Why Big Data Is So Hard for Companies

I landed in Paris just as the NSA story was breaking, and Europeans were waking up to the extent of their American surveillance. Made for a lot of interest in my speech on big data and innovation to CEOs of the travel industry the following day.

If any industry will be shaped dramatically by the revolution in data and business practice, it should be travel. Travel transactions have already shifted almost entirely online, numerous touchpoints and complex customer experiences allow for wide-ranging innovation, and airlines were an early pioneer in applying dynamic pricing algorithms to optimize “yield” from each flight’s allotment of seats.

And yet, over the course of two days of meetings and conference events, I discovered the travel industry is grappling with the same issues as every other industry in trying to make “big data” work to the benefit of their customers, their business models, and their bottom lines.

Five lessons for CEOs, CMOs, and CIOs struggling with big data initiatives:

1. Customer level data is paramount.
Data is no longer about knowing that “69% of customers prefer X.” As data has shifted from the survey paradigm to real-time analysis and unstructured data, the value is in knowing that “customers who buy X, and do Y, are 140% more likely to want Z.”  This value requires linking together different behaviors and data signals at the level of the individual customer, to unlock insight and deliver much more customized value. As of recently, the airline industry has not even retained historical purchase records, literally “throwing out” the unique ID of each customer transaction after the trip, to recycle the record locator number for another customer.

2. Customers need to see value, to allay privacy fears.
With an ever-increasing spotlight on issues of data privacy, from both governments and corporations, gathering and using customer data surreptitiously is no longer an option. And to earn the trust of customers to use their data transparently, companies need to demonstrate the value they are delivering to them. When customers see actual benefits, from personalization, offers, and unique services, they are much more willing to accept the anonymized use of their data by your business.

3. Loyalty programs will be the leading edge of opt-in data.
The most transparent and familiar paradigm for customers to recognize a value exchange around data is loyalty programs. Huge numbers of customers already participate in at least one such program, and understand that they are opting in to allow the company to deliver rewards based on behaviors it is tracking and responding to. For companies with limited customer-level datasets (e.g. those who traditionally sell only through intermediary channels), loyalty programs are the first step down the path of developing their own strategic data asset.

4. Data is political, not just technical. Most conversations about big data take for granted that the biggest hurdles to assembling and linking diverse and enormous sets of unstructured data are technical challenges. But in the real world of businesses, the toughest challenges are political.  Sharing and linking of data, in order to assemble a complete picture of customer behavior, is very frequently obstructed by reluctance to share between divisions of a single company, or between partner companies.  Whosoever “owns” the data wields a great deal of power. The travel industry is struggling to shift to NDC, a new data standard for airline reservations. Why? Because while airlines claim it will allow for much better servicing of customers, online travel agencies (OTAs) fear being cut out of the value chain – disintermediated by their partners.

5. Data “ownership” is the wrong model. As turf wars heat up over customer data, some businesses are trying to lay down rules to establish their “ownership” of their customers’ data, before they share it with any business partners.  But ownership is fundamentally the wrong legal paradigm. While one business may try to set terms of use before sharing data with another, it does not “own” the data of its customers’ public online behavior. (This is equivalent to a radio station claiming ownership of a songwriter’s lyrics once a song is transmitted over its airwaves.) In a post-Snowden world, companies who try to argue too loudly for legal ownership of their customers’ digital footprints, will not be looked on kindly in the eyes of customers or policymakers.

The conference I spoke at was hosted by Amadeus, a leading global technology provider for the travel industry. If you are interested in the state of play of data in the travel industry, Amadeus has sponsored an excellent independent report on the topic. (Disclosure: Amadeus is a client. However, I was not involved in this study.)

BY DAVID ROGERS

This piece was originally posted by David on the DavidRogers.biz blog at: http://www.davidrogers.biz

New Study: Marketers Struggle with “Big Data” & Digital Tools

The Center on Global Brand Leadership and the New York American Marketing Association (NYAMA) are pleased to release the results of a major new study on the changing practices of large corporations in:

• data collection and usage,
• marketing measurement and ROI, and
• the integration of digital and traditional marketing.

The BRITE-NYAMA Marketing Measurement in Transition Study was authored by David Rogers, Executive Director of BRITE, and Columbia Business School Professor Don Sexton. Results were first released at the Center’s fifth annual BRITE conference on May 5, 2012. The findings have been reported in numerous publications, including the top front-page story of Ad Age.

The study’s results focused on 3 main findings:

1. The failure of “Big Data” for marketing
2. Marketers are quick to adopt the newest digital tools, but struggle to measure them
3. ROI – marketers know they need it, but cannot agree on its meaning and implementation

The full report can be viewed at http://j.mp/MarketingROIstudy.

FINDING: THE FAILURE OF BIG DATA FOR MARKETING SO FAR
The researchers found that marketers’ desire to be data-driven is not yet matched by a consistent effort to collect the data necessary to make these real-time decisions. 29 percent report that their marketing departments have “too little or no customer/consumer data.” When data is collected by marketers, it is often not appropriate to real-time decision making. 39 percent of marketers say that their data is collected “too infrequently or not real-time enough.” Furthermore, marketers today are still much less likely to collect new forms of digital data like customer mobile device data (19 percent collect it), and social media data (35 percent), than they are to collect traditional customer survey data on demographics (74 percent) and usage (60 percent).

FINDING: MARKETERS ADOPT NEW DIGITAL TOOLS, BUT STRUGGLE TO MEASURE THEM
Marketers are also struggling to measure the impact of the newest digital tools, despite the widespread adoption of these applications. 51 percent of marketers said they use mobile ads (in-app, or SMS); 85 percent use social network accounts (brand accounts on Facebook, Twitter, Google+, and Foursquare). Yet these tools are among the least likely to be measured for ROI despite their profusion of data. Only 14 percent of the social networking users are tying them to financial metrics, and only 17 percent of those using mobile ads are tying them to financial metrics. By contrast, 41 percent of email marketers measure their results with financial metrics. In addition, as number of marketing tools expands, the challenge of measuring and comparing them grows. 60 percent of companies report that comparing the effectiveness of marketing across their different digital media is “a major challenge.”

Click image to enlarge

FINDING: ROI – MARKETERS KNOW THEY ALL NEED IT, BUT CAN’T EVEN AGREE WHAT IT IS
The study also revealed that there is confusion about the meaning and significance of ROI among marketers. Specifically, 31 percent of respondents said that they believe simply measuring the audience you have reached is “marketing ROI.” 57 percent are not basing their marketing budgets on any ROI analysis, and 28 percent are basing marketing budgets on gut instincts. 21 percent are using financial metrics for “little” or “none” of their marketing budget and seven percent are spending most or all of their marketing budget with “no metrics” at all. However, marketers are under pressure. 70 percent say that their marketing efforts are under greater scrutiny than in the past.

CONCLUSIONS: FIVE IMPERATIVE ACTIONS FOR CMOS
After its analysis of the dynamic and challenging environment for marketing today, the report recommends that Chief Marketing Officers should focus on five key leadership imperatives: Set objectives first; Design metrics to ensure marketing is linked to these objectives; Gather the right data for those metrics; Communicate to the entire organization what your objectives are and how they are being measured; and Evaluate and reward employees in part on how well objectives are achieved.

Read the complete findings and conclusions at http://j.mp/MarketingROIstudy.

# # #

METHODOLOGY
253 corporate marketing decision makers, director-level and above, were surveyed online between January 27 and February 8, 2012. These professionals are employed at large companies (90 percent have a global annual revenue of over $50 million; 45 percent are over $1 billion). Respondents were from b2c and b2c companies in diverse industries. The study was made possible with support from Research Now and GreenBook.

ABOUT THE RESEARCH PARTNERS:

The Center on Global Brand Leadership was founded at Columbia Business School in 1999 and has grown into the leading global forum on brands. The mission of the center is to turn the research and intellectual capital of academia’s foremost thinkers on branding into practical tools and insights for real-world application. The Center has worked with a wide range of sponsor companies to develop a variety of thought leadership including: conferences, case studies, videos and webinars, and sponsored research. The Center’s flagship BRITE conference on brands, innovation, and technology presented was founded in 2008 and is presented each spring at Columbia University. BRITE ’12 speakers included John Hayes (CMO, American Express), Marc Speichert (CMO, L’Oreal USA), and Bob Garfield (host of On the Media, editor for Ad Age).

The New York American Marketing Association (NYAMA) helps marketing professionals navigate to success in today’s dynamic business environment. We serve the marketing community by giving members opportunities to push the boundaries of marketing, expand their skills and exchange ideas with other experienced professionals. The BRITE/NYAMA study is one example of how we are contributing to the advancement of marketing.

Research Now is the leading global online sampling and online data collection company. With over 6 million panelists in 38 countries worldwide, Research Now enables companies to listen to and interact with real consumers and business decision makers in order to make key business decisions. Research Now offers a full suite of data collection services, including social media sampling, and operates the Valued Opinions(tm) Panel and e-Rewards(r) Opinion Panels. The company has a multilingual staff located in 24 offices around the globe and has been recognized for four consecutive years as the industry leader in client satisfaction.

GreenBook® brings stimulating, practical, and timely resources to marketers and market researchers on both sides of the table. Through its targeted multi-media platform, GreenBook offers effective marketing and lead generation opportunities to businesses that communicate with buyers and users of market research.

12 Tech Trends for Marketers in 2012

It’s year-end forecast time. Following are the 12 technology trends that I think are critical for marketers to watch in 2012. These are the emerging customer behaviors, digital interfaces, social media, and marketing platforms that will transform the way customers connect with brands in the year ahead.

1. Mobile by Default

In 2011, for the first time ever, global sales of smartphones overtook personal computers. This marks a huge shift in behavior by customers and employees alike. 2012 will be the year that computing begins to be “mobile by default.” Rather than marketers thinking, “Yes, our web experience is good, but how does it look on a mobile device?”, instead every digital experience will be built from the beginning with mobile devices in mind

2. But Tablets Redefine What Is “Mobile”

At the same time that mobile is becoming our default standard, the definition of “mobile” is rapidly expanding. This is due to the broad popularity of tablets, which have spread from personal computing to business with use cases ranging from mobile sales forces to C-suite executives on the go. On the strength of the iPad, Apple is poised to become the largest computer manufacturer in the world in 2012. Meanwhile, Amazon’s Kindle Fire is blazing the trail for a wider market of stripped down tablets at a fraction of the price. Increasingly, brands will have to develop digital experiences for three screens: the smartphone, tablet, and personal computer.

3. Apps Are Out, HTML5 Is In

Since the launch of the iTunes App Store in 2008, downloaded (“native”) apps have dominated the mobile computing experience, offering a flexible user interface better suited to small touchscreens than traditional websites. But the arrival of HTML5 has brought a new standard to the Web which allows for mobile websites (“web apps”) with much of the interactivity and customized design of native apps. Following the lead of The Financial Times and Amazon, many brands in 2012 will begin to shift towards developing mobile apps on the web. This will allow brands to avoid many of the problems of the native app model: developing versions of each app for different operating systems (iOS, Android, etc.); persuading customers to the take time to install an app vs. simply clicking a web link; handing over a share of revenue and control of customer data to the App Store owner; and facing significant delays for every update to your app (web apps update instantly, just like a website or blog)

4. Offline Merges with Online

By 2012, QR codes (“quick response”) will have gone from “Too confusing, consumers don’t get it” to “Too new, the ROI is unclear” to “That’s old news, of course we have one on the corner of every brochure.” Meanwhile, innovative uses of augmented reality will continue to unfold in retail and gaming apps that merge on-screen reality with what’s in front of us off-screen. While the first iteration of Google Goggles has not caught on, visual search (or “true A.R.”) may start to make its first appearance in 2012, allowing us to point phones at random objects in the real world and find relevant online information about them.

5. Mobile Payments Drive Loyalty

Starbucks’ mobile app has processed 26 million transactions in its first year, thanks to scanners on location in many stores. Kenyan mobile payment startup M-pesa now processes more transaction globally than Western Union. Loyalty marketing firms like Aimia are focusing on using mobile payment to incentivize brand loyalty and customer retention. In 2012, brands will find new ways to manage customer relationships by tying payments to mobile devices using new technologies like Square and NFC (near field communications).

6. Touch and Voice Transform Computing Interfaces

Touchscreens have defined our experience of mobile devices — first on smartphones, and now on tablets. In 2012, Microsoft will finally launch its first Windows operating system with a touch interface built into it from the ground up. After years of telling your kids to stop touching your computer screen (it’s not an iPhone, dear!), you won’t have to, as your screen will seamlessly switch back and forth between mouse, keyboard, and touch. The emergence of another transformative interface, voice-driven computing, was first seen this year in IBM’s Watson, the Jeopardy-playing artificial intelligence (A.I.) computer. Consumers got their first voice A.I. interface to take home in Siri, the personal assistant in the Apple iPhone 4S. Expect voice interfaces to appear in more consumer digital experiences starting in 2012.

7. TV Grows Ever More Social

Multi-screen TV viewing is rapidly becoming the norm. 42 percent of Americans surf the Web while watching TV, and 26 percent send instant messages or texts. In the last Super Bowl, Twitter users sent a record-breaking 4,000 messages each second. YouTube’s integration with Google+ will allow for simultaneous social viewing of online video, not just television. Brand advertisers will need to think about how to engage customers across these multiple social screens. They may want to look to Bravo TV, who found that its online viewing parties gave a 10 percent ratings lift for the “Real Housewives” series.

8. Live Video Emerges as a Business Channel

Recorded video has already become a huge business opportunity, as testified by the many YouTube channels for brands like Home Depot, IBM, and Pepsi. By contrast, live video interaction (like Skype and FaceTime) has been seen as a consumer conversation tool. But it is now emerging as a powerful platform for conducting business. Not just teleconferences, but medical consultations, therapy, and even cooking classes are now being conducted via live video. The Hangouts feature on Google+ will further popularize this by making group video incredibly easy. Look for brands in 2012 to find new ways to use live video conversation to engage key audiences.

9. Social Commerce Stalls Two Ways

Social couponing will likely decline in 2012 for three reasons. Many Groupon competitors have pulled out (including Facebook Deals); investors are showing wariness about the business model; and local retail partners are growing increasingly wary. A recent study showed that customer reviews (as measured on Yelp) decline significantly after a retailer launches a Groupon deal. In another kind of “social commerce”: Facebook’s dreams of becoming a huge e-commerce platform to rival Amazon will likely not come to fruition in 2012. Facebook brings social sharing but not much else to the table (it can’t handle fulfillment, or customer complaints, or inventory), and it keeps too much of customers’ data for itself. Merchants will find they can do better by advertising their wares within Facebook apps, and encouraging customers to share their purchases on social media, but keeping the actual e-commerce transactions on their own websites.

10. Google Integrates

In 2012, marketers will warily watch the web’s three titans fiddle with the rules of their respective kingdoms. The first to watch is still search giant Google. Brands will need to carefully track how the integration of Google’s products (especially Search, YouTube, Maps, and Google+) begins to impact the rules of the game for SEO and customer engagement in 2012. Will brands need to spend more time on Google +1′s and Hangouts, as part of ensuring that their web presence stays high in Google’s search algorithm?

11. Facebook Ups Its Ante

Facebook is next. As brands still wait for the roll-out of Timeline, we can expect that Facebook will continue to play with its algorithm for what gets shown to consumers in 2012. On the plus side, this may lead to less visual spam for the user and higher click-through rates on Facebook’s vast but underperforming inventory of banner ads. On the down side, marketers may find they have to pay more and more just to get their content seen by their own Facebook “fans,” let alone spread virally to others.

12. Twitter Innovates for Advertisers

Finally, Twitter will continue to experiment with its interface and its advertising products in 2012. Its addition of brand pages this month is a welcome step, and it adds a bit of polish for users visiting a business account via a web browser (but this is only a small portion of Twitter’s traffic). The real question for 2012 is what new advertising products Twitter will develop (like the new Promoted Trends) that will give marketers more visibility in front of the right Twitter users, while ensuring that what users see is relevant enough to keep them engaged with the service.

BY DAVID ROGERS

This post originally posted by David on the DavidRogers.biz blog at: http://www.davidrogers.biz

(Webinar) New Rules for Business in the Social Media Age

With social media now occupying more time than any other online activity, the question for businesses is no longer, “should I be using social media to communicate?” but “how should I?”

In my webinar “New Rules for Business in the Social Media Age” (for Columbia Business School), I present best practices for planning a social media strategy to match your customers, your business and your objectives.

This 30 minute webinar examines:

• Best practices from top brands for building customer relationships online
• Facebook, Twitter, LinkedIn, Google+: the critical differences for business
• How much social media is too much? (for your business)
• New research on when and how to best communicate with customers in social media
• Why you need to integrate social media with the rest of your communications
• How to know if your social media is paying off (with real metrics and ROI)

This webinar is based on a lecture from my 3-day executive program “Digital Marketing Strategy“, offered by Columbia Business School Executive Education. Click the link to learn more about upcoming sessions (March 12-14, and October 15-17, 2012).

BY DAVID ROGERS

Avoid These 7 Social Media Fiascos

The list of scandals, embarrassments, missteps, and P.R. fiascos tied to social media seems to grow every day.  Everyone knows the stories of disgruntled customers whose online complaints go viral, attracting millions of sympathetic viewers. Or the employees who get companies into trouble with an ill-advised post on the company’s social media accounts. Even a carefully planned ad campaign can stir up a storm of protest in the social media world.What is a business to do? While it is tempting to stick one’s head into the pre-digital sand, the fact is that organizations today face little choice but to engage with a network of customers that is empowered, vocal, and ready to share their own opinions in social media. To prepare themselves, businesses should apply lessons learned by the failures of others.Following are 7 lessons that will reduce the risk of social media failures for your own brand:

1. Don’t try to fool anybody. In an age of social media, you can only fool some of the people for a fleeting moment, until one of them exposes your deception and broadcasts it for the world to see. While companies may be tempted to plant fake customer reviews on Amazon, Yelp, or blogs, the likelihood of discovery is too high a risk, especially for larger brands. The imagined benefits of something like Wal-Mart‘s fake customer blog, “Wal-Marting Across America,”pale in comparison to the damage to your reputation from its exposure.

2. Follow decorum. The first rule of social media training is that the old rules for employees still apply. When an employee speaks, tweets, posts, or shares a photo on behalf of their company, it should be with the same discretion that they conduct an interview or draft a press release. The second rule is that many employees will need to have the first rule drummed into them. Their experience using these same media for personal conversations can lead to some sloppy habits. If you hire an outside agency to run your social media accounts, it is critical to establish style guidelines and an understanding of their accountability – like for the digital agency that was fired by Chrysler after a staff member inadvertently tweeted an obscenity about Detroiters on the auto brand’s own Twitter account.

3. Balance oversight with speed. Training and guidelines does not mean you can run every tweet, wall post, and image upload by a committee of legal advisors scattered across your company. An executive at Citi told me that he finally got the company to reduce the 20 legal sign-offs required to post to Twitter when he sent senior leadership a calculation of the cost of each tweet. In a world where customers expect instant replies and interaction, companies need to strike a balance between oversight and speed.

4. Pay attention to tone. Customers expect a more personable voice in social media than on a corporate website or press release. So your social media guidelines need to cover not just what you share, but the tone in which you share it. This should include guidance on how to handle irate or unreasonable customers, as well. Using a condescending or sarcastic tone with customers is always a bad idea, as Nestle learned when a tit-for-tat dispute with a customer on its Facebook wall led to widespread criticism and the departure of fans.

5. Know which tools are not under your control. Some social media channels are controlled more by the account holder, and others are controlled more by the public. It’s important for businesses to understand the differences as they start to engage customers. For example, Twitter hashtags (words anyone can use to join a topical conversation), are extremely public. Starbucks learned this lesson when it launched a print ad campaign to promote twitter conversations around #top3percent and found it hijacked by a labor activist’s criticism of the company.

6. Invest in customer service. In an age of social media, good customer service is often the best p.r. money can buy. The worst social media fiascoes stem from customers telling tales of terrible service – from Jeff Jarvis’s “Dell Hell” blog posts, to the “Sleeping Comcast Technician” video on YouTube, to Dave Carroll’s viral music video “United [Airlines] Breaks Guitars.” Customer service used to be an easy place to cut costs during lean times. But now, businesses should realize that investing in decent quality customer service is a direct defense against the worst risks to their brand.

7. Test launch any big changes to your communications. A number of social media protests have arisen not because of companies’ digital marketing, but because of changes to their traditional marketing. Think of the outcry when The Gap tried to change its logo, or when Tropicana tried to change its packaging, or when Motrin ran an ad about back pain from babies that moms found unfunny. Companies should consider pre-testing any major changes to their brand identity in order to gauge customer response, or else launch them with any understanding that they may need to be yanked quickly if customer complaints spiral out of control.

No Heads in the Sand

In an age of social media, brands no longer live in a 24 hour news cycle. It is more like a 24 minute news cycle.  This demands speed, nimbleness, and thoughtfulness on the part of business.

Opting out of all social media is not the answer. In fact, many of the most flagrant social media “failures” have stemmed from old-fashioned “offline” screw-ups that get talked about much more by customers now that they have a powerful public voice of their own.

So be aware of the hazards to your reputation, and remember these 7 lessons as you bravely navigate the risks and rewards of engaging with customers in a world where everyone now has a virtual megaphone.

BY DAVID ROGERS

This was originally posted by David on his BNET.com blog.

Note: Image courtesy of flickr user, Chris Daniel