One of my favorite books, Moneyball, written by one of my favorite authors, Michael Lewis
(also the author of Liar’s Poker, The Blind Side and The Big Short), reveals the concept of Sabermetrics – the
application of analytics to the sport of baseball. More specifically, the
book (I’m told there’s also a Hollywood movie of the same name) tells the story
about how a team in Major League Baseball, the Oakland Athletics, applies
analytics to try and gain a competitive advantage over 29 other teams that
essentially have the exact same product, and goal: winning the World
Series. It’s not hard to draw the parallels between baseball and
business. In baseball it’s about becoming World Series champions, in
business it’s about becoming the market leader. In baseball it’s about
stealing wins from the other team, in business it’s about stealing market
share. In baseball it all comes down to winning baseball games, in
business it all comes down to winning customers. So as your market
becomes ever more crowded and hyper-competitive, it’s becoming ever more
critical to find a competitive edge over your opponents to win.Like how the Oakland A's did - and continue to
do - leveraging analytics and finding your Sabermetrics can give you that
edge. Here’s how:
Determine what kind
of team you want to be
"Guys wait, you're messing up Johnny Damon's hair!"
In
Major League Baseball, it’s pretty straight forward: the teams with the most
wins during the regular season make it to the playoffs, where they then battle
it out until one team is crowned World Series Champions. And in order to
win games, one team needs to generate more runs than the other – it’s that
simple. And there are endless strategies and tactics that try and do
that, but when all is said and done, you can essentially boil it down
to two basic strategies: generating more runs than the other team by focusing
more on offense; or mitigating the other team’s ability to generate runs by
focusing more on defense. The difference between the two strategies is
like the difference between The Godfather, Part 1 and The Godfather, Part 2:
one is not intrinsically better than the other – it's just a matter of style.
But the risk of doing too much at once will likely end up like The Godfather,
Part 3: a huge disappointment. So determine who you want to be and how
you want to play (i.e. as the Run-and-Gun offensive team or as the
Staunch defensive team) and what strategy makes the most sense for you based on
your resources, circumstance and market positioning. Because figuring out
which strategy you’re going to employ will not only inform how you’re going to
approach winning, but it will ultimately drive the type of analytics that will
help you get there.
Numbers don’t lie. The
trick is to find the right numbers.
"Another walk, another bonus. I think I'll pick up that G6."
To
this day, the success of baseball teams and their players are largely
measured by a set of traditional, generally accepted metrics that essentially haven't
changed for the last hundred years. For offensive players, high Batting
Average, Home Runs, Stolen Bases and Runs Batted In (RBI) are regarded as the
cornerstones of high performers. Defensively, a pitcher’s Earned Run Average
(ERA), Shutouts and Strikeouts are key measures of success. Interestingly
enough, as the book points out in detail, if you were to statistically analyze how
these metrics actually impact a team’s ability to generate runs, you'll find that none of
these metrics have any significant impact. None.
Instead, it turns out that non-traditional statistics such as On-base
Percentage (OBP), Walks and Slugging Percentage were much better
predictors of a team’s ability to create runs. Not only were they much better predictors,
but they were effectively the only stats that had any meaningful impact on
an outcome of a game, and thus should be the only metrics worth
considering. So while your competitors may be tracking the same old
industry metrics they’ve been tracking since Fenway Park was built and players were catching pop flies with their bare hands, consider
differentiating by using analytics to uncover new, non-traditional metrics that
might actually be driving truer impact to business performance.The main point here is that there are
underlying factors that are positively contributing to performance and using analytics
is an effective way to help uncover those factors.
Make it a whole new
ball game Changing
the way you look at performance will essentially change the way you play the
game.So instead of building a team full
of players that hit over .300, hit 40+ home runs and drive in more than 100 runs,
you should be building a team full of players that optimize your new metrics i.e. the number of times
they get on base (OBP) and the total number of bases they achieve on a given
hit (Slugging percentage), thus maximizing the number of runs generated in a game.Now you might think that
Batting Average, Home Runs and RBIs are, in fact, indicators of how often a
player reaches base and brings in runs, but they only really tell part of the story. For example, Batting Average only
looks at the probability that a batter will make a hit on any given At
Bat, and it doesn’t take into account getting
on base via walks or getting hit by a pitch. And at the end of the day, it's all about getting on base because without
getting on base, you can’t score runs. So it really shouldn’t matter how you get on
base.The same thing applies to business
– it’s all about winning the customer.So building a strategy around how to do that, whether it’s through the use of analytics to identify and predict your most loyal customers or investing in a
platform that’s going to engage with your customers in real-time based on their
interactions with you, it’s about building the capabilities that will
ultimately lure key customers away from your competitors - and keep your best ones.In essence, you’re changing the playing field
for which you have the upper hand.Now
that’s true home field advantage!
Swing for the fences
"You're outta there, Trumbo! And here's a reverse punch for questioning my call."
My
high school baseball coach always use to say “110% or nothing”.The statistical impossibility of that
statement notwithstanding, and ignoring that he was a calculus teacher (and a
great one at that!), the essence of that statement is still powerful and are words to live by.So don’t go about implementing a strategy
half way.If you truly stand behind your
strategy, go at it with full force and with the same vigor you apply when competing
against your rivals.Now, you might swing
and miss along the way, but if there's one statistical certainty in baseball it's this: you miss 100% of balls you don't swing for.
This is my first blog post. For years I've been meaning to start my own blog to share my experiences, thoughts, ideas and points of view on all things marketing, particularly in the red-hot emerging field of Customer Engagement. But life, as it were, kind of got in the way (in a good way!). But now that I've finally mustered up the time (and courage) I am completely hooked! So my first topic is my personal how-to guide on getting to know and engaging your customers. I've basically spent my entire career in this field working for some of the biggest brands in the world, and over that time I have come to the conclusion that there are some fundamental rules that need to be followed in order to get to true Customer Engagement. So, here is everything you need to know about how to
get there, including what data you need, how to mine it for
insights, and the platforms, tools, and communication strategies you need to
engage them. Hope you enjoy.
Rule #1
Tag and track your customer data
First thing's first: it all starts with the data. But even having all the data in the world on your customers is useless unless you can properly match it back to your customer's profile. So make sure you're tagging your data properly. Not tagging it is like forgetting to write down your parking spot number at an airport parking lot. You'll get lost.
Rule #2 Build a proper customer datamart
Having all your customer data in one centralize place is a good start, but ask yourself if it's truly organized in a way where you have a single customer view? And can you access it efficiently?
Rule #3
Nail down your ETL
Some say insights are only as good as the data it's based on. I would go a bit further and say that insights are only as good as the Extracting, Transforming and Loading of the data because it serves as the foundation of how data is prepared, so it's worth spending the time getting it right.
Rule #4
Cleanse your Data
Cleaning is a chore and the more you put it off, the more dust bunnies form under the sofa and the more effort it takes to clean it. I'm not sure what the data equivalent of a dust bunny would look like but I'm pretty sure it would be scary and would keep me up at night.
Rule #5
Create a 360 view of your Customer
Creating a holistic picture of your customer means stitching together all of the data sources that surround your customer. So not only do you know what your customer's purchase history is, but you also know her demographic profile, that she's an active fan on your Facebook page, she frequently provides reviews on your products, prefers online shopping on her tablet vs. shopping in the store, and that she's loving your new app. Now that's holistic!
Rule #6
Identify key engagement drivers
Out of the increasing ways a customer can interact with your brand - whether it's online, in the store, at promotional events, in social media, on their mobile phones, etc, etc, etc - believe it or not there's really only a handful of these interactions that a customer will find engaging. What's more is that different customers will find different sets of interactions more engaging than others, since every customer is unique. This is where analytics comes in. The use of analytical techniques to identify - and quantify - what key interactions are driving your customer's engagement, and ultimately how it correlates to their lifetime value with you, will provide a completely new view of your customers. Afterall, it's well documented that the more engaged your customers are with you, the more loyal they tend to be. So yes, you absolutely need to measure customer engagement because if you can't measure it, how do you know definitively that you're improving it?
Rule #7 Identify your best customers, worst customers and everyone in between
Just as important as knowing your best customers, you need to know your worst customers. More importantly, you need to know why they are your best and worst customers. Having a good sense of where all your customers plot on whatever segmentation schema you have (preferably one that's based on engagement) will provide clear strategies on how to move them up the value chain. But again, you have to know where they are first.
Rule #8
Profile your customers
Once you know where your best and worst customers are, get to know them. Who are they? What do they look like? What's their lifestyle? How do they think and feel about you? What feedback do they have about you? Basically what makes them tick? Over-laying these insights to your customer segments literally bring them to life and puts a face on who you're communicating to.
Rule #9 Design a customer experience When you set out for a trip, you typically plan out where you want to go, what you want to do and when. In other words, you plan exactly the experience you want. Designing a customer experience is exactly the same (although probably not as fun). You want to map out the journey you want your customer to take with you and plan the exact experience you want them to have. Then your communication strategies should live and die by this experience. This exercise provides a longitudinal dimension of your customer segments and almost serves as your Customer GPS - you always know where your customers are in their journey with you. Rule #10 Define your objectives and KPIs We can't forget about the top and bottom lines, and understanding what levers drive those numbers up and down are obviously critical. But at the end of the day, your customers are what drive those numbers. And the more engaged they are, the more loyal they are. And the more loyal they are, the more they spend with you vs. your competitor. So by simple deductive reasoning, it follows that you should have KPIs around customer engagement. Rule #11 Build a communication strategy If you've gotten to this point - adhering to many of the rules above - then serious congratulations are in order! It's certainly not an easy feat. So you (and surely your client and/or your boss) should give yourself a huge pat on the back because this is where the organizational benefits really start to pay off. Now that you have a clear picture of who your good/better/best customers are; know what they look like and what engages them; and mapped out the exact journey you want them to take, now it's really about detailing the type of touchpoints you want your customers to receive that will maximize their engagement i.e. what message, when, and in what medium. Rule #12 Create engaging Creative What getting to this point also does is that it paints a clear picture for your creative team/agency to develop laser-focused art & copy that's going to resonate with your customers: creative that's going to be more relevant to your customers; creative that's ultimately going to be more engaging for your customers. Rule #13 Pick the right CMT
Organizationally, achieving the above also informs the type of Campaign Management Tool or platform you'll need in order to enable the communication experience you want your customers to have. So if your communication strategy is multi-channel, real-time and multi-directional, does your CMT have the DM, email, social, mobile, web, interactive and dynamic content management capabilities to support it?
Rule #14 Create a Measurement & Learning plan Just like a project plan, creating an M&L plan should start first with the desired output then work-back to the strategic plan. Identifying what learnings you want upfront will highlight what you need to measure and how. And the more specific you are the more targeted your plan will be. Rule #15 Test, Learn, and Test Again If Alec Baldwin's "art of selling" scene in Glengarry Glen Ross was remade today, he would definitely be talking about ABT: Always Be Testing! Not only should you test everything - and by this I mean every interaction point throughout the journey, and even the journey itself! - you should do it ALL the time! How else are you going to know what's truly impacting the behaviors you want? The good news is that with the proliferation of all things digital it's becoming more cost-effective and trackable to do it. So there's really no good excuse not to test. (Warning: scene is laced with profanity)
Rule #16 Tag everything for measurement This goes back to Rule #1 but it's worth repeating here. As strategies and plans become more and more evolved and optimized from the insights and learnings gained from every touchpoint, it's important to stay on top of tagging your data (particularly new data sources) to keep deepening your relationship with your customers.
Rule #17 Measure effectiveness Did your campaign increase your KPIs? Did it achieve the objectives you set out? If yes, apply the good things that worked into your next campaign plan. If no, fix yourself a stiff drink, brush it off, and tomorrow start doing a thorough post-mortem and go back to the drawing board. Rule #18 Measure impact on engagement Measuring engagement is one thing but changing it takes a lot of time, effort and nurturing. Just ensure that you have a longer-term view when assessing engagement and if any of your efforts are impacting it. If you just can't wait, a little trick is to look at how your key engagement drivers are moving as they can serve as leading indicators.
Rule #19 Reconcile with what your customers say Don't always take your customer's actions word for it. Customer's don't always do what they say or say what they do, so always check back with them to reconcile their comments with their behavior. Rule #20 Refine your communication strategy Take all your insights and learnings and refine your strategy accordingly. Your communication plan should be a living and breathing plan that should be revisited often and flexible enough to change on the fly. Rule #21 Innovate or die Pretty harsh statement but a general business rule worth highlighting: Never rest on your laurels. The market is always changing. Competitive pressures are always increasing. Growing your share is becoming more challenging. Your customer's needs are constantly evolving. Their expectations are growing and they're demanding more and more from you. All the more reason to constantly look for new and innovative ways to keep your customer's engaged with you. Because guess what? Your competitors certainly are!
