By Michael J. Penney
The McKinsey & Company study, “Big data: The next frontier for Innovation, Competition, and Productivity,” reaches two conclusions business leaders will quickly realize. First, there are huge opportunities available for improving marketing in organizations with the use of data analytics; and second, it will be really challenging to realize those opportunities.
Data and its use will become a key basis of competition and growth for individual firms. One of the most visible areas is in marketing, where there are two types of benefits available.
The first benefit is improving targeting, which most importantly begins by determining who to target. Data has always provided the ability to help predict who a company should want to target based on historical data. The incremental opportunity is to predict who that person is based on what they’re doing right now. For example, what did they just search for on their mobile device? What product information did they just view on-line?
Once the person is identified, the next challenge is to determine what to offer them and via what mix of communication vehicles. For many companies, there are somewhere between 20-50 different touchpoints, so determining how to communicate involves balancing between understanding what is the best mix and what a company can actually manage through to execution.
Next is to determine how to say it. Digital touchpoints enable personalization and versioning to maximize the value of each communication; as with managing many touchpoints this involves managing complexity.
The second benefit is improving decision making, notably in product development and resource allocation. Information about competitive products and marketing activities is so transparent today, it is essential to understand what is occurring and to be nimble enough to change marketing elements to retain and shape a product or service’s value proposition.
To use data to its fullest requires four categories of capabilities: 1) capturing and measuring what’s occurring; 2) identifying patterns and opportunities; 3) segmenting/organizing information for action, and 4) predicting the outcome of planned actions. These capabilities require underlying skills in large scale and real-time capturing and managing of data, cleaning up and enhancing data, and statistics and visualization tools.
Why is this challenging? Each step requires specialized technology to capture the information and people and tools with special capabilities to analyze and use it. McKinsey predicts by 2018, the United States alone could face a shortage of 140,000 to 190,000 people with deep analytical skills as well as 1.5 million managers and analysts with the know-how to use the analysis of big data to make effective decisions.
The cost and complexity of managing the information and tools can be daunting. Many organizations are amassing data and tools to meet the challenges and are at risk of either spending on technologies, data, and capabilities they won’t be able to use, or they’re becoming dependent on a labor force they won’t be able to attract, develop, and retain.
McKinsey estimated BILLIONS of potential benefits in a number of industries. Suffice it to say that in almost every industry, there will be significant competitive differentiation between companies based on their ability to harness data with advanced analytics.
Tom Friedman, the celebrated author and columnist, believes what is needed are managers within companies with the skills to manage resources wherever they are in the world, while recognizing it is unlikely those resources are in the same building, in the same company, and/or even in the same country.
Friedman’s point is: the most valuable skills a company can have (and the most valuable people within a company can have) is to be able to determine exactly what needs to be done and then manage the increasingly networked resources to get them done.
This is particularly true with the opportunities and challenges for big data.
First and foremost, make sure the leaders are on staff to ask the right questions. These are the rare breed of leaders who can sort through a wide range of opportunities and challenges and clearly set a direction for the use of data based on the value to the organization. These people are hard to find and retain, but are key to ensure the organization is properly focused and doesn’t get mired in details and challenges.
In contrast to someone who would say, “Let’s capture a bunch of data and see what we can learn and how we might use it,” find the person who can articulate and quantify the specific benefits being sought and can create the plan for getting there. That leader would say, “These are the customer experiences we need to deliver to our current and prospective customers; here is how we are going to execute, and this is what they will be worth to us.”
This person may not always be right since needs and capabilities are rapidly evolving, but they need to follow a structured approach and be able to adapt when necessary.
Find a partner organization (this may be an internal group, but increasingly will be external agencies) that can help deal with the complexity of the work and the rapid evolution of the increasingly complex data environment. This should be a partner that has scale in order to offer efficiencies and breadth of experience – both with big data and with marketing challenges. This is not a core competence of many companies and in many cases will involve a work force that is distributed around the world to bring to bear the right talent at affordable costs.
Finally, create a sustainable business model with partner organizations to ensure continuous improvement of the marketing efforts. This will typically include agreements with performance metrics for: 1) marketing program development; 2) availability of skilled talent and, 3) predictable costs. The last two points are worth emphasizing since the scarcity and demand for talent is already driving up costs to acquire and retain. This will not be an area where reducing costs will be an option, but rather will be more of a challenge to find the appropriate resources.
The demands and opportunities of big data are upon us. Focus on finding those few individuals to lead the company’s efforts to capture the opportunities. Direct those individuals to develop and leverage partnerships to provide the skills, scale, and flexibility.
Michael Penney is the Executive Vice President for Strategic Consulting and Advanced Analytics at Dallas-based Epsilon, a multi-channel marketing services company. He can be reached at firstname.lastname@example.org.
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