HBR and Contrarian Marketing – Big Data Brings Finance, Marketing and Sales Together

Harvard Business Review LogoThe HBR published an insightful article – ‘How Big Data Brings Marketing and Finance Together’ that is instructive in creating trust & teamwork between these two departments.  A central notion of Contrarian Marketing is that “marketing is not magic, just math“, and this HBR article provides several excellent examples of companies who have created cross department alignment, and very powerful data-driven organizations.

In many cases, finance departments are skeptical of marketing’s ROI claims, and similarly, marketing departments are remiss to provide specific ROI targets.   Big Data and Predictive Analytics now lend tremendous power in creating an agreed upon data set & common language that the CFO and CMO can use to run scenarios, calculate returns and foster communication.

Author Wes Nichols, CEO of MarketShare (and author of an excellent Harvard Business Review article – Advertising Analytics 2.0) highlights several companies (MasterCard Worldwide, Intel, Mattel, USAA and others) have used the power of Big Data and Predictive Analytics to bring finance and marketing together via an “ROI evaluation framework”.

Logo for Intel CorporationIntel Pioneers Analytics Platform for Marketing & Finance

For example, he references how Intel pioneered an analytics platform in which marketing and finance could  run what-if scenarios.  “In one instance, we worked with both Intel and Facebook to quantify how the chip maker’s social media marketing on Facebook affected consumer PC sales”, notes Mr. Nichols.  “This targeted effort showed that paid Facebook ads and the company’s own unpaid (organic) Facebook postings increased Intel brand and product search volume by 1.9%-2.3% – which in turn led to increased PC sales”.  This is impressive to say the least.

Use of Marketing Scorecards

Picture of Contrarian Marketing Book by Nick MavrickIn Contrarian Marketing, I cite a study by the Chief Marketing Council Study from this past decade that noted that “just 49 percent of companies with revenues over $500 million reported using formal marketing performance scorecards. Smaller companies reported using performance scorecards only 20 percent of the time.”

Big Data and Predictive Analytics now enable the entire enterprise to work together, building trust and empowerment throughout the company.

Cascading Big Data and Predictive Analytics to Sales

Many companies acknowledge that marketing and sales teams don’t play well together. This separation is understandable: marketing organizations tend to be more cerebral and passive – – nudging customers to take action. In western terms, they are the ranch-hand cowboys who work hard to keep the place running smooth. The sales organizations are the gun-toting sheriff and deputies that take a stand in front of the customer, daring them to action. Oftentimes, the conflict originates from the sales organization contending that the marketing team does not customize their offering for local markets. And conversely, the marketing organization tends to feel that the sales organization lacks structure and discipline.

“Marketing blames the sales force for its poor execution of an otherwise brilliant rollout plan,” said author Dr. Philip Kotler, Distinguished Professor of International Marketing at Northwestern University in Chicago.

Managing Sales People: How to Make It Work

Many organizations take a ‘big brother’ and ‘command and control’ attitude towards their sales persons. Since sales people live or die via the empirical data of whether they met their quota, management has a tendency to burden sales people with the over-reporting of ‘lost sales’, sales pipelines, call reports, etc. Understandably, the management team wants visibility into the status of this month’s or this quarter’s revenue.

There is an alternative approach that satisfies the reporting needs of the CFO, but places less burden on the salesperson with reporting busy work.  By using the pre-established analytic framework from finance, sales and marketing teams can engineer a marketing campaign tailored to specific list of customers and specific high-value prospects, and allocate capital accordingly.

Once your marketing and sales teams have agreed upon a conceptual structure to the marketing campaign and the amount of capital to be invested for each target, each individual salesperson can customize the campaign to their knowledge of each best customer and prospect.

Moving from Command & Control, to Decentralized

Since marketing now involves the sales team in best customer / prospect selection, the recognition of the contribution value of the best customers, and the conceptual marketing tactics, the relationship between marketing and sales  has shifted from adversarial to cooperative, from command and control, to highly decentralized.

This conceptual framework not only allows each sales person to flourish, but enables senior management and the marketing department to measure the results in a highly controlled manner and with capital allocated to the highest impact activities.

The end-result: a force multiplier.

In conclusion, Marketers are learning to speak a language that only a Chief Financial Officer could love.

Sources:  

HBR Blog Network, How Big Data Brings Marketing & Finance Together

Contrarian Marketing, Chapter 7

By Nick Mavrick

You can find Nick Mavrick on Google+

Intelligent Response specializes in operationalizing Predictive Analytics and Digital Advocacy projects from start to finish in Washington DC.

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