The data-driven organisation

As I may have mentioned before, I worked a good number of years for DHL (a multinational, wholly owned by Deutsche Post, with an annual turnover of AUD $7bn), in various European senior marketing roles. Since moving to Sydney, I’ve worked on the other side of the fence, both in research and advertising agencies, and, having worked with a number of clients, I’ve come to the view that DHL was a highly data-driven organisation.

I believe many Australian businesses would benefit from instilling a stronger culture of analysis within their organisation, by adopting some of the following practices employed by DHL:

DHL used business goals to drive decision making.

One of the common problems with analysing data is that companies look at their numbers without putting them in the context of their overall business. As a result, when they receive an analytics report (often in a crisp, new binder with colourful, attractive charts) they sift through it without knowing what it means to their bottom line. Data-driven organisations make sure that goals and metrics are defined and agreed on, and they communicate them to everyone according to role.

Data-driven organisations never rely solely on gut feelings.

For sure, data and research will never give you definitive answers. However, making educated decisions based on analytics-driven insight will help you meet your goals. This doesn’t mean you should throw your experience out the window. But you should be honest with yourself about what you really know and don’t know. I have observed many clients mistake their own personal likes and dislikes for insights in customer behaviour.

Successful data driven organisations spend money in the right places and in the right way. As a result they can justify every marketing dollar they invest and tie it to business goals and KPIs.

For example, instead of putting millions of dollars every year into a full website redesign, they target their spending according to where it will be most effective. To do this, you first need to identify which aspects of your website are most important in driving your business. Let’s say you have a lead generation site that tries to get visitors interested in you offerings so they will request a meeting with a sales rep. Every upgrade you make to the site should improve the way it converts your visitors into high quality leads. Your efforts may involve highlighting calls to action or streamlining request forms so that it’s easier to separate good prospects from bad.

Companies like DHL that are serious about data also use analytics to maximise their ROI for online and offline initiatives. If you have an underperforming marketing campaign, you should reallocate resources to areas that have a better probability of success. That way you’ll always be sure you’re investing wisely and strategically in areas that drive your business goals.

In a data-driven organisation, every team, business unit and individual operates under a unified, global set of standards.

To do this, you need to set overall business goals and metrics. Then you assign different groups in the company their own targets and metrics based on how their works impacts the top-level goals. This process continues down the chain of command until it reaches individual employees. In the end, everyone is aware of how their actions contribute to the success of the company. I’ve found that once people and departments have clear and specific metrics to define their success, they tend to have an entirely different (and often much more motivated) approach to their work.

Whenever a data-driven organisation launches an initiative or campaign, it has already put together a forecast of its potential impact on the business and bottom line. When these projects are complete, the organisation also wants to know how the outcome of the project compared to earlier estimates. For this, you need to include a full post-launch analysis in your process. You should not only focus on the outcome but also use the opportunity to look at the forecasting process. Are you making accurate predications and if not, why?

Market research is under threat of extinction

It’s now widely acknowledged that human behaviour is causing climate change. If we don’t stop polluting the earth’s sea, there’ll be no more fish in the sea. If we don’t stop polluting the atmosphere, we’re heading for drought and famine and many more parts of the world will be under water.

Similarly, the ecology of market research is under threat of extinction. In 2007, the Advertising Age in the US reported that 50% of respondents come from less than 5% of the population. And 0.25% of the population supplies more than 32% of responses to online surveys. Clearly, this will not give us a reliable basis to make important business decisions. There appears to be a dangerous slide taking place where market research is dependent on a small number of professional respondents. This means we’ll not have a representative sample that reflects reality. Why? Well as the Advertising Age article put it we’re in a Catch 22 – “No-one really knows whether people who don’t answer surveys are similar to those who do. Because they don’t answer surveys”.

There is an interesting dichotomy here. Many people are willing to share their opinions and views via blogs and online forums, but not so willing to take part in market research surveys. Let’s face it – market research doesn’t have a good name. Ask around what people think of market research and their unlikely to say that it’s about businesses understanding their customers better so they can provide better products and services. Many people just feel like their being played – some are asked to participate and then later get harassed by sales calls, some are called/emailed out of the blue without opting in to participate. Respondents give their views but nothing changes, like the bank still treats them harshly and charges an exorbitant fee when they go overdrawn a few dollars.

So how can we use the digital environment to enhance respondent engagement, and what measures can we take to ensure market research has a sustainable future?

Over recent years, there has been a shift from telephone to online surveys. This has been driven by a number of factors including reduced cost. Many online panels have been created. The better research operators recruit a good number of their panel offline to ensure the panel is representative of the population. They make it clear to their panellists that their details will not be passed on and will be used for market research purposes only. They make it clear that panellists will only take part in approx. 6 surveys a year, and are not paid per survey. Essentially, the better panels are compliant with ESOMAR guidelines.

Perhaps the main benefit of online panels is that it helps researchers to build a trusting relationship with respondents. A panel website with clear communication and the opportunity to feedback on surveys offers vital reassurance for respondents and enhances their engagement with the operator and the survey. Rather than a financial reward per completed survey which encourages professional respondents, entries into a prize draw should be considered or perhaps a non-financial reward.

A good panel should seek to establish a sense of community – panelists want a sense of belonging to something worthwhile and valued. They want to be part of the process in developing a user friendly and effective survey. Co-operation depends not just on the now, but how the respondent feels about previous surveys. If participants know that this is an ongoing communication, not just a one-off invitation to participate, then they are more likely to give of their best.

We also need to tailor our research approach to the needs of the specific audience to remove some of the obstacles of participation. There is an array of data collection interfaces available from SMS polls to blogs to asynchronous online discussions.

Mixed mode data collection may be appropriate, for example, where it is important to get a representation of the entire population and not just the research population. An online data collection method might be complemented by an offline method, combined with propensity weighting, which takes account of demographics, beliefs and attitudes.

The development of the web has triggered a social change where consumers are more informed, involved and connected. Marketing is no longer about one-way communication; we seek to engage with consumers and encourage a two-way dialogue with the brand. Research should reflect this too. Rather than ‘respondents’ we should talk about ‘participants’, which suggests a two-way interaction.

We should look to be more creative in engaging with participants. One idea is to invite participants to an event and expose them to issues presented by speakers, video and props. This helps them understand the issues, set the agenda and participate in a more considered and engaged way. Online blogs via the panel website can be used to encourage debate and discussion on a topic and to give our participants the opportunity to refine/define the topics from research. And we should look to make the survey interface a more interesting and enjoyable experience, not just in terms of closed questions with no visuals.

These measures will not be cheap or easy to implement in the short term, but by doing so, we will get better quality results and greater co-operation from the general public.