What do the American division of SAP and the largest German teleshopping channel HSE24 have in common? Both have identified solutions to their problems in the data to which they already have access.
This is a global trend – as many as 78 percent of marketers believe that analytics-based decisions are of strategically significance to further development of their business. Marketing is a field which has changed and will continue to see dramatic change due to the influence of data.
What is data-driven marketing?
With the advent of more advanced technologies, marketing has become measurable: we can control campaign outcomes and optimize promotional activities based on information which we already have available. For this reason, customer and related data represent a key corporate resource.
This approach to marketing, in which our previously collected data determines or helps to determine current marketing strategies and decisions, is referred to as data-driven marketing. In data-driven marketing, promotional activities are determined by available information (in the form of data), and outcomes are controlled through the application of appropriate tools to the automatic, real-time collection of data on performance, customer behaviour, and business results. A possible example of data-driven marketing is the analysis of data tracking which email messages customers opened and clicked to prepare more effective communications on that basis.
This involves a number of benefits. In the opinion of 67 percent of marketers, speed is the greatest gain from data-based operations. Due to the availability of precise information and to analytical capabilities, future marketing moves can be planned much more effectively. Furthermore, the iterative, real time approach significantly reduces the time needed to experiment. 53 percent of marketers find that the delivery of best-tailored content, effectively addressing their precisely targeted customer(s) is the requirement most dependent upon access to and analysis of information resources.
Internal and external data sources
The basic challenge in data-driven marketing is data acquisition. Each organization has its own internal data – information on products and customers, transaction histories, etc. Today enterprises have available to them hundreds of options from which to choose for their data collection, organization and processing.
Apart from their own resources, such as transaction history or CRM information, companies have access to their business partners’ resources and external data. Partner information includes data acquired by third-party service providers, such as loyalty programme operators.
Third-party suppliers include sellers of mailing databases, leads, and other customer information which is not acquired directly by the company needing access to the data or its trusted subcontractors. In such a situation, however, doubts may arise concerning the quality of information provided. As many as 69 percent of retailers are of the opinion that poor-quality databases adversely affect business and may even operate to its detriment.
In spite of the aforementioned concerns, many companies continue to purchase access to third-party data while others may choose to do without, failing to recognize how much they could achieve simply by drawing on the already-existing internal information resources! What’s more, this (internal) information can easily be checked for quality and improved, in-house.
SAP Hybris Marketing in B2C, or data-driven marketing practice
The German company HSE24, operator of three television channels (HSE24, HSE24 Extra, HSE24 Trend) and an online store, reaches 42 million customers to whom it sends 32,000 products daily. The company’s business model calls for the address of their offers to customers who are selected as carefully as possible (for likelihood of interest the product) and sufficient familiarity with the brand to opt for purchase. In order to meet those challenges, the organization needed to target its advertisements much more precisely than before and to launch them within shorter campaigns.
At the same time, it was important to provide the marketers with tools that would make them independent on Business Intelligence. All necessary data was already available within the organization; all that was needed was its appropriate preparation and processing. For this reason, HSE24 opted for SAP Hybris Marketing.
The deployment of the solution made it possible to combine all the information existing within the organization, collecting it from its various sources such as CRM (also supplied by SAP) and data warehouse (prepared by another supplier). The capability to process all available data enabled the Marketing team to develop campaigns that were tailored much better and took less time to create. The effect was immediate.
The deployment of an advanced marketing solution made it possible to reduce the time for preparation and launch of promotional campaigns by 20 percent. What’s more, the number of customers returning to the company for purchases increased by 4 percent, which, given the scale of operation, means thousands of additional purchases generating an additional 30 percent of net sales.
All information resources necessary to make the above changes was already available within the organization, but Marketing had no access to them. The data previously had to be requested from Business Intelligence, whose job it was to answer hundreds of queries from multiple sources, among whom Marketing was not always their top priority.
Equally impressive effects to those seen by HSE24 can be achieved by applying the data-driven marketing paradigm in the B2B segment.
Data-driven marketing in B2B
Data also made it possible for SAP to create a new level of communication with customers of its North American branch. To achieve the ultimate objective of each enterprise – business excellence – the company decided to draw on its internal resources in the form of data collected on its customer base.
The company’s 5 strategic customers were selected through tests, in-depth examination of their profiles, and in-depth interviews with the customers. Based on the history of interactions, it was determined what long and short-term objectives these customers pursued and how they wanted to achieve them with SAP products. Starting with this accurate, detailed understanding of their customers, individualized campaigns were developed.
This meant that in the case of key customers the company decided to refrain from personalization based on statistical and quantitative data in favour of individualization of contact. In this case, offers were based both on quantitative and qualitative data concerning the customer which the company managed to collect the course of the relationship. Consequently, the performance of the 1-to-1 marketing model implemented was satisfactory enough for the organization to expand its strategy of relying on in-depth study of its existing resources, which allowed the purchasing potential of those customers to be increased by 27 million dollars. All this was achieved through the use and skilful processing of information already available within the organization.
Good data is your own data
In each of the above described cases, spectacular results were achieved through the smarter, more specific application of the company’s own, existing resources. Hidden in distributed systems, unavailable to Marketing departments for a variety of reasons, these resources cannot be used either to accelerate and fine-tune a campaign or to individualize contacts with key customers.
While as many as 54 percent of management staff recognize as hindrances both the lack of quality data and its incompleteness, only 35 percent of organizations reach for big data in marketing activities, and 92 percent have yet to develop a uniform view of their customer which is available to everyone throughout in the organization .All these challenges can be addressed by appropriate organizational and/or technological solutions: in the former case, preparation of an appropriate internal policy that includes access to internal information and those responsible for it (data stewards) and inn the latter, a platform supporting data processing without specialist knowledge. SAP Hybris Marketing in an example of such solutions.