Future of Work: Marketing

Long Live the Funnel

Contrary to what you might have heard, rumors about the Marketing Funnel’s demise are greatly exaggerated.

The Funnel is alive and well. And it should be leveraged extensively by Marketers. It provides a consistent and universally understood (and somewhat accepted) framework. The funnel does come in a variety of shapes and sizes and colors – with different twists and turns. Despite this variety, few Marketers really leverage this powerful model.

The funnel enables Marketers to have an almost universally understood visual representation of various customer touch points, and makes it easier to track and score a person’s behavior. The Marketo funnel provides a good (although, not the only) framework and consists of six key stages:

  • Awareness: This is the universe of people who know anything about Marketo no matter what social network they participate on, what articles they read, etc.

  • Inquiry: This is when we finally know something about the person; we know at least their their name and email address.

  • Prospect: This is when the individual has taken some sort of action.

  • Lead: Finally This person is treated as a lead and can be shared with a sales organization.

  • Opportunity: The sales team has accepted these leads and added them to their pipeline.

  • Customer: The person becomes a customer and they are passed on to a new revenue cycle for upsell and retention.

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Of course, each of these stages include multiple marketing tactics and scoring approaches.

It’s important, though, to understand the difference between a contact (or a prospect) and a true lead (someone who has explicitly engaged with the company). Obviously, the relationship does not end after an individual becomes a customer. At that point, you can upsell or cross sell them.

You can determine the value of a customer based on the different products they purchase, if they adopted your product sooner than others or if they are part of a referral program, etc.  As Seth Godin points out – “Customers are traditionally undervalued, and prospects are all treated the same.”

Godin continues:

“Once you see the funnel, it’s easy to understand how valuable your existing customers are, and easy to think about how you want to spend time and money in promoting and building your site. Most Marketers are running a flat campaign. Embracing the funnel changes the way you treat people. And treating different people differently is what consumers demand.”

Having a model like the funnel and a good marketing automation tool enables you to measure and understand the cost of each interaction. Sharing this information with the rest of your organization helps build a Marketer’s credibility in a company, especially with the CFO.

The funnel also provides a learning framework for Marketers to test out different messaging and creative at each stage of the funnel. This gives Marketers the option to fine-tuning his current program.

Since I started my first big marketing job in American Express in 1992, I have heard lots of critiques of the funnel. Marketers love the catch phrases, such as ‘The Funnel is Dead.’ Well, I disagree. It’s advantages have has evolved since 1898 when E. St. Elmo Lewis developed a model which mapped a theoretical customer journey from the moment a brand or product attracted consumer attention to the point of action or purchase. (St. Elmo Lewis’ idea is often referred to as the AIDA-model – an acronym which stands for Awareness, Interest, Desire, and Action). Let’s address some of the funnel naysayers’ concerns, most of which apply to any marketing or sales model:

  1. It fails to take into account the ‘feedback loop between existing customers and prospects.’ Whether it is the funnel or another framework (such as a Life Preserver Ring of unique  ‘Awareness, Interest, Desire and Action areas’), there always exists the challenge of tracking all the interactions among people (customers and prospects ). It’s always difficult to uncover each discussion about your brand online.

  2. The funnel is too linear. According to these critics, the primary problem with the funnel is that the buying process is no longer linear. Well, I was always taught that the shortest distance between two points is a straight line.  Most of the companies I work with, however, do have the majority of their customers follow more or less a linear process. They can be broken down into the different stages described in the Marketo model above.

  3. If fails to track retention or repeat business. I must confess this might be the weakest part of most funnel models. But that doesn’t mean you should ignore the simplicity of the Funnel’s approach. Most frameworks do not go into any great detail about ‘Retention’ or ‘Lifetime Value’ anyway. The bottom line is that good Marketers constantly score their customers over time. American Express might be the masters at this. They leverage all their great Cardmember spending data to model, score and customize online and offline programs.

  4. It fails to paint a pretty picture, nor does the word funnel doesn’t sound great. I never did judge a book by its cover or a person by their name. If this is what a Marketer is worried about, then they are focused on the wrong things. There are many powerful Six-Sigma names and diagrams, for example, that don’t convey a powerful image such as SIPOC (Single Point of Contact), DPO (Defects Per Opportunity), PD (Proportion defective)

  5. It fails to take into consideration the powerful feedback loops between existing customers and newly arriving prospects that search and social media have wired up. I beg to differ. If you have some of your word of mouth programs coded properly you should be able to track shares, referrals and other types of influencer programs.

  6. It fails to consider some products, such as iPhones, where marketing is integrated into the product. I think it comes down to how you set up your programs. You should be able to track cross-sell and upsell, and even referrals from within a product. With Flurry, for example, you can track your customers behavior when they use a mobile app. It tracks the big 3: taps, tasks and transitions.

  7. The Funnel fails to capture all touch points. Over time, a good Marketer should be able to define these, however. They also should ensure they are in learning mode so that they can constantly update their list of sources. This means they should be tracking referral links, surveying their customers and analyzing where their competitors get their leads from.

And then there’s the McKinsey Consumer Journey (see below) which attempts to demonstrate that the buying process is not linear and that several steps repeat themselves. For the real digital practitioner, however, it’s too simple to say someone goes from Bond to Buy:

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While brands may put the decision maker, the Customer,  at the center of the McKinsey Customer Journey, the above excludes the importance of the experience the Marketer and the company are having with the customers. Life is not all about the transaction. For example, at Marketo, our energy goes into building relationships with Marketers as well as connecting Marketers together. In addition, you don’t have to be a customer to recommend a product. I am probably the biggest promoter of Tesla, but I can’t afford one. I have only tried it via a Freemium ride provided by a neighbor and have read great reviews about it on Edmunds.com. Does that mean I can’t recommend the vehicle to others? Obviously not.

In sum, CMOs and their teams need to know that the funnel is alive and kicking. Rumors of its demise are greatly exaggerated. The Funnel is an easy to use, easy to remember approach to tracking individuals who interact with your brand – either directly or indirectly. It’s simplicity is what makes it special – and it provides the most universally understood way of thinking about an individual’s interaction with your brand. It works not only in a B2C environment, but also in a B2B environment. Marketers should always feel free, however to add their own creative twist on things and rename all or parts of it.  Long-Live the Funnel.

Disclaimer: I am currently an employee at Marketo, so yes ‘I bleed Marketo Purple.’

Note: This will be the second of a series of posts that look at CMO’s evolving role in companies, especially as the “run and gun” campaign approach moves to building longer-term customer relationships. My next article will focus on How to Build a High Performing Band of Marketers.

Marketers Need To Quarterback (or own) Their Technology Decisions

Over the last year, the role of a marketing team within a company, particularly the CMO, has evolved drastically. Being able to market in its most traditional sense is no longer they key: businesses expect marketers to become digital and technology leaders. The marketing department now consists of technology builders, who have to create new channels (websites, mobile apps, facebook apps, etc), implement new tracking systems (marketing automation, CRMs, mobile analytics), and integrate these into their customers’ experiences. More importantly, they have to quantify each step of the marketing funnel.

As Gardner Research often points out “Technology is the heart of Marketing, and CMOs will outspend their company’s CIO by 2017.” This new responsibility requires looking at their job through a different prism. They need to conduct business in a completely different manner because now, it’s vital to the success of their business. CMO’s now have to:

  • Find the right technology provider whose nimble

  • Ensure they can easily fire your technology provider just as they would do with with their ad agency

  • Build in performance goals for the technology provider

  • Rely on the CIO to drive the technology purchasing decision

  • Make key decisions by extensively kicking the tires of these technologies. (Note: To this day, it still surprises how many technology providers do not have sandboxes or a demo product for CMOs to properly evaluate their products.)

As a result Marketing will have to quarterback the technology acquisition and licensing process for their companies. To accomplish this, they will need to:

  • Sync up with the company’s business goals

  • Prioritize and identify the critical few projects

  • Facilitate projects and communications between marketing and IT

  • Prioritize funding for marketing technologies

  • Select, evaluate and choose technology providers

  • Define success for these providers (hold them accountable)

  • Design and implement technology keeping digital business models in mind

  • Plan ongoing reviews of technology provider and your goals

  • Push your technology provider to continue to ameliorate their technology

According to IBM’s CMO study, however, there are many barriers to adopting technology. See below:

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None of these, however, focus on being able to leverage technology to improve the overall customer experience or extract actionable data. Marketers need to carefully consider how implementing a new marketing system impacts people visiting their site. This needs to be carefully looked at by capturing VOC (Voice of the Customer and looking closely at data.

I am surprised, however, how many still don’t focus on lifetime value or retention. As eMarketer shows below, there tends to be a focus on one time activities (campaign tracking) and brand analysis (which does focus on their customers behaviors and competitive intelligence.

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Understanding your customers data is the fuel of your marketing organizations. Since marketing is now a key for major technology buyers, CMOs need to know how to evaluate, implement and leverage new systems. All parts of marketing is impacted by technology.

To prepare for their new role, CMOs then need to

  • Be able to quantify each step of the funnel which means they need to have the technology to accomplish this.

  • Identify or hire individual who has the technology background in Marketing Automation, CRM, and Web Analytics. In many cases, you don’t even need to have a Marketing Technology officer as some companies are beginning to do. As a result, a new job title has come on the scene – “Chief Marketing Technology Officer (CMTO). Within large companies — more than $500 million in annual revenue — 81% of them now have a chief marketing technologist role, up from 71% just a year ago. Another 8% expect to add that role within the next 24 months. However, smaller companies might not be able to afford to pay for an additional Marketing chief.

  • Have this person map out your technology and challenge them to figure out how the many pieces of the many technology puzzle fit together (no solution will solve all your problems) — how your marketing automation system fits with your CRM system, for example)

  • Be committed to a just-in-time agile approach (they can learn from their engineers meet Agile Development process and apply it  marketing)

  • Map out the process too before buying the technology (but be flexible)

  • Embrace technology — pick a few technologies to learn. Yes, I think CMOs need to understand how some of these products work.

Marketers need to understand that any change in a company’s infrastructure can impact the overall customer experience. They need to embrace technology vs. fear it. They can no longer say ‘it’s too technical to understand.’ As Phil Fernandez, Marketo’s CEO said, “The days of ownership are being replaced with the days of partnership.”

In the modern, connected, mobile environment, companies need to connect with customers with personalized and differentiated services. So called “stickiness” is essential and CMOs should be better equipped to meet those demands, regardless of whether or not they have the same level of technical knowledge as the CIO

Despite all of the above, CMO’s should not be lead by technology and should remember that it is just an enabler. Instead, marketing leaders should:

  • Map out the ecosystem of everyone who impacts your product

  • Focus on a few target audiences at first (prospects, customers, partners)

  • Map out each of their customer journeys (online and offline)

  • Identify their water holes and where they spend their time

  • Understand how they speak about their work, your product, etc.

  • Understand the jobs/tasks they get paid to do

  • Map out potential experiences in the funnel

  • Determine the right technology to collect data at those key touch points

Much of the change in the CMO’s role is due to customers’ every increasing influencer. More and more conferences, articles, etc. will focus on this. For example, next month, the Incite Conference in San Francisco will focus on the CMO’s evolving role. There need to be more detailed blueprints for Marketers to follow. Hopefully, this post provides some guidance.

This will be the first of a series of posts that look at CMO’s evolving role in companies, especially as the move from ‘run and gun’ campaign approach to building longer-term customer relationships. My next article will discredit the myth that the marketing funnel is dead.

Operationalizing Social Business

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Earlier this week, I sent a Brandwatch research study to my brother, who manages a radio station, about the importance of Twitter. The report indicated that radio stations do not interact with their fans enough, and instead are stuck in the old paradigm of just blasting and broadcasting their message with their traditional one way approach.

The Brandwatch study also highlighted the fact that 75% of their interactions are with celebrities and brands (who pay the advertising dollars) and not their fans. The most important (and probably obvious fact to most people) is that people follow the personalities on the radio more than the station itself.

Even with the opportunity to highlight their DJs and newscasters more, most stations do not have specific goals and strategies for leveraging social networks. While they may be on it and posting a tweet here and there, they’re not optimizing their social media presence. This number increases substantially more when you consider how many don’t know how to operationalize their social efforts.

To get started, here is a basic checklist on how to operationalize your social efforts:

  1. Set up your primary account and keep your   password information in a safe place. Also, don’t let your digital agency or PR firm set up your account. Make sure one of your employees is the lead person and manager of the account in case there are any conflicts. Note, however, that you should make sure that employee shares all info with you and signs a legal document stating they will turn over the account when then leave. There will probably be no issues about this if the employee uses your company domain account

  2. Organize Team and Identify Moderators: Use the DACI approach with clarity around who is the Driver (project manager) of the project, the Approver (who owns the budget in most cases) of the project, the Collaborators of the project (moderators) and who needs to be Informed. While it might be a cost to hire your moderators before launching, getting them on board early can help set up some of the infrastructure you need to build a successful social network presence. For example, they can create a stockpile of back up posts and also be involved in establishing the tone and spirit

  3. Document the tone and spirit of your posts and tweets: Most mature and established companies have documented their brand positioning and how they want to communicate their brand to their customers. It’s more beneficial to do this early on, rather than blindly posting and tweeting. Even smaller companies should take some time to think this through.

  4. Build out your page: Appearance is important, even on social networks. While you’re thinking about your brand positioning, the aesthetics of your page should play a role too. Leverage company branding, photography and graphics guidelines. You should have a cohesive look and feel across all your pages.

  5. Create a content calendar: Build a content calendar for each social network (and their pages) that you manage. Throwing up posts last minutes can lead to too many issues. Vice versa, planning too far ahead won’t allow you you to factor in recent newsworthy topics. Ideally, you want the calendar to cover all content for at least two weeks into the future. You can plan for a longer period of time, but I have found that it is often difficult to plan too far down the road.

  6. Create a stockpile of back up posts: There are some posts, such as standard customer service posts or event announcements or welcome posts, that you will post/tweet over and over again. You might as well have a stockpile of them ready to go.

  7. Identify tools: The cost of good social media tools is quite minimal these days. Many of them are even free. I recommend that you have at least three types of tools ready to go: a posting tool (Hootsuite or Sproutsocial, a listening tool (Radian6 or Social Mention) and an analytics tool (Twitonomy).

  8. Create Rules of Engagement, Workflow Process and Answer Decision Tree: List out desired response times, the type of posts you will respond to, and all potential issues. Then try and place them into categories and assign and and owner to each of them. You’ll be able to be quantify how successful you are by setting these rules.

  9. Outreach to relevant influencers and followers: I am big on focus, focus, focus. Don’t try and boil the whole ocean and sign up as many followers as possible. It’s about quality, not quantity. I recommend reaching out to people who would have a vested interest in your products, services or offerings.

  10. Focus on a few critical metrics: There are so many different metrics to track on a social network. Concentrate on 3-5 levers, establish a benchmark, measure your success against them and keep raising the bar. Make your goals more challenging. Hold each person on the team accountable for these goals. Social Media is a team sport.

Executing well on the above ten areas will increase a radio stations or your probability of success. Remember, it takes a while to build an audience. Remember that Rome was not built in a day and neither is a social presence. Unless you are Nike or Madonna, it might take time to build your presence and generate a high degree of engagement on a social network’s page that you manage. The keys are to be persistent and consistent.

Thought of the day: It ain’t about followers

“Get me as many followers as possible… and get them soon”

I hear that request often.

Unfortunately, having a lot of Twitter “followers” or getting many “likes” on Facebook is not a good proxy for influence. And influence is probably more important than popularity. As Rogers pointed out in his classic Diffusion of Innovations, influencers persuade others, so it’s important to target influencers in large scale networks.

These days, people focus less on the popularity of a person. Instead, they focus on the interpersonal relationships among a specific tribe and then the willingness and readiness for he group to use a new
product or technology. They also focus on the ability of that person to provide useful information. Influence is less about size and more about about relevancy, specificty and expertise of a certain topic.

The Million Followers Fallacy

Adi Avnit coined the term: The Million Followers Fallacy, which states that the number of Twitter followers is largely meaningless. After looking at data from all 52 million Twitter accounts (and, more closely, at the 6 million “active users”), Meeyoung Cha from the Max Planck Institute for Software Systems confirmed Avnit’s theory, stating, “Popular users who have a high indegree [number of followers] are not necessarily influential in terms of spawning retweets or mentions”

Followers Always Don’t Make True Groupies

There are a number of reasons why followers don’t represent how much influence a person has.

  • Following says more about popularity (size of audience) and less about a person’s ability to influence a user or sway the opinions of her followers.
  • Followers conflate repetition with understanding, i.e. if we beat a message into people’s heads through repetition they will understand our message.
  • “Follower Fraud” (where people get paid to build accounts and follow someone) is rampant.
  • Many people click “follow” and never interact with that person again (I am certainly guilty of this).

Unfortunately, small and large businesses often prioritize the goal of getting as many followers as possible. They believe that if a person has a lot of followers, they must be able to sway the crowd. Or at least be worthy of a gold star.

The people who study what makes someone influential, however, understand that this is not a good proxy and that popularity does not equal influence. They also know there is no consensus on how to measure influence.

Followers Are Just Cold Leads 

It is probably better to think of followers as being part of the ‘lead funnel.’ But in most cases, these are just cold leads, meaning you need to either offer them something, such as a coupon or discount. In other words, get them to raise both hands instead of just one.

Facebook Offer: “Pay to Reach Your Followers”

With Facebook’s (somewhat) new Promote Post program, marketers will need to manage the lead generation process better. According to the Wall Street Journal, “Under a program rolled out in May, businesses pay Facebook Inc. anywhere from $5 to hundreds of dollars to promote a post to the news feeds of users who have “liked” their page, plus Facebook friends of those users.” [This number really surprised me. I now need to recalculate my Facebook related cost per lead numbers.].

HubSpot reports that only 6% of fans engage with a Facebook brand’s page and that Facebook posts obtain 50% of their reach in the first 30 minutes of being posted and its all down hill from there.

Companies, therefore, need to develop their own algorithm to define the quality or usefulness of their content. When it comes to Twitter, this process is still fairly simple with marketers using ‘past local influence’ (mentions, retweets, etc.) as a predictor of future influence.

This presents a great opportunity for data scientists to:

  • Experiment with how information spreads in a single network and from Network to Network
  • Develop algorithms (or better proxies) to determine influence

Language, Rituals and Leaders

 True influence is based on the relevancy of a conversation (post, article) to a specific audience or tribe. Each tribe has their own language (nomenclature), their own rituals (attending Burning Man), and their own leaders.

Among Data Scientists, for example, can we identify who has the most influence? And does that influence change across different channels and networks? It probably does.

Spreading valuable information across a network is a challenge. As such, companies usually make the mistake of defining influence as a user who has the most followers or the most page views.

In Silicon Valley, this leads to every corporate marker (and their mothers, fathers, siblings…) reaching out to the editors’ most trafficked technology sites, such as TechCrunch and Gigaom. If I am selling big data tools, for example, these two publications will not help me sell my products as much as identify relevant data scientists or data analysts, the people who have subject matter expertise.

Relevant Influencers More Important that Popular Influencers

In their important paper, Everyone’s an Influencer: Quantifying Influence on Twitter, authors Watts, Hoffman, Bakshy, and Mason find, “although under some circumstances, the most influential users are also the most cost-effective, under a wide range of plausible assumptions the most cost-effective performance can be realized using ‘ordinary influencers’ or individuals who exert average or even less-than-average influence.” The paper also highlighted that word-of-mouth information spreads via many small cascades, mostly triggered by ordinary individuals, and this is also likely to apply generally, as has been suggested elsewhere. Marketers need to go beyond the raw number of followers and identify potential relevant influencers, e.g., those who speak with some authority on a topic and have consistent engagement from their fans.

And just to throw in a curve ball: a person’s influence can differ among channels and networks, so it’s important to measure that as well as the actions their content is influencing. I read a post from a data scientist’s blog, for example, and then signed up for a webinar to get the real skinny.

When it comes to online communities or social networks, a person’s influence comes down to their ability to provide useful answers and information. Hurricane Sandy provides a great example of this. Using the hashtag, “Disaster,” some individuals provided tips on how survive (where to find food and shelter, etc.) while others (even individuals with a lot of followers) posted jokes and sarcastic comments in the communication stream.

 


Wish for the Day: You say you want to be a Media Company

As the Beatles said:

You say you want a revolution
Well, you know
We all want to change the world
You tell me that it’s evolution

And many companies say the want to be a media company:

Many companies say they are different because they are a media company on the internet or they want to be a media company. But what does that really mean? From a content perspective, here are some suggestions:

  • Understand that we are in a 2+ screen world, where people are watching their TV or a Netflix video, while texting with their iphone (and in some cases, even working with their lap-top)
  • Relinquish control which means join your fans on other social networks and platforms (this sounds obvious, but most people still want to bring their fans home to their site)
  • Identify your relevant fans and tribes — Where they spend their time? How they speak about your products and your competitors’ products? Who are the leaders? How do they help each other out?
  • Know that your work is never done, meaning that once you post something it is part of an ongoing story (you can add more later on)
  • Go beyond text and incorporate video, photos, and more
  • Wear multiple hats: Curator, Editor, Organizer (inviting guests to participate) and Host (invite your users to contribute to your site and find out what they need for their own site)
  • Establish brand, tone, etc. consistency across multiple channels (iPad, Web, etc.)
  • Interact face-to-face, such as in Google Hangout’s NFL Fantasy Football forum!
  • Turn each commenter into editor by encouraging them to contribute to the discussion.
  • Concentrate editorial content on “people” — their stories, their lives, etc.

Paid Content came out with a list of the most successful media companies that included Twitter, Amazon, Gawker, BuzzFeed and the Guardian, but here are some questions I have:

  • Is Amazon creating any of its own content or successfully curating third party content (Yet)? I know they are working on this.
  • Is Twitter doing real “content programming” or generating real ad revenue?
  • Is the Guardian turning a profit? (This would be important for a successful company : )

Finally, companies need to have the kind of organization that:

  • Makes quick decisions and does not get bogged down in office politics or in over analyzing the right approach (I always liked it when my former boss said, if you are 65% sure something is the right decision, then go for it and implement it)
  • Scores their decisions and determine how well they make them, how fast they make them and what’s entailed (What resources are involved?)
  • Provide clarity on who they are targeting, what the offer is, and why you are offering it.  (and continue to refine over time)
  • Building a learning environment which is one of the key things people are looking for these days. I always believe in the “Learn, Teach, Learn” approach which requires an individual to teach something they recently learned to others)

What does it mean to you to be a media company? What is entailed? Which businesses qualify?

Oh yea, you probably asking “OK, Wilder, who is a successful one media company?

One company that comes to mind is Bloomberg LP (and I am not just saying this because I am a native New Yorker : )  It meets all the criteria I list above. For a great article on Bloomberg, check out what the New York Magazine recently had to say about them.

 

Future of Work Interview: John Kennedy, SVP of Corporate Communications, IBM

Some shy away from IBM, but throughout my Internet career, I have found them to be a loyal business partner. In 1996, for example, I partnered with “Big Blue” to create the first multimedia backend database used on the Internet. At Borders.com, we used the IBM’s infrastructure to sell books, music and video. For our site, IBM leveraged their earlier work with Vatican Library, which houses some of Western civilization’s most ancient and precious documents. IBM technology has helped them dramatically extend library use to scholars around the globe. At the time, this collaboration was unprecedented and helped make a precious collection of medieval manuscripts accessible via the Internet

I like the fact that IBM has been using culturally significant projects to stretch the boundaries of technology for generations. My Future of Work research is as much a cultural project as it is an exercise in individuals every day experiences from from the digital trenches ™.

With this in mind, I reached out to John Kennedy, IBM’s VP of Corporate Marketing. John oversees IBMs global branding and marketing programs. He has some good insights on the major transformation going on in the world of C-Suite members.

CMO’s: the new C-Suite leaders with a new set of challenges

Kennedy explains that CMOs increasingly find themselves the C-Suite leader as they are expected to convert mountains of social data into valuable information for their companies in order to create new relationships or enhance existing ones. This places the CMO in a different role with new set of challenges. Kennedy listed the top four:

  1. Managing the explosion of an overwhelming amount of data
  2. Navigating Social media/ Making Social Media compatible with existing technologies
  3. Standardizing/ Simplifying/ Managing/ Facilitating proliferation of channels and devices
  4. Marketing to individuals, not to broad demographics

This requires CMO teams to have better analytical and technical skills, especially when it comes to defining something as important as customer lifetime value. Companies that are in more transactional-based industries, such as banking, airlines, and retail, have historically done a better job in these areas.

CMO’s can use analytics to reach customers

Today’s marketers are just beginning to use analytics to answer customer specific questions while harnessing insights to drive better results. Kennedy states:

“Marketing departments put a much bigger premium and emphasis on marketers who are comfortable with data…and can use data as a way to make decisions about reaching their customers.  Analytics can bring a greater degree of discipline and rigor to marketing.”

As Big Data emerges as a prized asset for organizations, corporate marketing is suddenly becoming the wealthiest and perhaps the most influential part of the C-Suite. According to Kennedy, “Big Data, led by the CMO, is not only driving marketing activities, but also increasingly influencing product development, supply chain, and virtually every strategic area of an organization.” Historically, some of these areas are part of the CIO’s bailiwick. We’ll discuss the significance of this below.

Kennedy has seen his clients participate more and more in content, application, and software development, leading to the rapid transfer of company’s budgets to marketing departments. Ironically, this infusion of dollars has not made it any easier to determine ROI. Roughly half of the 1,700 CMOs surveyed in an IBM study felt insufficiently prepared to provide real ROI numbers. They admitted the difficulty of proving value.

By 2017, a CMO will influence IT spending more than the CIO.

As a recent Gartner report points out, this transformation will mean that by 2017 the CMO will have greater control of the IT budget than the CIO. Marketing budgets will grow 7-8% over the next 12 months, which is 2-3 times that of IT budgets. Despite this increased power, CMOs readily admit they lack IT skills. While 79% of CMOs expect high or very high levels of complexity in their jobs over the next five years, only 48% feel prepared to deal with it.

CIOs know their role is changing and this transformation goes beyond surrendering  influence to their marketing counterparts. Kennedy states that CIOs are also “breaking through the firewall mentality of a slow approval process and realizing that securing all aspects of technology can’t keep up with the world of Facebook and Twitter.” Their priorities are changing too. According to a Fall 2011 IBM CIO Study, their main focus is business intelligence and analytics followed by mobile solutions.

Just as IBM practically invented the discipline of the CIO in the 1950s, “Big Blue” is now helping IT move from the back office to the front office.

CIO + CMO = the new C-Suite power team

Given this new realignment for both the CMO and CIO, Kennedy warns that neither can afford to go it alone or operate in separate silos. To succeed, they’ll have to forge an alliance as a new C-Suite power team, who can deliver business results through innovation and efficiency. Unfortunately, this type of collaboration is still the exception and not the rule. CMOs can re-imagine their roles with next-generation skills, expanded peer networks, and transformative tools and technologies, while CIOs can lend their expertise in enterprise IT integration and expand their horizons further outside the firewall.

The link between a company’s culture and its brand

My discussion with Kennedy also focused on how companies need to change their approach to branding. He emphasized, “Every employee impacts that brand and every action communicates something about the brand. Consumers are not making a distinction between what marketers are saying, what the brand represents to them, and what their actual experience is with a product. In the same way that marketers have more transparency and visibility to the person, markets and audiences have more transparency and visibility to the company.That’s to say, markets, audiences, and customers can quickly see when there are gaps between what a company may promise in its brand and what they actually deliver.  There can no longer be any daylight between what a brand promises and the reality becomes behind the firewall.  Customers want to know how the company really operates, what the company’s practices are, and what the brand stands for.

Since customers track organizational behavior more closely than ever before, marketers realize that a brand’s image comes not only from its products or reputation but also from the culture of the company itself. Companies need to recognize the profound influence that employees have on their own brands as part of their marketing portfolio. As a result, marketers are now discussing more how a company should shape its own culture. They are leading these discussions and playing a more collaborative role in the C-Suite meetings.

Kennedy points out, “It’s important that <a company’s> character and brand come together. If there are any gaps, they will come out in the social sphere because the brand is a culmination of everyone’s behavior online–especially in social networks. Each process of delivering a product, such as supply chain activity or how someone answers the phone at the call center, really matters.” Kennedy astutely points out that when there are gaps or inconsistencies (e.g., how people talk about the company or dissatisfied employees), this will find its way into the social sphere.

The Influence of Social Media: Customers speak and marketers listen

Kennedy says social media have become a testing ground for whether marketers are keeping their promises. People turn to their Facebook friends, price-scanning apps and video downloads to voice their opinions about brands within their own groups and to the world at large. In essence, social media has become a new channel between brands and their customers—but one where the customers are broadcasting and the marketers are listening. In turn, brands are using social media and Big Data analytics technology to better comprehend their markets and understand customers as individuals.

Here are Kennedy’s recommendations for creating an authentic and consistent brand and culture:

  • Develop an acute understanding of your company’s reputation by actively listening and engaging in social media
  • Systematically close the gaps between your company’s unique character and its reality—in all critical interactions.
  • Champion tools that connect the organization and implement platforms that enable employees to delight customers.
  • Ensure that systems are in place to manage the risks of being a social business.

Kennedy ended our discussion with some specific recommendations for CMOs, such as:

  • Marketers need to develop greater technical expertise and analytic skills
  • Marketers need to partner with CIOs who are moving from the back office to the front office. This shift is being influenced by marketers’ increased control of budget and decisions.
  • Marketers need to include CMOs in their discussions and planning to ensure consistency across the organization
  • CMOs convert mountains of data on a company’s culture. Since this can directly impact the brand, a well thought out plan needs to be in place  (for building the brand).

Transcript for John Kennedy Interview

 

 

 

 

 

Future of Work: Interview with Anthony Goldbloom, Founder and CEO of Kaggle.com

As someone whose career in the 21st Century has focused mainly on user contribution systems and user created content, I leverage several crowd-sourcing sites on the Web. One of my favorites is Kaggle.com, which according to its Australian CEO, Anthony Goldbloom, whom I recently spoke to, enables people to outsource big data questions. Every predictive modeling problem is framed with a competition where the person who builds the most accurate model gives that model to the company and in exchange the company gives them a prize. Kaggle is a powerful way to build predictive modeling algorithms. Why is this important? Imagine a bank being able to predict who will default on a loan. (Note: Predictive Models are created or chosen to try to best predict the probability of an outcome. In many cases the model is chosen on the basis of detection theory to try to guess the probability of an outcome given a set amount of input data, for example given an email determining how likely that it is spam (definition from Wikipedia)

Andrew Goldbloom, CEO Kaggle

Goldbloom came up with the idea for Kaggle, while working at The Economist. He worked on an article on big data and data science, although as Anthony reminds me, ‘It wasn’t called that at the time”. While talking to CIOs who were struggling to get value from their data, he knew he could solve them and could “put up those problems (on the web)” and people could kind of prove their mettle by actually solving them.

During our discussion, Goldbloom mentioned two competitions:

  1. The William and Flora Hewlett foundation (Hewlett) reached out to Kaggle’s data scientists and machine learning specialists to develop an affordable solution for automated grading of student written essays. (Not sure my wife, who is a high school teacher will like this). The Hewlett foundation ended up collecting 24,000 graded essays written by high school students. In the end, a British hedge fund trader (trained as a physicist), a software developer at the national weather service and a German grad student created the winning solution, which can help schools assess students’ writing. The Foundation sponsored the contest and awarded $100,000 to the top three research teams. In the end, 250 teams participated and there were 2,500 submissions. (Note: None of the winners had a data science background).
  2. The Wikipedia Challenge focused on getting data-mining experts to build a model that predicts the number of edits an editor would make. Wikipedia wanted to understand what factors determine editing behavior. Contestants were expected to build a predictive model that can be reused by the Wikimedia Foundation to forecast long term trends in the number of edits that we can expect. There were 94 Teams with 115 players and 1024 entries. Here’s a page describing the challenge:

Kaggle combines many of the popular current trends in the industry: gamification, crowdsourcing, virtual workforce, and, of course, Big Data. (Venture Capitalists must love this company).

Companies can build models in house or hire a consulting firm like Accenture. Kaggle’s crowdsourcing solution is a new third option. As Goldbloom points out, “Companies are beginning to see Kaggle as a leveraged arm of their own business.” How does it work? Companies and researchers post their data. Statisticians and data miners from all over the world compete to produce the best models. Companies identify a problem and then leverage Kaggle’s active community to solve it. This crowdsourcing approach relies on the fact that there are countless strategies that can be applied to any predictive modeling task, and it is impossible to know at the outset which technique or analyst will be most effective.

Kaggle’s secret sauce is that there’s lots and lots of data out there, and a strong desire to play with this data.

In particular, Kaggle is gaining the most traction in financial services, in the technology sector, and in life sciences. Competitions filter talent and also let the best data solutions float to the top of the pack while people are giving objective feedback along the way.

As Goldbloom points out “The really nice thing about these predictive modeling tasks is you can back test people’s algorithms on historical data and get a sense for which algorithms perform well and which algorithms don’t perform so well.”

Most of the 45,o00 members on Kaggle call themselves data scientists, which is one of the hottest professions in Silicon Valley. Most of them, however, have an engineer or computer science degrees.  Here’s a breakdown of their professions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kaggle has several public offerings:

Kaggle Prospect (in beta now), which Practice Fusion (another favorite company of mine), a vendor of electronic records, used by opting up their data to determine what types of problems could be solved, such as predicting who will develop diabetes.

Kaggle In-Class is another product, predicting the past or the future requires students to build models
that are evaluated against past outcomes. For example, an instructor might host a predicting-the-past competition that requires students to build models to predict wine prices based on country of origin, vintage, and other factors. The winning model would then be that which most accurately predicts actual prices from a set of historical price outcomes (hidden from the students).

Kaggle has a great business model, one that should be considered by other crowdsourcing companies. As Goldbloom explains:

“Competitions are open to everybody. The sole purpose of these competitions is to qualify talent. So you if you finish in the top ten percent of two public competitions, we’ll label you as qualified talent.” Most of Kaggle’s commercial work, such as banks trying to predict who’s going to default on a loan is conducted via a private competition. “For private competitions we basically invite 15 of our strongest members. Each of them compete behind the scenes and the prize money is consistently – it’s a six figure sum and we also take a large fee on those private competitions.”

The private competitions require large data sets, and an invitation only crowd-sourcing process, both of which are kept private. All the participants received some sort of monetary reward.

Here are some examples on potential ROI vs. Realized ROI.

Transactional Fraud: A large credit card issuer.

Assuming the issuers has 50MM credit cards with their customers spending on average $500 per month. Based on current industry estimates, let’s assume the issuer experiences 10 basis points (1 basis point is 1/100th of 1%) in current fraud losses, will put total fraud losses per year in the neighborhood at $300MM / year (50MM * 500 * 12 * 10 basis points). Just a mere 5% reduction in fraud losses with a better model will generate an incremental return of $15MM / year.  This can easily put the ROI in the double digits, especially when you can think about much time and how many people you would need to resolve these issues.

Retail consumer marketing: A large retailer

A big box retailer, with over 20MM customers, sends product promotions to their customers on a monthly basis. Typically the number of customers who respond to these offers is less than 1%. Assuming, each customer spends $200 on average because of the marketing offer, the retailer probably sees $40MM (20MM * 1% * 200) in incremental sales. A better predictive model through Kaggle can easily double or triple the response rates to these marketing offers, there by leading to $80MM to $120MM in incremental sales!

Goldbloom’s team’s grand vision is to create a Meritocracy, a labor market where the best people rise to the top, both in perms of skill and value.” (Meritocratic is a system where appointments and responsibilities are objectively assigned to individuals based upon their “merits,” namely intelligence, credentials, and education)

Goldbloom provides an example: “Roger Federer is ranked number one in the world because he wins more tennis matches than other tennis players. I would very much like to see us create the world’s first meritocratic valuable labor market. So, you know, I mount the argument that, Roger Federer is a phenomenal athlete, but he doesn’t generate, you know, a lot of value.” (most people in the audience, for example)

I highly recommend that you check out Kaggle.com!

ROI (Real Overall Impact!)

  1. Use a public area to identify potential leaders to participate in a private area
  2. Leverage a real time leaderboard which motivates people
  3. Enable the community to determine the content – what problem will be resolved.
  4. Check out Hacker News for a good implementation of the Thumbs up / Thumbs down process
  5. The platform for uniting free agents is important.
  6. People learn more by doing vs. sitting in a class or reading a user manual

Transcript of Interview:

What is Anthony reading?

Interview was recorded on June 20th, 2012 and written up in Boston at the Trident Bookstore in Boston, while watching another competition: Women’s Gymnastics at the London Olympics!

Thank you Nation!

 

Mind the Gap

Once a month, I take a peak in my ‘to read’ folder in my Google Drive and catch up on some reading.

One almost-forgotten article written by MarketingProfs.com highlighted some research showing big measurement gap between ‘what’s important to management’ and ‘what can actually be measured.‘ (see chart way below). According to the research, marketers seem to focus on data that is least important to management; they tend to focus on likes, clicks, downloads, etc. Unfortunately only a small percentage are starting to focus on key areas such as customer lifetime value:

In an earlier interview here, Gary Angel, CEO of Semphonic highlighted this points:

They are (beginning to) look at customer segmentation and lifetime value, and building predictive models that help you understand which customers might attrite or which are the best candidates for retention- models and analysis that really help you understand which of your operational and marketing efforts drive incremental lift and change customer behavior.

Financial institutions, airlines and others with affinity type of programs have been some of the few industries to understand their various customers from a financial perspective. When I worked at American Express back in the late 1900s (1989-1992), all members were placed in deciles (In descriptive statistics, any of the nine values that divide the sorted data into ten equal parts, so that each part represents 1/10 of the sample or population). Companies, especially those on the web or on mobile platforms, need to start approaching their customer base in this manner so they can understand their most valuable customers (not always the ones spending the most), their least valuable customers, and those with high probability to move up to one of these important segments. 

Some important items to consider when looking at the value of a customer:

  • Determine how much it cost to engage with them and drive them to a transaction
  • Break this information down by channel (Google, social network, email, etc.)
  • Subtract your costs (decide if you want to make these costs fully-loaded included the costs of employees)
  • Ensure that you can track each individual, their original channel, etc. over time

Tracking true ROI and lifetime value requires a real metamorphic change in some organizations. It requires a lot of data crunching, strong analytic skills (something that is in high demand), and is intellectually challenging. As Gary Angel points out it’s a challenge “to balance the long-term impact on retention with a short-term monetization opportunity around display than to simply “optimize” your revenue, that the two tasks can hardly be compared.”

The research also touched upon the discrepancy between what is being tracked and what managements wants to track were highlighted in the reports, such as brand awarenes: 78% of marketers said it is important to executive leadership, but just 32% of them feel they can actually assess this. This is nothing new. For decades, brand (only) marketers have fought to prove their value because so much of awareness advertising is untrackable.

Today, though, marketers finally realize that building brand encompasses a great deal more than a nice logo or tag line. The complete customer experience impacts the awareness and impact of a brand. (See my Hugh Dubberly interview). 

One area marketers seem to be doing a good job is in driving traffic to the site. The problem, however, is that driving traffic to the site is kind of an older paradigm (unless you want to own all the transactions). I would recommend to ‘fish where the fish are,’ and conduct your marketing efforts and engage with customers where they spend their time.

NOTE: MarketingProfs.com customer base was used for this research. It’s site states that it’s user base consists of 449,000 entrepreneurs, small-business owners, and professional marketers at the world’s largest corporations. This leads me to believe that not many executives were included their research. Most of these people (at least ones I work with and some of my big data research has shown) believe management can not clearly articulate its KPI’s for success. Lets just say there’s a healthy tension between the two groups. 

It’s important to really (gently) force management to clearly articulate its quantitative criteria for success, and if you don’t have the means to get to those numbers yourself, then seek outside assistance. I can recommend some firms, if you would like (and not promote myself).