How to Use Big Data to Win Customers, Beat Competitors, and Boost Profits

TAKING ADVANTAGE OF BIG DATA

When used car dealer Les Kelley launched the Kelley Blue Book, his target customers were used car dealers (and insurance companies and banks that made car loans). Dealers could consult the book and, based on the information it contained, have an idea of what price tag to put on their merchandise. Today, the target customers for the Kelley Blue Book, now free online, are used car buyers who consult it to have an idea of what they should pay for the used car they are buying.

The customer flip for Kelley’s Blue Book exemplifies the switch in power in the purchasing process from seller to buyer. Buyers are no longer dependent on sellers to give them the information they need to make a purchasing decision. So in this new purchasing paradigm, are sellers completely powerless?

The answer is no, and the reason, in large part, is what is commonly known as “big data.” As explained in The Big Data-Driven Business by LinkedIn marketing executives Russell Glass and Sean Callahan, in today’s world, buyers don’t have to go to sellers in order to find the information they need to make the right decisions. Instead, they can use a variety of digital search channels to gather any information they need and then approach the sellers.

However, write Glass and Callahan, the same digital capability that allows buyers to take the initiative allows sellers to follow what the buyers are doing. They track the websites and pages within those sites that buyers or potential buyers are visiting. They also track purchasing trends, which merchandise is popular at a given time, which items lead to the purchase of other items and a whole host of other customer-related data — so much data, in fact, that we now refer to all of this information as “big data.”

Such extensive tracking takes some sophisticated software, of course. This software, write Glass and Callahan, is what is known as the “marketing stack.”

The marketing stack includes marketing automation software, business intelligence databases, CRM systems, content management systems (which allow marketers to take over updating digital marketing content with minimal IT involvement), blogging and data management platforms, analytics tools, social media management platforms, search engine platforms, and other systems and software that, in essence, enable marketers to manage the accumulation and analysis of big data.

Principles for the Data-Driven Company

It may seem, from the litany of technological systems just cited, that establishing a big data-driven company is complex and expensive. It can indeed be complex. The chief marketing officer and the chief information officer must work closely together if a company is going to have any success at using big data. Some companies have started hiring “chief marketing technologists” solely responsible for the technology side of marketing. The bottom line is that all marketing professionals today must be at least knowledgeable about the technological components of the marketing function.

Using big data does not have to be expensive, however. In one of the most insightful chapters, Glass and Callahan offer 11 principles for successfully making a business more data-driven. Among the principles are, determine what you want to know about your customers and prospects; start small; don’t bet everything on technology (figure out first what you need, not what technology you want to use); and hire the right people — forget the art schools, and think about Star Trek conventions instead.

Glass, who heads B2B marketing at LinkedIn, and Callahan, LinkedIn’s senior manager for content marketing, present a guide for marketers in companies of all sizes.

Rediscovering the Art of Brand Marketing

MARKETING IN A DIGITAL WORLD

There are a lot of shiny objects in the world of marketing today. Traditional marketing channels such as television and print media ads are being outshone by the flashier marketing opportunities of the digital age, including big data mining and social media marketing. Many marketing experts happily sound the death knell of traditional marketing: television ads might have worked in the time of the giant television console with its rabbit ears, but this is the age of Hulu and Netflix.

In a new book titled Twitter Is Not a Strategy, Tom Doctoroff, CEO of J. Walter Thompson Asia, begs to differ. Given that global television advertising revenues are forecast to grow from $162 billion in 2012 to more than $200 billion in 2017, according to PriceWaterhouseCoopers, it seems a bit disingenuous, he writes, to say that television advertising is dead. The world is indeed changing, but it’s not a question of the past being replaced by the future.

As Doctoroff explains, traditional marketing was based on top-down positioning. The brands controlled the message and the channel, and customers were passive recipients. The digital age has given the customer more power in the process, which is now more bottom-up than top-down. Many marketing books tout this dichotomy as mutually exclusive; in other words, bottom-up has replaced top-down marketing. For Doctoroff, this is a false dichotomy. Marketing today is both bottom-up and top-down. That is why social media marketing is booming, but so is television ad purchasing.

Successful Marketing Today

The secret to successful marketing today, writes Doctoroff, is to know how to meld the two approaches together. “We must permit consumers to participate with brands without surrendering the ability to manage the message and what people say about their products,” he writes. The goal of marketers is to develop a life-long relationship between the brand and consumers.

To help companies enable customer engagement while managing the message, Doctoroff offers a framework for marketing based on four “interconnected modules.”

The first two modules are conceptual and focus on customer insight, on one hand, and the brand idea, on the other. No matter how much technology evolves, customer insight must remain at the core of marketing, he writes. Doctoroff describes the human truths shared by all and nation- or region-specific cultural truths, and explains how brands succeed when they can resolve the conflicts among and within these two sets of truths. Mont Blanc pens, for example, are very successful in China because, he writes, the luxury brand reconciles two competing cultural truths: “the desire to project accomplishments but also the need to be understated, to obey the rules.”

The brand idea, in Doctoroff’s words, “crystallizes the long-term relationship between consumer and brand that remains consistent yet evolves over time.” The brand idea emerges from the “fusion” between customer insight and a unique brand offer (UBO). The UBO, he writes, is based on product truths –– physical or emotional characteristics that differentiate the product, and brand truths, which build brand equity in the minds of consumers.

The executional modules of Doctoroff’s framework are engagement ideas, the ideas that will spark consumers to become engaged with the brand, and engagement planning, which is focused on bringing the brand into the lives of consumers. Successful engagement ideas connect to the three levels of passion, he writes: the individual-focused “me,” the community-focused “we” and the global-focused “the world.” For engagement planning, Doctoroff offers a step-by-step engagement system based on marketing communication at every step of the buying process: trigger (the unmet need), consideration, comparison, preference (choosing the brand), purchase and experience.

The core message of Twitter Is Not a Strategy is clearly conveyed when Doctoroff quotes Clive Sirkin, Kimberly-Clark’s global Chief Marketing Officer, who says, “We don’t believe in digital marketing. We believe in marketing in a digital world, and there’s a huge difference.” Twitter Is Not a Strategy also benefits from the global perspective that Doctoroff brings to the subject. His expertise in both China and emerging markets will be of immense value to companies looking to expand into these markets. Doctoroff has written a balanced, informed guide to branding in the 21st century.

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How to Build Habit-Forming Products

FOUR STEPS TO BUILD HABIT-FORMING PRODUCTS

When was the last time you checked your smartphone? If you’re like most people, almost certainly within the last hour. What about your Twitter? Or your Facebook page?

The fact is that smartphone manufacturers, Twitter and Facebook have all created products that are, in the words of consultant and entrepreneur Nir Eyal, “habit-forming.” As Eyal explains in a new book, Hooked: How to Build Habit-Forming Products, a habit is in fact a shortcut for the brain. A habit is an automatic, almost unconscious reaction by the brain to a trigger.

Habit-forming products are an obvious boon to business. Consumers automatically use the product on their own, again and again, without any prompting from ads or marketing. Of course, not all industries need habit-forming products. The sale of life insurance, for example, requires salespeople, advertising and word of mouth. There is no habit for the consumer to acquire.

But for many companies, success depends on developing such habit-forming products. For those companies, Nir Eyal offers a four-step circular framework, which he calls the “Hook Model,” to ensure that consumers keep returning to their products, over and over again.

The Hook Model

The first phase of the hook model is the trigger. This is the spark to the entire process. Triggers can either be external or internal. External triggers might be an email, website link or even an app icon.

External triggers propel consumers through the loop of the model in the hope that eventually consumers will no longer need prompting from external triggers; instead, the prompting comes from internal triggers — triggers that come from within the consumer. Internal triggers are formed slowly, taking weeks or even months of frequent usage. Eventually, however, the consumer automatically turns to the product whenever a particular emotion or need arises.

The second phase of the model is the action that the consumer takes as a result of the trigger. Building on the behavioral work of Stanford University professor B.J. Fogg, Eyal explains that consumers take action when there is both motivation and ability. External triggers will seek to spark motivation — an ad will seek to give a reason for the consumer to use the product — but it is internal motivation that in the end proves most powerful. Motivation without ability is useless, however, which is why companies work hard to make the use of the product as effortless as possible.

Variable reward is the third phase of the Hook Model. In traditional terms, consumers take action because they want a problem solved. The key word in Eyal’s definition, however, is “variable.” The consumer expects something as a result of the action, but exactly what that reward might be varies, and this is what keeps the consumer returning again and again to the product or service.

The last phase of the Hook Model is investment. In this phase, the consumer will put something — time, effort, social capital, money — that encourages the consumer to continue with the Hook cycle. Research has shown that the more consumers invest time and effort into a product (or service), the more they value that product. An additional motivation to return to the product is “stored value.” The more songs you download to iTunes, the more likely you are to return to iTunes to listen to them.

Pinterest, the online bulletin board, exemplifies the four stages of the Hook Model. The external trigger that sparks the consumer’s engagement might be a recommendation from a friend or reading about the application in books (or book reviews). The consumer takes action by registering on the site. The variable rewards include seeing what others have posted, reviewing what one has posted (after the first cycle), and the comments and likes to those posts. The consumer now makes a further investment by posting new images or commenting, liking or sharing (repinning) other posts. “Each pin, repin, like or comment gives Pinterest tacit permission to contact the user with a notification when someone else contributes to the thread, triggering the desire to visit the site again to learn more,” the authors write.

Filled with examples and anchored by the Hook Model, Hooked is a hands-on guide for companies seeking to emulate the amazing success of Pinterest, Twitter and others and build their own habit-forming products.

The Conscious Business

I decided to use today’s blog to look at a trend we’ve been seeing in recent business books – Conscious Business. This is by no means a new trend, with some people crediting it’s origin to Anita Roddick of the Body Shop back in 1976. But there seems to be renewed interest in the subject lately.

“The term conscious business implies that a business will seek to be conscious of its impact on the world in various spheres, and continue this inquiry over time. It is concerned with both its impact on a human’s inner and outer world as well as animal and environmental well-being. Furthermore, a conscious business considers both short-term and long-term effects of its actions or inactions. A conscious business evolves as does the methods that a business can and chooses to be of benefit to the world and to function with awareness.” – Wikipedia

Among the books published recently that have caught our attention are:
Conscious Capitalism – with John Mackey CEO of Whole Foods
At once a bold defense and reimagining of capitalism and a blueprint for a new system for doing business, Conscious Capitalism is for anyone hoping to build a more cooperative, humane, and positive future.

Conscious Business with Fred Kofman (this is a new edition)
Conscious Business presents breakthrough techniques to help you and the people in your company create a workplace founded in unconditional responsibility and unflinching integrity, anchored by authentic communication and impeccable commitments, and guided by right leadership

The 15 Commitments of Conscious Leadership with Jim Dethmer
These pages contain a comprehensive road map to guide you to shift from fear-based to trust-based leadership. Once you learn and start practicing conscious leadership you’ll get results in the form of more energy, clarity, focus and healthier relationships.

The Conscious Leader with Shelley Reciniello – we hosted a webinar with her in December.
The Conscious Leader describes the nine most fundamental but often neglected truths about human beings and their workplace behavior in jargon-free, accessible concepts and examples. With humor and inspiration, Dr. Reciniello provides you with the principles and practices necessary for conscious leadership which you can immediately apply in your organizations.

Uncontainable with Kip Tindell, CEO of The Container Store
In Uncontainable, Tindell reveals his approach for building a business where everyone associated with it thrives through embodying the tenets of Conscious Capitalism. Tindell’s seven Foundation Principles are the roadmap that drives everyone at The Container Store to achieve the goals of the company.

It would seem that the concept of being a conscious business is becoming integrated into companies of all sizes as a matter of survival. Consumers are voting for these types of companies with their purchases, so businesses are under pressure to get it right. What is your business doing in the area of conscious business practices?

A Journey from Corner Store to Corner Office

FROM THE CORNER DELI TO THE CORNER OFFICE

In Winners Dream, SAP CEO Bill McDermott describes his journey from his blue-collar roots in Amityville, New York to becoming CEO of the largest business software company in the world. Unlike many CEO books, Winners Dream is structured not as a book of lessons but as a straightforward chronological autobiography — although nearly every page is infused with business wisdom told through compelling stories.

Know Your Customer

One of the earliest business lessons McDermott offers comes from when McDermott is not even out of high school. When the small deli where he works is emptied out by robbers, the owner decides to sell what is now just a shell. McDermott, with help from his parents and after talking down the price, buys the tiny store, stocks it and starts hunting for customers — not an easy task with the competition of two major convenience store chains within a few blocks. “I was David amidst Goliaths,” McDermott writes. “What, I thought, did I have that the Goliaths did not? What could my little deli give people that 7-Eleven and Finast could not?” To get the answers to these questions, McDermott realized he had to ask another question: “Who is my customer?”

The young high school businessman determined that he had three types of customers: senior citizens from a nearby senior home, local blue collar workers and high school kids hanging out after school. For the seniors, many of whom did not like to leave their homes, McDermott set up a delivery service. For the blue-collar workers, many of whom were paid on Friday and broke on Sunday, he set up a credit system — they could buy on credit during the week but had to pay with the next Friday paycheck. For the high school students, he offered something exceedingly simple: they could all go in the store. At that time, the major chains only let students in the stores in small groups because of the fear of stealing. Thus, McDermott writes, kids with money in their pocket were forced to wait out in the cold.

McDermott’s high school experience offered him a clear lesson: To succeed in business, you must give your customers what they want — and that means you must know what they need. It was a lesson that would guide him when he had moved far from the corner deli.

Drive and Empathy

A successful retailer even in high school, McDermott was clearly born with a fine business acumen. But he also inherited a very strong work ethic from his parents and was driven by ambition and confidence. When he applied to Xerox and was told that HR would be contacting him with a response, McDermott asked the last interviewer to hire him on the spot instead — which he did.

For McDermott, passion, planning and confidence are key success factors for a business career. But perhaps even more important is empathy — understanding the needs of the people you sell to and you work with. It was empathy that made his small deli a success during high school, and when in 2010, as SAP CEO, he was working on a new strategy to strengthen the future of the largest business software company in the world, the questions he asked are surprisingly similar: Who exactly are our customers, and what do they want? For SAP, customers were any possible end users of technology. And what they wanted was compatibility with multiple mobile devices and access to cloud computing — and those are the areas in which SAP would move forward.

Winners Dream is subtitled A Journey from Corner Store to Corner Office. It is a journey that illustrates, with every step, inspirational business guidance and solid leadership lessons for anyone striving for a similar journey in their lives.