There’s a really good article on the Harvard Business Review Online site called Changing Health and Wealth Behaviors with Analytics by Tom Davenport and John Sviokla. I won’t summarize the article here, you can read it yourself. But there are three things I took away from it that I think are spot on:
- Analytics will increasingly be an important element to marketing competency.
- Customer segmentation should be driven by behaviors.
- Marketers need to actively shape customer behavior, not just understand it, or react to it.
I did, however, have some reactions to each of these points:
1. Analytics is rapidly becoming a meaningless buzzword. I can’t count how many technology vendors have told me about their “analytics” capabilities. When I say to them “it sounds to me like what you’re calling analytics is really reporting” some will admit that that reporting is what they’re really talking about. Call me a purest, but I’ve always thought of analytics as applying statistical techniques to predict or explain something. Slicing and dicing data isn’t analytics in my book.
The problem with this is that firms will invest in new technologies and processes because somebody in the organization called it an “analytics” initiative, when in reality it has nothing (or little) to do with analytics. This is an age-old problem: Firms invested hundreds of millions of dollars in initiative because the project sponsor called it a knowledge management or reengineering effort.
2. There are forces working against behavioral segmentation. For starters, many firms (especially financial services firms) purchase data from various sources that enable them to do attitudinal segmentation. While behavioral data may come from internal sources, and therefore be cheaper (theoretically), the firms that supply attitudinal data segmentation will make the case for why their data is still valuable. In addition, just because there’s “better” data out there doesn’t mean marketing is agile enough to change the way they plan and execute campaigns.
Then there’s the question of whether or not that internal behavioral data really is less expensive. For a decentralized, multi-line of business, channel-stovepiped business, pulling together reliable, consistent behavioral data across LOBs and channels is a pipe dream.
And where would you start? As Davenport and Sviokla wrote in their article, the first step in the process towards behavioral segmentation is “getting some data about behavior.” While space might not have allowed for them to more specific, that wasn’t very specific. And the financial services example they gave — using retirement savings calculators — wasn’t really a very good example.
Marketers will need to develop a theory — and then test and refine this theory — regarding which behaviors are the most important to collect data on. You can find some of my thoughts on this here and here.
3. Marketers don’t get right-channeling. The HBR article starts off by commenting that “changing consumer behaviors is increasingly critical to the success of several major industries.” This statement can be interpreted in more than one way. On one hand, it might be an observation consumer behaviors are changing and that that’s important. On the other hand, it might be a prescription to managers that they need to do things to change consumers’ behaviors, and that the ability to do so is increasingly important.
There are a lot of people who will interpret the statement the first way, and that’s too bad, because the authors intend the statement the second way. And it’s a really important thing for marketers to understand, and a competency for marketers to have.
A few years ago I was at a conference where the then-CEOs of Bank of America and Fleet Bank were speaking. In separate presentations, they both said the same exact thing: “We’ll do business in the channels our customers want to do business in.” That sounds very customer-centric, but it’s a helluva expensive way to do business, especially as customer channels and touchpoints proliferate.
I recently gave a presentation at Open Solutions’ customer conference on Right-Channeling Customer Interactions, where I argued that financial institutions needed to develop a competency for right‐channeling consumers’ interactions and transactions. Specifically, that through education, peer analysis, segmentation, channel integration, and process redesign, firms needed to test and learn their way to understanding what works and what doesn’t when it comes to actively shaping customer behavior.
I think that’s what Davenport and Sviokla are advocating for in their article. The problem is that this isn’t nearly as sexy as social media and launching your new Facebook page or some Foursquare campaign. I guess it comes down to what your priorities are: Generating profits or generating buzz?