Applying Science to the Art of Marketing

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1 Swissotel the Bosphorus, İstanbul / 15 Şubat 2012 Applying Science to the Art of Marketing Erman Akdoğan Business Analytics & Optimization Leader IBM Global Business Services

2 Agenda IBM Global CMO Study Results IBM Customer Analytics Approach Enterprise Marketing Management & Optimization Agenda Social CRM and Mobile Marketing Case Studies

3 Growth Markets Unit Point of View Insights from the Global Chief Marketing Officer Study

4 The 2011 Global CMO Study is part of our C-suite Study series encompassing interviews with more than 15,000 C- suite executives CEO CIO CFO CHRO CSCO CMO

5 In this largest sample of face-to-face CMO interviews, we spoke with more than 1,700 CMOs (760 in GMU) The study represents organizations in 64 countries and 19 industries Sectors Regions 21% Industrial 3% Public 16% Communications 44% Growth markets 17% North America 24% Financial Services 36% Distribution 4% Japan 35% Europe Growth Markets include Latin America, Central and Eastern Europe, Middle East and Africa and Asia Pacific (excluding Japan); n=1734

6 We wanted to understand which underprepared areas are the most critical for CMOs 70 Underpreparedness Percent of CMOs reporting underprepared Marketing Priority Matrix Data explosion Social media Growth of channel and device choices Shifting consumer demographics Financial constraints Factors impacting marketing Percent of CMOs selecting as Top five factors Decreasing brand loyalty Growth market opportunities ROI accountability Customer collaboration and influence Privacy considerations Global outsourcing Regulatory considerations Corporate transparency Mean Source: Q7 Which of the following market factors will have the most impact on your marketing organization over the next 3 to 5 years? n1=1733; Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years? n2=149 to 1141 (n2 = number of respondents who selected the factor as important in Q7)

7 To deal with the broad level of under preparedness, CMOs pointed to three key domains of improvement Deliver value to empowered customers Capture value, measure results Foster lasting connections Marketing must become more adept at managing the magnitude of change now taking place. Otherwise, it will be like going into battle with a Swiss Army knife. Financial services vice president, marketing, US 7

8 Moving from Stretched to Strengthened Deliver value to empowered customers Focus on creating value for customers as individuals Reprioritize investments to mine digital channels to access customers views and use advanced analytics to recognize preferences and trends across every touch point Work with IT to assess potential data and infrastructure exposures, employ tools to secure customer data and update privacy policies to address customers concerns Foster lasting connections Capitalize on new digital channels to stimulate customer conversations and new relationships; use tangible incentives to attract followers Engage with customers throughout the customer lifecycle; build online/offline communities to strengthen your brand Help the enterprise define and activate traits that make it unique and engage the C-suite to meld the internal and external faces of the enterprise Capture value, measure results Use advanced analytics and compelling metrics to improve decision making and to demonstrate accountability Adjust your talent mix to increase technical and financial skills, and grow digital expertise by finding new partners to supplement in-house resources Expand your horizons by enhancing your personal financial, technical and digital savviness

9 Organizations using analytics to drive marketing decisions outperform those that rely on intuition 3x 5.4x Organizations that lead in analytics outperform those who are just beginning to adopt analytics Top Performers are more likely to use an analytic approach over intuition* *within business processes Source: Analytics: The New Path to Value, a joint MIT Sloan Management Review and IBM Institute of Business Value study. Copyright Massachusetts Institute of Technology 2010.

10 These organizations leverage analytics across diverse marketing functions Brand & Market Management General Management Workforce planning and allocation Customer experience Transformed Risk Management Product research & development Customer Service Strategy and business development Sales & Marketing Operations and production Financial Management & budgeting Experienced Aspirational Source: Analytics: The New Path to Value, a joint MIT Sloan Management Review and IBM Institute of Business Value study. Copyright Massachusetts Institute of Technology 2010.

11 Agenda IBM Global CMO Study Results IBM Customer Analytics Approach Enterprise Marketing Management & Optimization Agenda Social CRM and Mobile Marketing Case Studies

12 Watson answered a grand challenge Can we design a computing system that rivals a human s ability to retrieve, analyze and interpret vast amounts of information in real time, arriving at the highest probability correct answer in less than three seconds?

13 Imagine if you had all the answers you need to win Which customers are thinking of leaving? Which offer is more likely to be accepted and brings more value? Which new product has the greatest chance of success? How can I extract insight from all of my information? The ultimate differentiator today is being able to make more informed choices with confidence, to anticipate and shape business outcomes.

14 Customers today are more empowered and in control Customers now have unlimited access to information and can instantly shareit with the world Social networking and mobile commerce have dramatically changed the dynamic between buyer and seller Customer expectationsof offerings, service, price, delivery, unbiased advice and convenience is soaring This is changing the entire way businesses interact and engage with customers, making it more complex than ever 95 million Number of tweets sent via Twitter each day 75% Percentage of people who believe companies don t tell the truth in advertisements $93 billion Amount in sales missed due to out of stock inventory

15 Organizations are applying analytics to improve decision making in order to redefine their customer value chain Analytics Sophistication Use structuredand unstructured Data Numeric Text Image Captured Detected Inferred Made consumable and accessible to everyone, optimizedfor their specific purpose, at the point of impact, to deliver better decisions and actions through: What happened? How many, how often, where? What exactly is the problem? What actions are needed? What could happen? Simulation What if these trends continue? Forecasting What will happen next if? Predictive Modelling How can we achieve the best outcome? Optimization How can achieve the best outcome and address variability? Stochastic Optimization Audio Video Descriptive Analytics Predictive Analytics Prescriptive Analytics

16 Focusing on three core areas centered around the customer Customer Insight Customer Value Strategy Gaining deep insights, in realtime into customer behavior and needs to anticipate, predict, and shape outcomes What is the customer profile? How do I analyze sentiment and brand perception from public information? Who is most likely to purchase? Which customers are at risk to leave? What is the most effective channel? Customer How to enhance, extend and redefine value as viewed by the customer so you can deliver exactly what your customers want - profitably What are the segments of customers in the current book of business? What can I infer about their values? How do I view segments as assets and invest in them intelligently? How do I communicate the right message through the right mass marketing channel? Customer and Partner Engagement Optimizing customer interaction to build the relationship and differentiate the experience How do I market to the best customers without too many messages? How do I see the stream of contacts customers receive? How to optimize customer contacts given a fixed marketing budget? How to ensure the right service agent interacts with the right caller? How do I better use customer interaction to enhance relationship?

17 IBM offers Customer Analytics consulting, software, and assets to assist clients with initiatives in each area Customer Insight Customer Profiling Customer Value Strategy Merchandizing and Offering Localization Customer and Partner Engagement Touch Stream Optimization Brand Management Next best action / offer Consulting Social Media Monitoring / Analysis Media Mix Optimization Cross Sale Profiling Customer Portfolio Foresight Sales targeting and lead management Campaign Management Attrition Modelling Cross Channel Marketing Customer contacts and request routing Customer Analytics Diagnostic - Business Value Accelerator Software SPSS InfoSphere Warehouse COGNOS ILOG UNICA DB2 Assets Foresight Branding Analysis LIFT MNBA MEO RAMP

18 Agenda IBM Global CMO Study Results IBM Customer Analytics Approach Enterprise Marketing Management & Optimization Agenda Social CRM and Mobile Marketing Case Studies

19 What Is Enterprise Marketing Management (EMM)? A marketing technology category that supports the end-to-end marketing function across all marketing disciplines. Marketing automation Campaign management Interactive marketing Interaction management Marketing resource management Lead management Event-based marketing

20 IBM Unica Enterprise Marketing Management Help marketers create dialogues with customers Send the right message, to the right customer, at the right time, through the right channel over-and-over again Right channel = any channel: Online Web site, , Facebook, Twitter, etc. Offline direct mail, catalog, something in the store Outbound Mail, , SMS, telemarketing Inbound Web sites, call centers, POS/stores, kiosks, mobile apps Also, behind the scenes, manage marketing operations efficiently budgets, projects, approvals, digital assets, etc. Measure marketing results and return on investment

21 IBM Unica Enterprise Marketing Management Awareness Decisioning Execution Web & Digital Analytics Event Detection Predictive Analytics Visual Exploration Segmentation Offer Management Interaction History Real-time, Behavioral Targeting Contact Optimization Operations Inbound Integration Lead Routing & Monitoring Distributed Marketing Search/ Display Ad Management Plans & Budgets People & Processes Data & Assets Measurement & Performance

22 More than 2500 Organizations Worldwide Depend on IBM s EMM Solutions Financial Telecom Retail / Catalog Travel / Hospitality Healthcare & Insurance B2B / High Tech

23 MNBA Introduction What does MNBA do? Enriches campaign management and e-commerce systems with innovative analytics that automatically generate marketing action rules, reducing labor and generating better offers Supports phased transition from periodic planned offers to real time online offers Creates a single point of contact for dynamic management of customer profiles, analytical attributes, and segmentations Builds a foundational common infrastructure for analytics required in call centers, e-commerce, mobile advertisement, and more Examples Real time identification of churners coupled with optimized offers to counteract Average Revenue Per User (ARPU) erosion Real time identification of complex situations coupled with best offers to address the situation, e.g. customer charges exceed limit, prepaid balance below threshold Proactive notification and compensation on service failures to high value high risk customers to reduce complaints and churn Real time website offers based on historical transactions coupled with click stream tracking Real time mobile advertisement based on historical transactions coupled with location tracking

24 MNBA Campaign Management functional architecture Outbound Channels Inbound Channels SMS Campaign Management and Execution Portal IVR Mail Call Centers Real time event collection Real time customer situation inference Advanced Customer Analytics Hub CMDP: Constrained Markov Decision Process Next Best Offer Enterprise Product Catalogue Call Centers Other Apps Other Apps Multi Channel Next Best Action CRM IN Billing Other Apps

25 MNBA: Effective Inbound Marketing, Easy Maintenance Effective Inbound Marketing Customer walks-in Agent opens up the offers screen Best action (ie: Increase Satisfaction) that maximizes the overall lifetimevalue of customer is identified And corresponding best offer (ie: New mobile device) which the customer is most likely to accept is identified and shown to agent Agent does not have to pick from a large list of possible offers for the customer Easy Maintenance MBNA processes all available periodically IBM Research Asset, CMDP Engine, auto-creates micro segments based on many variables and sets optimum campaign rules Marketing staff do not have to maintain all the marketing rules. CMDP engine updates and ensures optimality of rules by processing campaign results as well as incoming transaction records.

26 Agenda IBM Global CMO Study Results IBM Customer Analytics Approach Enterprise Marketing Management & Optimization Agenda Social CRM and Mobile Marketing Social CRM Case Studies

27 SMARC: Social-media Micro-segmentation and Real-time Correlation Continuously analyze social social media media data data from from a wide wide range range of of sources, to to construct 360-degree profiles profiles of of entities entities and and leverage them them in in timely timely decision-making Value Proposition Construct a comprehensive view of entities of interest (e.g., people, companies, products) Identify actionable leads in real-time From s of TBs of social media data from sources such as Twitter, blogs, and forums Using Scalable Data-at-Rest and Data-in- Motion analytics platform Advanced analytics technologies (unstructured data analytics, real-time, and predictive analytics)

28 Consumer Intelligence Personal Personal Attributes Attributes Identifiers: name, address, age, Identifiers: name, address, age, gender, occupation gender, occupation Interests: sports, pets, cuisine Interests: sports, pets, cuisine Life Cycle Status: marital, parental Life Cycle Status: marital, parental Social Media based 360-degree Consumer Profiles Timely Timely Insights Insights Intent to buy various products Intent to buy various products Current Location Current Location Products Products Interests Interests Personal preferences of products Personal preferences of products Product Purchase history Product Purchase history Life Life Events Events Life-changing events: relocation, Life-changing events: relocation, having a baby, getting married, getting having a baby, getting married, getting divorced, buying a house divorced, buying a house Relationships Relationships Personal relationships: family, Personal relationships: family, friends and roommates friends and roommates Business relationships: co-workers Business relationships: co-workers and work/interest network and work/interest network Monetizable intent to buy products I need a new digital camera for my food pictures, any I need a new digital camera for my food pictures, any recommendations around 300? recommendations around 300? What should I buy?? A mini laptop with Windows 7 OR a What should I buy?? A mini laptop with Windows 7 OR a Apple MacBook!??! Apple MacBook!??! Location announcements I'm at Starbucks Parque Tezontle I'm at Starbucks Parque Tezontle Life Events College: Off to Stanford for my MBA! Bbye chicago! College: Off to Stanford for my MBA! Bbye chicago! Looks like we'll be moving to New Orleans sooner than I thought. Looks like we'll be moving to New Orleans sooner than I thought. Intent to buy a house I'm thinking about buying a home in Buckingham Estates per a I'm thinking about buying a home in Buckingham Estates per a recommendation. Anyone have advice on that area? #atx recommendation. Anyone have advice on that area? #atx #austinrealestate #austin #austinrealestate #austin

29 Lead Generation Real-time Real-time product product intents enriched with intents enriched with consumer consumer attributes attributes Micro-segmentation Micro-segmentation of of product intents by product intents by occupation occupation Real-time Real-time tracking tracking by by micro-segmentation micro-segmentation Micro-segmentation Micro-segmentation of of consumers by hobbies consumers by hobbies

30 Reputational Risk Assessment Real-time Complaint & Sentiment Tracking Real-time Real-time tracking tracking of of consumer consumer feedback feedback Aggregate Aggregate consumer consumer feedback feedback by by location location Comcast : Feedback by Location Real-time Competitive Intelligence

31 Agenda IBM Global CMO Study Results IBM Customer Analytics Approach Enterprise Marketing Management & Optimization Social CRM and Mobile Marketing Mobile Marketing Case Studies

32 IBM Universal Information Framework An alerting and notification framework for smart phones and tablets A cheaper alternative to SMS Allowing the immediate interaction with back end systems and processes Information can be pushed to the mobile device in real time Timely, accurate, two-way interactions with the end user Messages can be any size and richness, using bandwidth efficiently Direct link to clients, customers and employees Offline storage and interaction capability

33 SMS versus Notifications Mobile SMS Messaging: Expensive, Limited Functionality 0.03 TL minimum per message Up to 160 text characters No images No embedded functionality Small screen sizes No scope to start two-way conversation No cross sell opportunities Smart phone Notifications: Free, Wide Functionality Widely used Rich media capabilities High quality display Equivalent processing power to PCs Immediate interaction possibilities

34 Unlimited Opportunities Cost savings No SMS costs Enable self serve Lower demands on call centres Vivid Campaign Messages Customized Graphics, Images Immediate response

35 Agenda IBM Global CMO Study Results IBM Customer Analytics Approach Enterprise Marketing Management & Optimization Agenda Social CRM and Mobile Marketing Case Studies

36 Applying Customer Analytics helps organizations answer tough marketing and sales questions Social Network Insights Customer Acquisition Customer Retention Loyalty Promotions Cell phone provider: How do social networks effect churn and what are the best intervention strategies with opinion leaders? Retail Bank: How do we increase product ownership and deposit levels by differentiating our branch strategy and localizing our branches? Large US Automotive Company: How do we prevent customer attrition arising from discontinued models, divested brands and dealership closings? Large Airline: How to we target our promotions to the right people to increase loyalty from all levels of our program? Brand Management Sales Force optimization Marketing optimization Contact Center optimization Consumer Products Company: How do we revive a failing brand by better understanding consumer appetite and sentiment toward the product? Large pharmaceutical company: How do we focus sales reps time and promotional budgets on the physicians most likely to prescribe our branded medications? Large Electronics Retailer: How do we reduce $1 billion advertising budget by 40% without adversely effecting revenue? Large Insurer: How do we intelligently assign the right customer service caller to the right CSR to maximize revenue and minimize customer attrition?

37 For more information, please visit ibm.com/bao

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