According to Gartner, marketing budgets as a proportion of company revenue have fallen from 11% in 2020 to 6.4% in 2021, their lowest point in the history of Gartner’s CMO Spend Survey.
With less money allocated, decisions about where to spend those marketing dollars become even more important, especially for those companies without an established marketing analytics department.
Recently, Keith Werle, managing director of the Scheller Business Analytics Center at Georgia Tech and William Koleszar, editor and publisher of The Chief Marketing Officer Journal and chief marketing officer of the National Spine and Pain Centers, sat down to discuss the role of business analytics in marketing—and what marketing pros need to know.
The conversation flowed easily between the two old friends, with Werle offering a more left brain, math-oriented perspective while Koleszar’s comments reflect his decades of marketing and sales-oriented leadership.
Despite their very different backgrounds, they quickly identified five key things marketing professionals need to know about analytics:
1. Business analytics is a powerful tool to predict customer behavior.
Werle: Business analytics allows you to model the future in order to predict a result. The more you know about your customer and their buying behavior, the more likely you are to meet your customers’ needs. Like football, marketing is a game of inches. Small, incremental gains in understanding your customers’ behaviors can make a big difference over the years.
Koleszar: One of the most valuable perspectives marketing brings to the C-Suite and the boardroom is customer insights. Business analytics and data allow marketers to reveal buying patterns, predict purchases, personalize the buying experience, and even anticipate future buying needs. To put it simply, data fuels efficiency and a better return on investment—which is always appreciated by the C-Suite and boardroom!
2. Building an evidence-based, decision-making culture across the company pays off.
Werle: To get the best results, using data to make decisions should be a company-wide initiative. If business analytics is only being done in business analytics and data science groups, many competitive advantages are lost. As a marketer, you are in a great position to help change the culture and encourage data literacy throughout the company. If marketing professionals, (including the leaders), use data to drive decision-making, other company members will as well—especially when they view firsthand the results of the investment in data.
Koleszar: In addition to helping the company, building a data culture will also be beneficial to YOUR career. Marketing leaders who embrace business analytics survive and thrive. I saw this in the late 90s and early 2000s when the old school CMOs who tended to focus more on the creative aspects of marketing, didn’t adapt to the new world of technology—and lost their jobs as a result. I’ve used business analytics across a host of marketing activities from advanced segmentation to measuring customer experience and beyond. For me, it has been a strategic advantage during the past 15 years in particular. Marketers who don’t realize the value of data do so at their peril.
3. It’s easier to get the attention of the CFO and C-Suite if you speak their language.
Koleszar: As a former banker, I’m more comfortable with financial jargon than most marketing executives. However, despite that background, I’ve learned the hard way to use precision in language when discussing marketing efforts. Investing time in understanding the financial metrics of the business through the eyes of the CFO and the finance team, then communicating with them in that language, is crucial. It’s worth it to take the time and do a lot of listening; there really aren’t any short cuts.
Werle: It’s important to learn how to justify and pay for investment in data and business analytics. As a marketing professional, you’re probably already a great communicator. Take it a step further and be a great technical communicator. Be able to communicate both why business analytics works and its dollar value. Be able to explain how using data makes or saves the company money.
4. It’s better to optimize than maximize.
Werle: I endorse the portfolio optimization approach. Often, marketing looks to do more, with an emphasis on a “what-else-can-we-be-doing approach”. When thinking about your marketing efforts across the company, I advocate asking: are you doing the right things, for the right people, in the right mix? Evidence-based business analytics gives you clarity. Evidence matters. Measure everything in terms of results, then test it again. Spend your money where you already know it will make a difference rather than on initiatives that may or may not have worked in the past.
Koleszar: I agree. A company’s marketing spend can be freed by an integrated analytics approach. Specifically, the best analytic approaches such as marketing mixed modeling can determine spend effectiveness by channel. Through mixed modeling, we can determine effectiveness by channel and ultimately that translates into a better monetary result.
5. Good data is vital to quality analytics and insights.
Koleszar: When millions of dollars are on the line and you’re accountable for the return on investment, data can be your best friend. Conversely, bad data can be a lethal enemy. Making decisions based on bad data can not only hurt your financial performance, but also the credibility of the marketing team.
Werle: Totally agree. As we’ve discussed, good data helps take the guesswork out of decision-making. The more confident you are in your data, the more confident you can be in your marketing strategies. But, beware of bad data. Without accurate and trustworthy information – you are not just flying blind – you are flying with faulty instruments straight toward the ground. The damage from poor quality can be even worse than decision-making without data and can do more harm than good.
As the meeting draws to a close, both agree: the space-time universe in which marketers operate is rapidly changing and data and technology will continue to play larger and larger roles in marketer’s decision making.
Werle brings up a recent McKinsey report, The Data Driven Enterprise of 2025, and reads aloud: “By 2025, smart workflows and seamless interactions among humans and machines will likely be as standard as the corporate balance sheet, and most employees will use data to optimize nearly every aspect of their work.”
Koleszar nods in agreement and offers his last comments:
“It’s remarkable to me how business analytics continues to become more advanced—and therefore an even more strategic instrument for marketing professionals. With the advent of machine learning and AI, marketing leaders must commit to constant learning as there is no finish line and no limit ahead.”