enabling consumers to build new identities. Technologies are an identity destroying and an identity creating force. Successful marketing communications will not only recognize consumers’ “tribal memberships”, but respect the customer in these multiple identities. The science of customer segmentation is not dead but is becoming more complex and is in need of more sophisticated toolsets and methodologies than ever.