Focus on what data can do, not on quantity

July 8, 2002

BY MICHAEL KRAUSS

Stop doing stupid things. Start doing smart things. Strive to do amazing things.

That's a pretty interesting mantra for today's technology marketer.

Take Radio Shack as an example. I do a lot of home fix-up projects. I'm a regular at their local store. Every time I come in, the clerk who should know me by now-asks for my address and attempt to confirm firm information on the database. I know the only thing I'll get from Radio Shack is more junk mail. Why ask me to part with my information if they're not going to provide me with something of value?

I tried to help AT&T Wireless by calling to alert them to some holes in their network where my calls were regularly dropped. Competitor Verizon is using ubiquity as a point of difference, featuring it in their network television commercials. You'd think AT&T would want to know where its network coverage was weak. But the customer care was tedious, with difficult automated phone menus as obstacles that would stop the most intrepid customer.

I switched my service to Cingular.

A local grocery chain in Chicago, Jewel Foods, offers me and every other shopper a "Preferred Card." It's nice to have and saves me some money, but I don't feel very special with my Preferred Card.

I love to drink Snapple but will only buy it when it's on sale. A 24-count case retails for $18.96 but goes for $9.99 when it's on promotion if you have a Preferred Card. Not long ago, I missed the promotion. Couldn't they have sent me an e-mail alerting me to the special? Do they look at my purchase patterns? Probably not.

The other night I waited endlessly in a long checkout line. Could they have scanned my card, known I was a frequent shopper and opened another check-out lane when I approached the front end of the store? Now that would have been amazing.

My point: Despite all the investments in technology, as marketers, we still do too many dumb things, not enough smart things and precious few amazing things.

Why? Despite the Internet revolution, systems are still too vertical or silo-based and can't be easily accessed for simple but creative applications. Marketers as a group continue to do too little analysis of the data they have in-hand. And, lastly, people, corporate organizations and business processes are simply too rigid and don't reward new approaches

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Finally, I wonder if marketers are spending enough time thinking about their buyers' needs. We say we do, but I'm not convinced.

There are some bright spots on the horizon.

Peter Blacklow, senior vice president of marketing at Monster.com, has more Dell servers than anyone. He's Michael Dell's No. 1 customer for servers. Yet, when I spoke with Blacklow in a recent interview, his focus was on analysis and customer segmentation, not bits and bytes.

Blacklow was crowing about a recent trade show where he sent his people out to work with college students. The marketers had to help the college students register to use Monster.com. Even though the site has been extensively engineered to optimize the customer experience, they discovered flaws and recommended improvements, which Blacklow is now implementing.

No wonder Monster.com picks up 1,200 resumes per hour and is wellon its way to becoming the global McDonald's or CocaCola of the job recruitment business.

Speaking of smart players, Amazon pioneered the use of customer data analysis to push offers to buyers. The company uses a simple form of collaborative filtering, a technique that relates like-minded customers' interests to suggest potential new titles toshoppers. It's an intelligent use of technology. What would beamazing would be the opportunity to link Amazon to abricks-and mortar site so I can return books locally; Barnes & Nobledoes it, why can't Amazon?

I know a wireless telecommunications provider that's doing customer value analysis to optimize the lifetime value of its relationships with customers. The company is cutting customer churn and building loyalty, adapting the organization to optimize revenue and profits. To succeed, its executives focus on analysis of customer data and organizational change, not merely on promoting new technical features and functions.

Another example is Harrah's Total Rewards loyalty program. It rivals AOL and Amazon vith more than 25 million customers in the database. The company has defined 90 high-value customer segments and uses predictive modeling techniques to keep attracting the top-value customers. Customer data drives its marketing efforts.

In an industry that typically builds mammoth and expensive gaming Meccas with names like Bellagio, Caesar's and Mirage, Harrah's is different: It's focusing on technology, analytics and organization. It's also delivering one of the highest three-year returns on investment in the industry, with revenues up 23% and net incomegrowth up 27% over the past 36 months.

Some marketers lament they can't get the budget to increase ad spending. Others say it will take hundreds of millions of dollars in new technology to achieve their dreams. Personally, I don't buy it.

Let's just stop doing dumb things, start doing smart things andstrive to do amazing things. I hope they're listening at Jewel headquarters. I do my grocery shopping on Friday nights.

Michael Krauss is a partner with DiamondCluster International in Chicago. He can be reached at michael.krauss@diamondcluster.com or news@ama.org.