Future of business in the age of marketing analytics

Stephan SorgerVice President - On Demand Advisors

REGALIX: What’s the most exciting development in Marketing in the last 3 years?

SS: The most exciting development in marketing in the last 3 years is that analytics has moved beyond from being just a good idea and is used by companies to see real results. For example, the marketing department of couture Rental Company, Rent the Runway launched a new up sell program on its website where customer analytics data showed that 25% of its customer’s added accessories to their orders for designer dresses. The company also found that women who viewed photos of dresses on real women were 200% more likely to rent than those who viewed dresses on models. This is actionable information.

Stephan Sorger

REGALIX: What motivated you to write this book “Marketing Analytics: Strategic Models and Metrics”? How did things get started?

SS: I have been teaching Marketing Analytics course at UC Berkeley since 2008, and have been practicing it in my professional career for at least a decade before that date. This substantiates enough experience to know exactly what students need to succeed. I searched for good textbooks for the course, but the only ones I could find were traditional marketing textbooks, with little information on analytics, and analytics books designed for Ph.D. students, which were too theoretical. I needed a book that offered a practical approach to marketing analytics. I did not find any, so I developed my book over the course of about 5 years. It was a labor of love, but as I look back at it, it was totally worth it.

REGALIX: How would you define Marketing Analytics?

SS: The traditional definition was “data analysis for marketing purposes,” but that is too vague to be useful. That’s why I define Marketing Analytics as analytics models and metrics that deliver actionable insight.

REGALIX: What should CMOs expect out of Marketing Analytics?

SS: Marketing Analytics gives CMOs the ability to predict the results of their marketing efforts, as well as measure the results in metrics CEOs understand–Revenue.

REGALIX: How can one gain a deep understanding of the business by employing analytics? How important is Marketing Analytics for the success of a business?

SS: Successful leaders often repeat the familiar adage, “What gets measured gets managed.” In that way, one cannot hope to gain a deep understanding of the business without employing some kind of analytics. Without knowing what metrics drive your business, how can you say you understand it? To that end, it is my opinion that Marketing Analytics is essential for success of the business.

REGALIX: What happens to businesses that do not rely on Marketing Analytics?

SS: Businesses who fail to employ Marketing Analytics will operate purely out of guesswork. In today’s dynamic, hyper-competitive world, such an approach will rarely yield to satisfactory results. You can fall prey to more savvy companies leveraging the best of analytics.

REGALIX: Consumers today shop for deals. How does Marketing Analytics address this emerging consumer segment?

SS: It gives companies a way to personalize deals for consumers to make sure they buy from you and not another company offering similar merchandise. For example, marketers can use geo-location and past purchase behavior data as part of their mobile marketing strategy. Here, a consumer could get a coupon for their favorite brand of frozen pizza on their cell phone as they walked through the supermarket parking lot. Companies are also working on technology that can change offers based on available inventory. Also, knowing a consumer’s price elasticity for certain items allows marketers to create the perfect deal–one that compels the consumer to buy but at the same time reducing the margin hit for the seller.

REGALIX: How do you choose from among the plethora of tools that provide analytics?

SS: Just as you would use a hammer to bang in a nail, and a screwdriver to turn a screw, marketers can turn to different tools for different purposes. My book discusses several different tools and the circumstances under which marketers should use them. For example, I review different types of forecasting models to predict future sales, different types of predictive analytics, and different types of tools to analyze and visualize data, and so forth.

REGALIX: Are companies misusing Marketing Analytics? Are they misinterpreting Marketing Analytics?

SS: As the Uncle Ben character in the movie Spider Man stated, “With great power comes great responsibility.” It should be a surprise to nobody that people often misuse data to advance their own interests. That’s why my book includes a section on the ethical use of marketing analytics.

REGALIX: What do marketers need to know about emerging uses of unstructured data and predictive modeling?

SS: Unstructured data represent a gold mine of untapped data. Marketing analytics vendors, such as Apache Hadoop, specialize in the processing of both structured data, as found in relational databases, as well as unstructured data. What marketers need to know is that tools to handle unstructured data are starting to become more mainstream. For example, enterprise-ready versions of Hadoop can be much easier to adopt than the original open source version. In addition, companies such as Tableau and Marklogic are coming out with tools to visualize unstructured data.

REGALIX: Is there a strategic model you have recommended to any company? If they have implemented what are the results?

SS: While all the models I discuss in my book will yield success, I often find good results with even simple models. For example, one company with which I worked struggled to generate incremental revenue. I conducted a market survey and analyzed the results, then combined the findings with a Pareto analysis of their existing sales data to identify a new market segment with 30% greater revenue potential than their existing market. In another instance, a lady in one of my post-graduate marketing analytics courses had struggled for many months to find employment during the deep recession a few years past. She wanted a job as a marketing analyst for a major healthcare insurance provider. She was able to use the methods taught in my course to size a potential new market for the provider. They were so impressed with her analysis that she got the job. That was a very proud moment for me. It makes all the hard work worth it.

REGALIX: What’s your bold prediction for Analytics in the next five years?

SS: My bold prediction is that analytics will transform from a practice reserved for the 1% of Ph.D. uber-geeks out there to more of a consumer focus, where marketers of moderate mathematics skills can still find success. I am already seeing it in the easy-to-use nature of Tableau and other visualization programs. Once the tools become easier to use, adoption of them will take off, and then sky’s the limit in terms of the benefits analytics can bring.


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