During all the years that I have been working in marketing, I have always been amazed to see so many companies making mistakes and wasting millions of dollars. As I continued seeing decisions being made against what the data would recommend, or using the wrong data, I started trying to understand why that was happening. Marketing analytics methodologies have been around for many years[1], but most companies are still unable to use them to their full potential[2]. Why can’t every company successfully adopt them? I believe that just as with any other organizational change, a company’s success in utilizing marketing analytics methodologies requires top management support, getting the right people, and changing the company’s culture -all of which is easier said than done. In addition, the company has to gather reliable information to enable marketing analytics. In a study by Forester Research[3] on the top barriers to improving marketing Return on Investment [ROI] and the reasons why marketing analytics projects don’t make more progress, most of the answers were directly linked with the prior categories [Figure 1]. These general principles apply to analytics in all fields, but my focus of interest and experience is in marketing.

Figure 1: Keys to Marketing Analytics Success [MAS]

Management Support: I can’t emphasize enough that senior management support is key to achieving marketing analytics success in a company, as it is an enabler for all the other success factors. Management support is the basis for sustaining adequate levels of investment for hiring the right people and fostering the necessary data-driven decision culture. Management support is especially important in helping overcome internal resistance to change. Many marketing professionals are trapped in their beliefs about which strategies work and which don’t, and they defend them fiercely even after being confronted with consistent evidence to the contrary. Moreover, I have seen that when executives start changing the advertising budget, every media manager who finds his or her budget reduced starts to fight back as if they were paid based on how much they spend. This must change if marketing analytics are to be employed effectively.

People: Hiring the best professionals with the right skillset is also a fundamental part of ensuring success. When hiring for marketing analytics positions, the company needs professionals who can bridge the gap between statistical experts and business people. In my experience, this combination of math skills, social skills and business acumen is difficult to find. Internal hiring can be complemented with a specialized consulting company that helps develop these skills. Hiring an analytics consulting company can provide faster results, experience and guidance, but companies still need to develop an in-house team if they want to be able to create a competitive advantage. The main goal should be to make marketing analytics a core competency, and outsourcing a core competency is a strategic mistake. If a company is too small to hire a team of in-house experts, an internal “champion” should at least lead the effort, manage external consultants and ensure that all know-how gained stays within the company.

Culture: You need to change the organizational culture of the company to focus on analytics. The more the management team is involved in data-based decisions, the more often the company will make the right decisions. You should also make these marketing analytics methodologies and insights available to all marketing professionals and demand that they are used broadly. Furthermore, sending clear messages from top management generates and enforces that cultural change. For instance, Jeff Bezos, CEO of Amazon, laid off a team of web designers for “changing the website without testing” [4]. That cultural change must influence not only marketing but also every area of the organization for the change to be effective. But having access to analytics insights doesn’t do anything unless everybody understands them and is acting based on those results. The best information in the world is worthless unless the company makes real-world decisions based on it. I have seen several cases where marketing analytics insights are discarded and a manager makes and advertising decision based on his instinct -against all odds- and ends up losing millions of dollars by investing in the wrong media or campaign. If feasible, the best approach is to test a hypothesis and then after positive results are available, the company can expand the changes gradually. For example, a company could try a new promotional strategy in a small city market and if the test results are positive expand that to the rest of the country

Information: Thereis only one thing that is worse than making a decision without data, and that is making a decision based on the wrong data. That is because when you don’t have data to make a decision, at least, you tend to be more cautious. In order to avoid making decisions using the wrong data, you need to apply scientific rigor to the creation and use of it. For example, when you are running a test, use the right experiment design so that the results are reliable. A test needs to have a control group and a large enough sample size for a company to be able to use the results. Moreover, the results have to be statistically significant for those results to be trusted. Gary Loveman, CEO of Harrah’s Entertainment, a highly analytical company, said that “not using a control group” is sufficient reason to dismiss a company employee[5]. In the case of modeling, you need to review the statistical validity of the results. Creating an analytics center of excellence or other type of central coordination group within the company could ensure that high level of rigor across all business units. Being aware of the limitations of these methodologies will also help avoid mistakes. Another important aspect of the information is knowledge management as you need to preserve and share the knowledge. After the company learns new insights -for example regarding the effectiveness of social media or the best TV commercial to use during the holiday season- that knowledge should be maintained in a searchable database with easy access for all marketing professionals. Nowadays, knowledge management software systems make this task very easy. In most cases, you don’t need to reinvent the wheel, and you can apply what you learned before. Every so often, though, retesting and revisiting results is important when the market environment or customer base changes enough to make the prior results obsolete.

In summary, in order to be successful at implementing marketing analytics, a company will need to have strong senior management support, get the appropriate people, build a culture focused on analytics and get reliable information. If any of those pieces is missing, your company may not be able to achieve marketing analytics success.

One thing is certain: those companies that master marketing analytics will have an edge over their competition for the foreseeable future[6]. Companies that don’t use this opportunity will likely see their market value decrease. In the worst case, they might not survive.