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Business News/ Opinion / Online-views/  Time for data-driven marketing decisions
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Time for data-driven marketing decisions

With the Internet of Things, digital and mobile devices, the amount of data that is coming to companies is unbelievable, but the key to success is the effective data use

Rajkumar Venkatesan, professor of business administration the University of Virginia believes that Netflix is actually a data analytics company that happens to be in the media business because it uses data it gathers on what people watch to evaluate what content to buy. Photo: ReutersPremium
Rajkumar Venkatesan, professor of business administration the University of Virginia believes that Netflix is actually a data analytics company that happens to be in the media business because it uses data it gathers on what people watch to evaluate what content to buy. Photo: Reuters

If you thought Netflix was a simple services firm that delivers video on demand, think again. Rajkumar Venkatesan, professor of business administration at Darden School of Business, University of Virginia, would have you believe that Netflix is actually a data analytics company that happens to be in the media business. Its actual capability is analytics, says Venkatesan, because it uses data it gathers on what people watch to evaluate what content to buy. And it is very good at it, he adds.

Venkatesan should know. For someone who taught database marketing, marketing research and quantitative marketing models to graduate students at the University of Connecticut before joining Darden, he is obsessed with analytics and fruitful use of data. The professor was in India recently to take off-site classes for the global executive MBA programme where international students and faculty work on case studies. While this was Venkatesan’s fifth year with the global executive MBA programme held in Mumbai and Delhi, he also got his first teaching assignment at the Indian School of Business, Hyderabad.

With a book on marketing analytics behind him, Venkatesan, who has worked with a bunch of companies in technology, pharma and retail sectors, is all for data-driven decisions in marketing. He says that with the Internet of Things, and digital and mobile devices, the amount of data that is coming to companies is unbelievable. But the key to success is the effective use of this data.

For instance, currently most companies know all about their product sales—stock-keeping units (SKUs)/models, prices, discounts, geography, when (down to day and time) and to which distributors/dealers the products are sold. They can generate the most sophisticated MIS (management information system) and analysis on their sales performance, and can forecast it quite accurately. This data is a lifeline for companies. Without it, they would lose to their competitors.

However, the missing link in the sales data is the information on the end-consumer who bought the product. This information is increasingly becoming the key to help improve marketing RoI (return on investment)—target the right consumer at the right time with the right SKU.

To be sure, there’s a lot of talk on the kind of data that is available. But much less is known about its strategic value and how it affects company strategy. Venkatesan says that while collecting data may be great, it is effective only if you connect it to strategy. He recommends a five-step methodology to build an analytics culture in the company that includes a strategic challenge, matrix, data, tools and transformation. What analytics eventually does is change the outcomes, he argues, and then you can choose the outcome that suits you best.

To support his argument, Venkatesan cites one of his case studies on Dunia—a financial services company—in Abu Dhabi. The call centre of the company was selling credit cards and looking at the risk score of the customers. The call centre executives were going after people who responded easily to their phone calls.

But as it turned out, the people who responded to credit card offers the earliest were not the best customers in terms of future value. “My analysis showed that some people take time to respond but once they respond, their value is so high that it is worth putting in the extra effort. If this has to be taken to the implementation stage, they have to go to the call centre and change the way the call centre calls," says Venkatesan. That is not all. The incentives for the call centre employees also need to change. If their reward is based on the number of sign-ups, that needs to change. So that is the transformation part, he explains.

Clearly, analytics is a critical issue in the world of marketing right now, across product and service categories. It is the lifeline for retailers as well, especially for their loyalty programmes, which are becoming increasingly challenging. But Venkatesan says he believes that loyalty programmes are still important if they come with relevant offers for customers. He’s all praise for the Starbucks app in the US which has become hugely popular as it offers points, rewards and payment options—everything integrated into one system.

To be sure, consumer data gives a “face" to the sales numbers. If used well, it can work as a critical guidepost on how companies market their products and services. Besides, it also opens up an opportunity to interact with the consumers, build stronger relationships, loyalty and repeat business.

Data has immense power and if used effectively, can be transformative. Online/digital space is already using the transformative power of data to track consumer navigation across the Net, study his spending patterns, and use it to sell or recommend the right products and services. It’s called Big Data, and the power of Big Data has just started to unfold.

So are companies able to use Big Data sensibly? These are early days yet. But with time and investment, its sensible usage will only go up. And the companies which do not use it will definitely be left behind.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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Published: 28 Jan 2016, 12:44 AM IST
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