Last year when Sir Martin Sorrell proclaimed that the future of marketing is in the effective management of data, many business leaders’ ears pricked up. The god of the advertising world is difficult to ignore, especially when his business, WPP, is investing millions in getting its data in order.
And it seems that most marketers agree with Sorrell, recognising that using data effectively leads to successful business results, according to the Marketing Week Data Survey, in conjunction with data specialist Alterian.
When managing a campaign, 36% of marketers believe that data is very effective at increasing sales, and 47% say it is somewhat effective. In an unstable economy, with weak February retail sales reported by the British Retail Consortium, getting customer databases in order will be a priority for many businesses looking to boost returns.
In a competitive market, the success of a business is not just measured by selling more, but by gaining market share from competitor brands. And 68% of marketers believe the effective use of data can play its part in this.
Making data a priority across the business can also improve customer experience, according to 77% of respondents. Many marketers regularly talk up the importance of the customer, advocating that they are at the centre of their brand. And being able to accurately understand customers through the data they provide helps to steer their brands ahead of the competition.
It also stands to reason that if marketers and business leaders believe that effective data improves the overall customer experience, then they will link good data with customer loyalty. The survey bears this out, with the majority of respondents (72%) stating that use of data is effective in promoting customer loyalty.
The number-crunching side of marketing is also being attributed to the softer side of brand success. The effective use of data greatly improves brand perception, according to 28% of respondents, with almost half (49%) believing it to be somewhat effective at achieving this aim.
However, while on the face of it the effective use of data is being hailed as the darling of marketing and overall business success, practically speaking marketers are facing a myriad of problems. Anecdotally, the survey reveals that marketers are often banging their heads on their desks in frustration that while they recognise the importance of data, the rest of their business does not.
One marketing manager working for a telecoms company highlights this problem by arguing that: “As a marketing department we’re good at managing data, but we need the larger organisation to contribute to it as well and this is where we fall down.”
Another respondent also faces similar issues within a hotel business “that struggles to see the importance of data capture and therefore creates weak data,” but adds, “we are addressing this at present.”
In a competitive market, the success of a business is not just measured by selling more, but by gaining market share from competitor brands
Demonstrating that it’s not just the marketing department that has to understand data, one marketing manager says: “Good management and use of data is probably the activity performed the most poorly by our organisation and also the thing most holding us back.”
While some bemoan the lack of enthusiasm for data across the business, others are frustrated that the investment in it has been made, but that employees can’t be bothered to spend the time making effective use of their investment. A manager working for a not-for-profit company, says: “Currently we have a database, but people are reluctant to use it as data entry is time consuming.”
Marketers have a job on their hands convincing their organisations that good data makes good business sense. What is clear from these survey results is that data can be proven to be a safe marketing investment, so convincing the board that more money should be spent in this area shouldn’t be such a challenge.
Compared with other marketing investments, a customer database provides a very good, or good ROI for 69% of respondents. Just over a fifth (21%) believe that it provides a good ROI, while just 10% believe it to provide a poor or very poor ROI.
Some of those who believe that their customer database provides poor ROI say that it is because the business isn’t investing in the area to make it an effective strategic tool for a marketer. While marketers are using data tactically, many are not using data strategically, according to the survey. While 81% use data to segment an audience when planning a multi-channel campaign, far fewer are using data on a strategic level when executing their plans.
Sixty-two per cent use data to decide on the most appropriate channel or channels for a campaign, while only 40% use data to determine media planning. Even fewer (38%) use data to determine the nature of an offer.
Data is also being used erratically to plan and assess campaigns. While 83% say they use both on- and offline data to plan a campaign, fewer people are using on- and offline data to assess the success of a campaign, with 74% saying that they number crunch to measure effectiveness, and 12% saying that they only analyse online data. And according to the survey, 10% of marketers don’t use data to analyse their campaigns at all.
Good management and use of data is probably the activity performed the most poorly by our organisation and also the thing most holding us back
Perhaps this is because the quality of data that can be collected is currently not good enough for an accurate assessment of a campaign. This appears to be the top concern for marketers this year, with 59% saying that their data priority for 2011 will be improving the quality of their customer database.
The second most important priority for brands is finding an effective way to integrate data within their organisation, with 56% saying it is a priority this year.
For this to happen, the entire business needs to get on board with the geeky side of marketing and it appears that more than half of businesses (56%) have sat up and taken note of the importance of data, as investment is being made by these businesses over the next 12 months to address issues they are currently facing.
As one marketing director from a house building business puts it: “In an uncertain market it is imperative to intelligently use all the data available. Applied knowledge will be the difference between success or failure.” Wise words that even Sir Martin Sorrell would be proud of.
David Eldridge, Chief executive, Alterian
Data is rarely used to its best effect within businesses and this is demonstrated in the results of this survey. What is implied is that data is being used tactically for campaign planning, but not strategically.
Only 62% of marketers say they use data to decide which channel or channels to use for their campaigns, yet many marketers are comfortable using data tactically, with 81% saying they use it to segment a particular audience when planning a campaign.
Putting customers at the heart of a brand is shifting the way companies do business, so using data strategically is becoming even more important. Companies really need to develop a data roadmap determining how it will be used to inform the future strategy of their entire business; the effective use of data can truly put the customer at the core of a brand.
Many companies don’t appear to have integrated all of their data together to enable them to do this. This is one of the major priorities for businesses this year, and it is imperative to get this right to get ahead of the competition.
It is encouraging to see that marketers do rate data as an effective business tool, with almost 70% believing that their customer database provides a good return on investment compared with other marketing investments. I believe that marketers are going to find this increasingly the case as channels that have traditionally been considered broadcast become more direct.
Marketers are considering the benefits of addressable television advertising, which has the ability to tailor adverts direct to settop boxes, for example. Social media is another area that is becoming more of a direct channel. Marketers and organisations will need to understand the data behind social media to understand their customer.
Many businesses have a long way to go in terms of using their customer databases on a strategic level. It’s interesting to note that improving the quality of data is the top priority for 2011. Businesses need to get this right in order to start thinking about data more strategically across the business.
Marketers who are struggling to invest their budget in improving their customer database should really reconsider their budget allocation this year, as it really can be the lifeblood of an organisation.
About this survey
- The study was carried out during February and March 2011 among Marketing Week readers and visitors to our website.
- 18% of respondents work for a company with more than 5,001 employees; 15% in an organisation with between 1,001 and 5,000 employees, and 23% in a company with between 100 and 500 employees.
- Marketers from a variety of sectors responded – 15% from financial companies, 12% from technology companies and 12% from the media sector.
- All results have been rounded up or down to the nearest full percentage point. Not all tables add up to 100, as more than one answer may be given.