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[Music]
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[Music]
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we're here today with marketing
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Professor George day to talk about his
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new paper closing the marketing
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capabilities Gap and which he discusses
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the Deluge of data that companies are
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faced with as they try to meet the
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challenges of marketing over the next
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decade joining us in this discussion is
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marketing Professor David rebstein Dave
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and George thanks for joining us George
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your paper is called closing the
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marketing capabilities Gap what exactly
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is that Gap and why is it so important
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that companies address it you know as I
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reflected on the title I'm beginning to
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think a better title would be narrowing
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the uh Market capabilities Gap the Gap
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is a uh consequence of two things what
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you might call the data Deluge the
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information explosion where we have a
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doubling of the amount of data not
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information necessarily or wisdom but
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the amount of data stored every 18
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months and so this is an exponential
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increase in the data available to
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companies at the same time is our best
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guess on the ability of companies to
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actually use this data converted into
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information then act on it is growing at
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about 2% a year so that's the Gap that
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uh I'm looking at here so we're we're
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overwhelmed uh we're confused with uh uh
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the consequences of term I love which is
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the Splinter net uh and the fragmenting
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media the tremendous uh decomposition of
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mass markets into little niches and of
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course media choices uh are
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proliferating rapidly it's all quite
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overwhelming to companies and and and by
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the way individuals we're all I think uh
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struggling with this uh tremendous
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overload Dave what are what are the
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traps that companies fall into trying to
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manage all this data well one of the
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things that I think is really
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interesting is thinking about the
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history of of how this Gap happened
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because what George was just referring
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to which is absolutely right is this
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huge proliferation of choices that
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customers have options that companies
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have and then the abundance of data but
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let's back up just a little bit and
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think about who was in marketing and
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who's been sort of doing this in the
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past and many of much of it has been
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people that have risen up through sales
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and have a sales orientation they were
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very good interpersonally very good at
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sort of working and talking to customers
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um or they were people that sort of
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could identify and feel what the
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customer felt but what's happened is we
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don't need to rely on sort of the the
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pearls of the tongue um or the empathy
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that the marketer needs it really is we
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have
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information and so the new marketer
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today is very different than the
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marketer of the past and I think you
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know one of the traps is sort of falling
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into doing things the old way and trying
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to unlearn the way that uh that we used
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to doing marketing and today it is so
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much more just data
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driven so there both there there's so
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many new developments in in knowledge
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sharing technology like microt targeting
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and communities of users and all the
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social networking tools what are the
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best examples of these Technologies and
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who is using them in the most
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advantageous ways George you might want
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to answer that well uh let let me set
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the uh the frame for uh a broader way of
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thinking about how companies cope and
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then see how they're a able to take
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these Technologies I think two ideas one
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is that technology is creating the
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problem it's also going to be the
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solution to the problem so social
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networking knowledge sharing many
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Googles that companies are creating for
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their own databases are obviously the
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path to the solution but it'll only work
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if the organization is inclined to use
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them and prepared to use them so I uh am
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am looking at three different
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capabilities
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that companies will need in order to
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effectively use all this new technology
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for sorting through sharing and
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interpreting data uh first one is uh
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what I call Vigilant Market learning
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that is the ability to uh see things
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sooner to capture the right information
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as opposed to uh being a treating all
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information as equally important sorting
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out which signals are you really should
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pay attention to
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that's a significant capability requires
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very curious leadership highly networked
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and so forth second uh is the Adaptive
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notion of adaptive Market
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experimentation this is a capability
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companies have to master and uh whether
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it's B2B B Toc it's companies like
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Quicken doing
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600
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experiments every year with their
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customers and learning system atically
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from it so uh we we have a lot of
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interesting tools on Predictive
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Analytics and so forth uh that our
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colleagues uh uh Pete fader and Eric
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bradow are working on here to to try to
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unlock that uh the lessons from those
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experiments uh but the other thing that
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uh I think is important about companies
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that use these tools well is that they
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don't try to do it all themselves and uh
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what I've been fascinated with is what
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I'm now calling open marketing which is
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uh a direct lift from open Innovation
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and this is the notion that if you want
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to do search engine optimization or
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Predictive
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Analytics it's probably not a good idea
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to try to build that capability inhouse
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rather you find a really good partner
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who is able to help you with this to
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apply this and and by the way has the
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right kind of talent because the reason
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I think that you have to partner in is
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that the talent is very hard to find um
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so in an era of high unemployment
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there's a desperate need for qualified
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creative analytical people kind of the
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two ideas coming together but we have we
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have a talent crisis and companies are
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struggling to find people to do that the
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answer I think is to find the right
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Partners but where do you who are these
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partners are they other companies are
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they individuals that you that you hire
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they will array from uh and and the the
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IBM study that you talked about uh asked
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about potential partner R so there's 12
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kinds of Partners at least uh anywhere
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from Specialists one two three four
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person uh specialists in Predictive
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Analytics all the way to one of the big
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three integrated advertising agencies
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which has got a host of creative shops
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marketing research firms and with the
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with the specialized Talent built into
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them that they can spread across and
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build experience in lots of different
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situations yeah so you asked uh Robbie
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specifically who's doing a good job of
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trying to use you know the new tools and
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trying to take advantage of it and
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George mentioned Quicken um let me add
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to that um I would say Amazon Falls in
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that category of they're constantly
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experimenting and the web page that you
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get and the web page that I get are uh
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might be very very different not just
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based on our history but because we're
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coming in and they're going to try
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something different and it's it's a
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whole test and learn mentality I'm going
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to test something out see what works
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deploy it and that could happen all
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within the same day and in fact you
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could be doing hundreds of these every
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day where I'm going to test so you buy a
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blue sweater I buy a blue
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sweater you come back and they're going
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to give you a yellow sweater and see if
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you're going to do it and that's what it
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is that sort of is being featured and
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for me they're going to give me you
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know a uh what would go well with the
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blue sweater black slacks and they're
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going to see so which works better
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quickly do that with a couple thousand
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people learn from that deploy in fact in
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your in your paper George you quote Jeff
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Bezos as saying rather than ask what
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we're good at what else can we do with
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that skill you ask who are our customers
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what do they need and then you say we're
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going to give that to them regardless of
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whether we have the skills to do to to
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do so and we will learn those skills but
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Amazon has the luxury of being able to
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do these millions of tests to find out
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what consumers need even before
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consumers know what they need other
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companies don't have there there's an
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interesting property that Amazon has and
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other companies have that that are
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taking advantage of this ability which
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is dealing with customers individually
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so there's lots of companies that sell
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through Distributors who sell to other
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Distributors and are not really in touch
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with the End
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customer um Amazon is in touch with
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exactly who their ultimate customer is
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and and there's lots of businesses
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certainly online businesses have that
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ability but actually if you think about
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it cellular companies have that ability
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um because they know exactly who that
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individual customer is banks have that
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so companies that have the individual
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level data which take back to the
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earlier problem the problem is this
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abundance of data right and the question
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is who's able to really take advantage
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of it now let me go to The Other Extreme
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which is take a company like
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Unilever Unilever sells through
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distributors or for the big retailer
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sells directly to retailers so either
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Distributors to retailers or directly to
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retailers who end up selling then to
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Consumers and they don't have that
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individual consumer level data but what
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they have started doing and doing it I
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think very effectively is working on a
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lot of social media so the whole Dove
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campaign that got tons of publicity and
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everything was all something that was
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primarily created online and they
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created ads that were never shown on
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broadcast television and it was really
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for this spread through
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YouTube and through other social media
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that really allowed them to reach a
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massive audience and it been very clever
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for a company that doesn't have that
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individual level data well let me ask
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George let me there's a follow-up
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question to that so consumers are
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obviously increasingly vocal chatty uh
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they get online and they're constantly
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spreading their opinions about products
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and services how can companies figure
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out which comments are important and
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need immediate action and which are just
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noise there's a lot of interesting
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technology uh to first of all
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capture these blog comments and then
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edit them and see if there's patterns so
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if if you go on to Google you you can
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see patterns of recurring use of a term
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and what you're looking for is literally
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clearing out all of the noise and
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concentrating on what's the what's the
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signal that we really want to look at
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and it might be a uh a complaint about
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product performance I remember one of
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the very earliest ones uh was a an
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experience Proctor and Gamble had is
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they brought out remember fabr yes so
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everybody knows for Breeze almost failed
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because early in its launch a woman got
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on blogged and said FaZe killed both of
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my
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canaries and uh you know this spread
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through the uh the internet uh Proctor
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had a very good uh way of capturing that
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they figured out who she was because
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they sent an email said can what can we
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do uh they rushed A team out talked to
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her and uh after a while discovered and
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she agreed the carries just canaries
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died of old age coincidentally so but
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that uh meant that they were able to
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stop that uh really threatening uh
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message going out over the toxic effects
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of deze and they actually turned it into
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an opportunity on the internet and and
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it's it's that ability to capture these
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signals understand them and act on them
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quickly uh but we've had lots of
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examples
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of uh blog messages that have been
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ignored for way too long and just just
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go viral and it doesn't take very long
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which which takes me back to your
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question I want to build on what George
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said Rel related to your question you
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said how do you determine which ones to
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respond to and I think part of the
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message ends up becoming every customer
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becomes important in part because today
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every customer has has a microphone or
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megaphone I guess I should say because
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it is easier to broadcast your
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message and you know you could have said
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there's not a massive number of people
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that are claiming their canaries are
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dying from fre Breeze Let's ignore it
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yeah but it a as George points out it
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goes viral right and suddenly it starts
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becoming this big publicity and if we
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ignore it then it could be very very
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dangerous so every customer starts
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becoming important and you need to be
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addressing all of them and that and that
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requires a whole different skill set as
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well right so this is back to the issue
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oh how do you build the skill set the
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technology so most companies would be
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ill advised to try to do it themselves
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it's uh extremely uh sophisticated kind
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of analysis so that's where Partners
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come in right and finding the right
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Partners building a relationship with
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them those are difficult management
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challenges and the good companies will
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do it uh so broadly this leads us into
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the question of how do you then think
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about this marketing capabilities Gap
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the answer is most
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companies are not going to be able to
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close it all their aspiration should be
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is to close it faster than their
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competitors get ahead line up the right
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Partners build a capability to do these
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kind of learn test and learn experiments
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and stay ahead of the competition okay
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by the way uh just a sidebar to this one
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of the things that I'm fascinated in is
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that there only so many good partners
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out there so I think what we're going to
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see in this open marketing Arena that uh
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the Smart Companies are going to get
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there first they're going to lock up the
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good partners in the later entrance who
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say oh this is a good idea won't have
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the pick of the partners should we worry
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about uh consumer short attention spans
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I mean they're trying to absorb these
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thousands of messages thrown at them
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aren't at some point consumers has tune
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you out so how do companies avoid that
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how do they avoid being ignored by by
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customers by potential consumers so that
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is always a threat it's been a threat
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for a long time but if nothing else
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because we have so many different
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channels to try and reach customers it's
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become more of a threat the
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responsiveness to banner ads is down
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yeah just because you know the the
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number of them have uh have gone up and
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so I think part of the answer goes back
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to really customizing messages and your
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Communications to the individual
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customer so that what it is that you're
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saying resonates with them
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historically we're going to post it out
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there for a large number of people our
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message is sort of comes from the
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history again of mass media we're going
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to put out a mass message versus Talking
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specifically to Robbie or talking
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specifically to uh an individual about
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what it is that they might need okay and
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but at the extreme uh not only the
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message is tailored but the whole
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product offering absolutely so you get
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exactly what you want now customers will
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pay attention because they understand
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that you're solving precisely their
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problem uh let's ask why zapus does so
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well in a otherwise uh crowded category
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because they are very good at customer
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service and they give the customer
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exactly what they want customers can
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solve their problems very easily on
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zapas right weren they one of the first
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to offer free shipping back and forth
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yes big big point for people who love
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shoes you can order three pairs of shoes
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to get the one that you really want to
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keep not pay any penalty uh George you
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sent me a study um from IBM called from
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stretched to strengthened in which IBM
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actually talked to 17 more than 1700
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Chief marketing officers around the
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globe and at one point um you can tell
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me what you felt was most interesting
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about that study but one point they the
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study advises CMOS to understand individ
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uals as well as markets to establish
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customer intimacy to focus on
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relationships not just transactions how
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do you do that in such a huge Global
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Online Marketplace well that's where
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technology becomes our friend and uh so
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we can uh build deep insights into
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customers if they choose to let us I
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mean they may not they may want a
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transactional relationship but by and
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large uh if let's just take zapus
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because it's a very familiar example uh
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zapus knows a lot about its customers
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and it reaches out to them let's take
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another company which I think has done a
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masterful job of uh addressing that and
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that's Tesco with their uh Club card in
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the UK they have 14 million customers
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who have given Tesco permission to
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capture all the data about every
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transaction all their demographics
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background information and so Tesco
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knows an enormous amount about these
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people it can then tailor messages
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offers precisely to their geographic
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area and to them individually so a newly
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uh wed couple gets a certain set of
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offerings a uh U family with a new baby
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uh it gets offers but at some point
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don't you think customers are going to
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stop giving that permission I mean
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there's just actually so there's this
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concern about you know too much uh
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intrusion I want to guard my privacy I
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think we're going to go through some
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waves of people saying no I want to be
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private and other people saying wait a
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minute I'm being better served by
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companies knowing some information about
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me my belief is that the only people who
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who should receive you know coupons for
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baby diapers are people with babies
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right yeah um that that and you could go
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through the whole list of you know the
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only people who are going to get spe
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specific offers are ones that are in
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need of it um we see the phenomena of
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Groupon going on right now and the
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number of sort of promotions that I get
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for Brazilian Blowouts is just amazing
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you know and for tooth whitening and for
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things that I'm not particularly
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interested in right now and that's just
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wasted messaging that's going on and I
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wish they knew more about me so that I
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wouldn't get all the noise so would you
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give them about you so they would know
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more about so I think as I said we're
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going to see these waves of people
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discovering I want to be private but on
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the otherand I am much better served I
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get much less of this noise if people
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know more about me and so I think
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there's going to be a bifurcation of
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those who say bring it on and others
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that say I want to protect and th those
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that are asking for you know protection
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of their information are going to be
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observing the others and and I think we
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will see an evolution towards more
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disclosure not less disclosure so uh
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just to to maybe put a wrapper around
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this uh what's what's a relationship
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it's a perception of mutual
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understanding and mutual benefits so the
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customer will only give the company
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permission if they think it's in their
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best interest they have control over
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this they have control and so why does
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Tesco get permission to uh collect all
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this information and to use it to Target
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as Dave was suggesting very specific
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messages and the answer is a rebate so
00:21:05
what's neat about Tesco is that every uh
00:21:09
quarter they get a rebate based upon a
00:21:13
percentage of all of the uh uh the value
00:21:17
of the purchases theyve made in that
00:21:19
quarter so that's a reminder you know
00:21:21
this is a very good two-way relationship
00:21:25
okay um I have two more questions uh
00:21:27
Dave the IBM study also quotes CMOS as
00:21:30
saying that return on marke investment
00:21:33
is the primary measure of Effectiveness
00:21:35
this is nothing new it's something you
00:21:37
you've talked about a lot but how do you
00:21:39
prove that value how do you come up with
00:21:41
some numbers or numbers not the answer
00:21:43
so people are sort of stuck on this
00:21:45
return on marketing investment and they
00:21:47
do that in part because it sort of
00:21:49
integrates with the rest of the
00:21:50
financial Communications of the company
00:21:53
because you've got an Roi right that is
00:21:56
measured in all sorts of Investments
00:21:59
um and so it's a basis for comparison
00:22:01
across um but I think what it is that we
00:22:04
need to do and what our current
00:22:06
accounting systems are not very good at
00:22:09
doing right now is sort of capturing the
00:22:12
long-term contributions of marketing so
00:22:15
we have things like a brand which only
00:22:19
shows up on our books if we acquire a
00:22:22
brand if we build it it it doesn't show
00:22:24
up officially on our books but that
00:22:27
doesn't mean that we can't measure it
00:22:29
and we can't measure what the value of
00:22:30
that particular brand is and again there
00:22:32
are partners and there are various
00:22:35
companies that assist in helping with
00:22:37
that particular measurement of it but
00:22:40
maybe even better than brand is looking
00:22:42
at the long-term value of a customer and
00:22:45
that's not saying just what is it that
00:22:47
they bought right now and how much did I
00:22:49
make in that
00:22:50
transaction but I want to think about
00:22:52
that relationship and that relationship
00:22:55
that I have with that customer that's
00:22:56
today and hopefully out into the future
00:22:59
so when someone buys a
00:23:01
BMW what's the value of that customer
00:23:04
that bought the BMW is not what I just
00:23:06
sell them right now and the service that
00:23:08
they're going to have but it's also
00:23:11
what's the probability that they're
00:23:12
going to buy a BMW out into the future
00:23:15
so I think what it is that companies are
00:23:17
going to move more towards is looking at
00:23:20
that longer term and and I raise this in
00:23:23
the context I haven't forgotten your
00:23:25
question the return on marketing
00:23:27
investment which is sort of looking
00:23:29
backwards how much did I make from that
00:23:32
and it's not looking enough forward
00:23:34
towards what's that future Revenue
00:23:36
stream that's going to come by having
00:23:38
gotten this customer solidified my
00:23:40
relationship increased the probability
00:23:42
that they're going to be buying out into
00:23:43
the Future Okay uh George maybe I'll
00:23:47
throw this out at you the IBM report at
00:23:49
one point uses a very strong image for
00:23:51
me it says quote just as x-rays
00:23:54
transform Medicine by letting doctors
00:23:56
see through human tissue so the new
00:23:59
information and communication
00:24:01
Technologies are revolutionizing
00:24:03
business by letting customers and
00:24:05
citizens peer through corporate walls so
00:24:08
what is the one single best thing a
00:24:10
company can do to turn consumers ability
00:24:13
to see through corporate walls into a
00:24:15
competitive advantage to essentially
00:24:18
create
00:24:19
transparency uh so I will focus on
00:24:23
largely the building of of relationships
00:24:26
uh based upon mutual benefits Mutual
00:24:29
understanding so the company has to
00:24:31
really invest to understand those
00:24:33
customers and then create offers that
00:24:35
are exactly tailored to their
00:24:37
requirements so that uh they thought
00:24:39
they're being listened to and that their
00:24:41
requirements are being met so this is
00:24:44
this notion of uh Mutual commitment
00:24:46
based upon Mutual rewards now I don't
00:24:49
mind you getting a benefit from this but
00:24:52
it's got to be worth my
00:24:54
while thank you both for coming thank
00:24:56
you thanks Robbie
00:25:02
[Music]
