The math, the magic and the customer

Data-savvy digital marketers must still maintain an emotional connection with the people who do the buying, says the team at Bain & Co

Forget Mad Men. Today’s marketers are more likely to be math men and women. They plumb the depths of big data with advanced analytical tools. They buy and use dazzling new software - some spend more on technology in a given year than their companies’ IT departments. They are hot on the trail of marketing’s holy grail, the ability to measure ROI on every campaign.

These are laudable pursuits, up to a point. The trouble comes when marketers mistake the algorithm for the person. Humans, after all, are pesky creatures. We make decisions with our hearts as well as our heads. Our wants and needs can’t always be reduced to or predicted by data. Great marketers have always known this, which is why they work hard to build an emotional bond with the customers they are targeting. They tell compelling stories about their brands through memorable messages and indelible images.

At its best, this kind of marketing pops and dazzles like magic. Marketing that ignores the magic and relies on math and science alone will be marketing that doesn’t work.

So there’s a challenge here. Today’s marketers can’t succeed without the new technological and analytic tools - the tools offer insights that simply weren’t available in the past. But marketers also need a holistic view of the people they are trying to reach in order to forge emotional connections. The two approaches - math and magic, to use shorthand - involve different skill sets and ways of thinking. Can they be combined?

We think they can because a handful of leading companies are already assembling the ingredients of just such a combination. These companies focus relentlessly on their marketing priorities and their target customers, never getting sidetracked. To implement the priorities, however, they are heading down new paths. They figure out how to integrate the torrents of data into a single overarching view of the customer.

They view marketing not through the usual categories, such as channels, media and so on, but through the omnichannel perspective of consumers. Instead of relying on what happened last year, they run sophisticated tests to determine what will be most effective in the future. After all, what works with one person won’t necessarily work with another.

They continue to tell stories about their brand and to connect with consumers’ hearts as well as heads, but they do so in new ways. Contrary to the inclination of many marketers, moreover, they do not put measurement of ROI at the top of their agenda. When they can’t measure the ROI of an innovative effort, they are willing to let instinct guide their efforts - at least for a while.

In a survey of marketers at 436 companies in the US and Canada, we compared the leaders, or those who were increasing sales and market share, to the laggards, who were losing sales and share. The leaders were three times as likely to use data in their decisions. And they were twice as likely to own their own creative capabilities, the ultimate source of great stories and memorable messages (see infographic).

Let’s look more closely at the central elements of their math-plus-magic approach and how these marketers use it to stay connected to customers.

1. A single smart view of the customer

Most major companies these days have access to large quantities of information about their customers. Marketers can capture and analyse sales patterns in ever-greater detail. They can track someone’s locations and transaction histories. They can draw on new sources of information, such as what people are saying about the company on social media.

Because data flows into a company in real time, they can see what their customers are up to right now. In nearly every case, however, this data sits in different places - a company’s legacy CRM systems, its loyalty program databases, new cloud-based applications, third-party servers - and can be hard to access. Sometimes marketers must wait in line to get the data they need served up to them by IT.

The first step toward a single smart view involves ending the traditional turf wars between marketing, IT and other functions. People from each group need to come together to share priorities and develop an overall plan. The next step is creating the new integrated customer records, a process that generally goes by the name of master data management (MDM). An MDM system sits on top of existing databases, capturing everything from store traffic patterns and online behavior to comments on social media. Every interaction enters the system in real time, and users of the system can tap into it from wherever they happen to be.

2. Digical experiences—and Digical marketing

Companies now provide all sorts of what Bain calls ‘Digical’ experiences - products or services that combine digital and physical elements and thereby create new sources of value for the business. Google’s Internet-connected Nest thermostat and similar devices reshape the experience of maintaining a home. Disney’s MyMagic+ system transforms the experience of visiting one of the company’s theme parks. Retail shopping, in particular, is undergoing a Digical transformation as consumers move seamlessly from online shopping to physical shopping and back again.

Digical marketers use new sources of information to learn what annoys customers and what delights them. Building on their unified data files, they create consistent messages and experiences for customers across every platform. They use digital data to enhance the physical experience and vice versa, and they adapt quickly to changes in customer behaviors and preferences. Of course, they also augment the master file continuously with each new customer interaction.

The result is a kind of digital magic because experiences like these make customers feel that the company knows what they want and helps them find it. It allows marketers to not just create seamless, personalized experiences but also to do what digital-native companies have always done: test, learn, adapt and test again.

3. Relentless testing and learning

Digital marketers at companies such as Netflix and Amazon constantly experiment with offers, pricing strategies, website design elements and countless other variables. Continuous testing infuses marketing with a dynamic element, allowing marketers to learn more every day about their customers’ priorities and behaviours. It also creates an environment in which experimentation and innovation are the norm.

A smart view of the customer augmented and refreshed by Digical experiences enables physical-world marketers to do nearly as much testing and learning as their online counterparts. Instead of depending on historical data, they can create future-oriented hypotheses. They no longer have to bet heavily on one set of messages because they are essentially transforming traditional one-way marketing communication with customers into two-way communication. When they listen to what customers tell them, they can respond accordingly.

Realism about ROI

Today’s math-driven environment has awakened marketers’ inner CFO. At last, the thinking runs, we can finally track the ROI of every initiative and campaign. We will know exactly what the payoff of our efforts will be. Real CFOs echo this belief and pressure marketers to gauge the financial effects of their every move, especially as the scale of spending on marketing technology grows sharply.

The trouble is that the marketing world itself is changing rapidly, and many new opportunities don’t lend themselves to easy ROI calculations. The leaders, we have found, recognise that it is just as important to experiment as it is to hold themselves to strict ROI requirements.

3 things you can start tomorrow

Marketing has become complex, and marketers must find their way through many new technologies and opportunities. But the leaders seem to maintain level heads in the midst of all this activity. They use the new technologies and even expand on them through MDM and other methods. They capitalise on the opportunities provided by Digical products and services, such as the ability to test and learn quickly and comprehensively. And they avoid a rigid focus on ROI lest it hold them back.

Distilling their approach into three things that other companies can act on, the list might look like the following:

1. Paint a holistic picture of the customer: Work on integrating your data so that you can assemble it into a more complete portrait. Supplement the data with human interaction, including direct customer feedback.

2. Encourage emotions: Marketing has become a two-way street, with customers talking back to companies through Facebook, Twitter and many other channels. Much of this communication will be emotional, but you can’t respond to emotions purely with tweaks to your offers. You need some magic, a mix of the unexpected with the occasional “Wow!”

3. Stay nimble and be bold: In fast-changing markets, you can be the first to try something new. The ‘learn’ in test-and-learn means being able to discard what isn’t working and devise more effective efforts. New opportunities are often untried, and only the fast and fearless will be able to take advantage of these opportunities.

The marketing world of Mad Men was entertaining, but it’s gone forever. The new world of math-and-magic marketing is at least as interesting, and is proving to be a great deal more effective.

This article originally appeared in CMO Council’s PeerSphere magazine, July 2016.

You can download the full brief from Bain & Co here.

About the authors
Laura Beaudin is a partner in Bain & Company’s Customer Strategy and Marketing practice, leading the practice’s Marketing Excellence work. She is based in San Francisco. Mark Brinda is a partner in Bain’s Technology, Media and Telecommunications practice, based in New York. Jason Ding is a partner in the Customer Strategy and Marketing practice, based in Beijing.

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