•Lecture 4 content: CRM, Big Data and importance of Marketing Analytics

There is again no activity today.

•To maintain sanity: I will cover half the lecture content today (because it
can lead to information overload), remaining content, I will cover in Week 6
workshop .

•Break in between the lecture today: It’s a lot to take in today, so it is right
that you guys deserve a break for 5 minutes in between the lecture delivery
content. Just knock me in and tell me to stop , when you feel the need (Do
not tell me to stop after 10 minutes of listening)
 LET’S GET STARTED WITH
TODAY’S LECTURE CONTENT 
 4

CHAPTER 5:
CRM, BIG DATA, AND
MARKETING ANALYTICS

Copyright © McGraw-Hill Education.  All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Part 2: Use Information to Drive Marketing Decisions

 Learning Objectives

Define CRM and articulate its objectives and capabilities.

Understand the concept of customer touchpoints and why they are critical in
CRM.

Identify and appreciate the types of data used in marketing management

decision making.

Recognize key approaches to marketing analytics.

Understand the concept of dashboard and how it improves marketing

planning for a firm.
 Objectives and Capabilities of CRM

A comprehensive business model for increasing

revenues and profits by focusing on customers.
No one department owns CRM.
Must have the support of senior management.
Cuts across the entire organization but most used by
marketing, sales, and customer service.
Drives the firm to be customer-centric.
Objectives of CRM
 Customer Satisfaction
and Loyalty

Customer satisfaction means that the offering meets

or exceeds the customer’s ___________.
Customer loyalty implies repeat purchases.
• High satisfaction
• High level of perceived value
• Strong relationship with the brand
 CRM Metrics

Customer lifetime value

• Relationships pay off in terms of cost savings, revenue
growth, profits, referrals
Return on customer investment can be calculated
to determine if the fire should fire a customer.
Customer Touchpoints: Interactivity

Interactive touchpoints are two-way and have direct

interface between customers and the sales force,
telemarketer, customer service rep, or interactive
website.
Non-interactive touchpoints are static such as direct
mail or website data entry form.
 Customer Touchpoints:
Considerations

Where are all potential touchpoints?

What are specific objectives for information collected
at each touchpoint?
How will information be collected and integrated into
customer database?
What kind of policies will govern how the
information will be accessed and used?
 Regulation of
Customer Information

Sensitive customer information like social security

numbers has led to heavy regulation.
Firms must tell customers how that information and
be used and allow them to opt out.
Firms need to be aware of the potential for abuse.
Customers must feel they can trust firms to protect
sensitive information.
Marketers can use the firm’s security strategy to build
loyalty to the brand.
Customer-Centric Culture

Formalization means that structure, processes and

tools, and managerial knowledge and commitment
are formally established in support of the culture.
Customer mind-set means all employees see both
internal and external customer satisfaction as central.
 Big Data and Marketing Decision Making

Big Data: the every-increasing quantity and

complexity of data being continuously produced by
technological sources such as laptops, smartphones,
and other smart devices
Four V’s: Characteristics of Big Data
1. Volume: the amount of data produced in bytes
2. Velocity: the frequency and speed of analysis
3. Variety: different types of data
4. Veracity: reliability and validity
 The Value of Big Data

Big Data helps marketers better understand customer

behavior.
Value is considered the fifth V by some managers.
Allows marketing managers to identify:
• Experiences of customers in the purchasing process
• Customer’s touchpoints
• How customers interact and experience different
products and services
 Categories of Big Data

• Generates logical organization.

• Easy to categorize.
Structured
• Numeric or text limited to certain input
values (male/female).

• No specific organizational structure.

• Rich source of customer insights.
Unstructured
• Social media posts, and customer service rep,
and sales force interactions.
 Categories of Big Data

Automated technologies are used to extract structured

data from unstructured.
Not all data neatly fits into these two categories.
Semi-structured data has some elements that
machines can understand but other elements
machines cannot understand.
• Example: XML files have tags (structured data) but
need more analysis to create other data in the files
 Big Data Sources

Wide range of sources.

Valuable sources capture data on current and
potential customers that allow the marketer to act.
• Business systems
• Social media platforms
• Internet-connected devices
• Mobile apps
• Commercial entities
• Government entities
 Data from Business Systems

CRM systems are often the central hub of data and can
integrate with other applications.
Allows a holistic view of the customer.
Point of sales systems and online transaction.
Processing systems help determine a customer’s relative
value and which offerings would appeal to the customer.
Web-related activity: Every action of a customer is
captured in a web log.
Data from Social Media Platforms

User profiles and posts create both structured and

unstructured data (for example, posts, responses to
posts, emojis, images, videos).
Provide insights into consumer attitudes and interests.
Analysis of with whom the user communicates
allows marketers to understand individuals or groups
with high levels of influence.
 Data from Internet Connected
Devices

Smart devices have sensors that allow for data

collection.
They provide an understanding of how customers use
products and services.
They may help design future features and figure out
features that are not being fully utilized.
Identifying underutilized features may allow
marketers to add value to the customer experience.
 Data from Mobile Apps

Different customers use apps differently.

Identify which app elements are most effective.
Can help customers improve in-store shopping.
Understand customer’s response to prices.
Gain insights into a blend of online and offline
experiences.
Identify cross-promotional opportunities.
 Data from Commercial Entities

Some companies like credit card companies and

retailers collect big data and sell to others.
Data are aggregated so an individual’s purchasing
pattern and history are not sold.
 Data from Government Agencies

Helps marketers understand demographic trends.

Federal and state agencies have improved access to
data.
• U.S. Bureau of Labor Statistics
• Census data
 Marketing Analytics

Marketing analytics: A set of methods facilitated by

technology that utilize individual-level and market-
level data to identify and communicate meaningful
patters within the data for the purpose of improving
marketing-related decisions.
Google users input 4 million queries per minute and
Google processes 20 million petabytes of data per day
(petabyte = 1 million gigs).
Facebook users post 2 ½ million pieces of content per
day.
 Marketing Analytic Approaches

Approaches depend on the complexity of the

analyses.
A marketing analyst is a highly skilled expert who
may be required for complex data.
Types of marketing analytics:
• Descriptive
• Diagnostic
• Predictive
• Prescriptive
 Descriptive Analytics

Descriptive analytics uses data to provide summary

insights.
Raw data is transformed into measurements.
Often presented in a visual format like histrograms or
pie charts.
Appropriate first step before more complex and
expensive analyses.
 Diagnostic Analytics

Diagnostic analytics uses data to explore

relationships between different marketing factors that
influence the firm’s performance.
• Example: Advertising frequency or placement that the
firm can control can influence sales.
Diagnostic analytics uses linear regression.
• Example: How do the number of conversations in an
online forum about a new TV show impact ratings?
 Predictive Analytics

Predictive analytics utilizes data to make predictions

about future marketing outcomes of interest.
Some use historical data to extrapolate into the future.
Others make predictions between a set of factors and an
outcome of influencing factors.
Example: American Express looks at loyalty indicators
to proactively contact potential at-risk customers.
 Prescriptive Analytics

Prescriptive analytics involves determining the

optimal level of marketing relevant factors for a
specific context by considering how adjusting their
levels in varying ways will impact different marketing
outcomes.
Most advanced and costly; draws on the other three
approaches.
“What if” questions allows the firm to evaluate the
value of different decisions.
 Marketing Mix Enhancement

The ability to understand the different effects of the

four Ps have on different marketing outcomes.
Big Data provides insight into customer-level data in
large quantities not previously available.
Sentiment analysis allows better understanding of
unstructured data for the general attitude contained in
a message.
Attribution pertains to how to give credit to different
elements of the marketing mix.
 Increased Personalization

Increased personalization is the ability to provide

products, services, and customer experiences based
on an understanding the characteristics of different
customers and of what they value.
Used by digital retailers and digital content providers.
 Recommendation Systems

Content filtering looks at a customer’s past

preferences to make new recommendations.
Collaborative filtering looks at similar customers
and their preferences to make recommendations.
Levels of Granularity
of Personalization
 The Marketing Dashboard

A comprehensive system providing managers with

up-to-the minute information necessary to run their
operation.
Including data on actual sales versus forecast,
progress on marketing plan objectives, distribution
channel effectiveness, sales force productivity, brand
equity evolution, and so on.
 Goals and Elements of a Marketing
Dashboard

An effective dashboard is organic, not static. It

changes as the organization changes.
Goals:
• Diagnostic insight
• Predictive foresight
Key Benefits of a Marketing Dashboard
 Elements of a Marketing Dashboard

• Goals and • Tools

objectives • Diagnostic insight
• Initiative ROI and • Predictive value
resource allocation • Efficiency and
• Brand and customer effectiveness
asset evolution
• Skills
Potential Pitfalls in Marketing Dashboards

Overreliance on “inside-out” measurement.

Too many tactical metrics; not enough strategic
insight.
Forgetting to market the dashboard internally.
 Return On Marketing Investment (ROMI)

Investment decisions in marketing must consider four

basic elements:
1.Level of investment

2.Returns

3.Risks

4.Hurdle rates
 Proceed with Caution

Marketers should embrace the opportunity to quantify

their contributions as ROMI and other marketing
metrics will continue to proliferate.
Using a more holistic dashboard for goal-driven
measurement reduces the downside of focusing on
one or a few metrics.
Marketing is both a science and an art.