Decisions without Data?
Recently, I discussed one of the findings of the survey Marketing’s Moment: Leading the Disruption, conducted by the Association of National Advertisers (ANA). A very comprehensive survey, it observed that the scale and complexity of the disruptive forces today demand that organizations “undergo significant transformations rather than incremental change.” I couldn’t agree more and will continue to write a series of posts suggesting solutions, actionable insights to speed the transformational process, and also demonstrate that SEO continues to be a crucial foundational element of digital marketing.
Decisions without Data?
A significant finding of the survey was reported as follows: “Most marketers acknowledge that data and analytics are the key to addressing a more complex landscape; 96 percent said the ability to make data-informed decisions is their most-needed capability to respond effectively to disruptions. However, more than one-third of companies are not using data to make decisions, and almost half say they still don’t have the right analytics in place**.”**
These percentages make me pause and draw in a deep breath. It is extremely difficult to get 96 percent of people to agree on anything. To put this in perspective, it is unusual for winners of U.S. Presidential elections to win 51 percent of the popular vote. So, with 96 percent of marketers agreeing on the need for data-informed decisions, what are the obstacles and how can they be removed?
A Rose by any other name …
One of the biggest obstacles, which presents quite the visual image, is the HiPPO. An acronym coined by Andrew McAfee, principal research scientist at MIT’s Center for Digital Business, it describes decision making based on the “say so” of the Highest Paid Person’s Opinion, even when that opinion is not informed by data analysis and often is formed in the absence of other critical qualifications.
He, and many others in the technology field, might be surprised to learn that they have an early and unlikely ally on this point, none other than the early 20th century etiquette expert, Emily Post. In case you are wondering, no, I haven’t been spending my time reading etiquette books lately, but a family friend with an interest in history pointed out the similarity between her statements and the concept of HiPPO and finding such viewpoints from diverse thinkers can be very instructive.
In a book entitled Etiquette, she writes in 1922 “Why a man, because he has millions, should assume that they confer omniscience in all branches of knowledge is something which may be left to the psychologist to answer, but most of those thrown much in contact with millionaires will agree that an attitude of infallibility is typical of the fair majority… topics he does not care for are bosh… his prejudices are, in his opinion expert criticism; his taste impeccable; his judgment infallible;…”
Clearly HiPPOs have existed in all eras, perhaps by others names, and not smelling so sweet.
I believe we owe Andrew McAfee a great deal of gratitude for coining an umbrella term that may cover anyone from senior executives, high ranking politicians, or perhaps the most aggressive, but not necessarily the best informed person, as identifying a problem that can lead to a solution.
In fairness, many senior-level people arrived at their positions due to the success that they brought to their respective organizations, but as Emily has pointed out, this does not confer omniscience in all branches of knowledge nor does it produce infallible judgment. It surely does not replace validated learning and evidence-based marketing. Before I provide an example of successful evidence-based marketing, I’d like to tell a cautionary tale.
A Cautionary Tale
In a rather unvarnished article, Forbes asks the question What Happens When a HiPPO runs Your Company?
The authors tell the tale of Ron Johnson, brought in as a CEO to revitalize the 111-year-old retail store J. C. Penney, but instead, they report that within a mere seventeen months, the following occurred:
- The company burned through nearly $1 billion in 17 months, taking its cash balance from $1.8 billion to $930 million
- Revenue fell by 25 percent in 2012, for a loss of nearly $1 billion
- The company’s market capitalization fell by nearly 50 percent on Johnson’s watch
I’m not here to kick sand in Mr. Johnson’s face. He’s certainly faced consequences, but I am sure you would rather learn from someone else’s loss of nearly $1 billion than your own.
What were his major mistakes?
- Johnson ignored data, including focus group data that revealed customer preferences
- Johnson refused to experiment, test, and analyze new strategies before instituting them nationwide, thus missing the opportunity to discover that the new strategies alienated loyal customers
- Johnson insisted to the employees that there were only two types of people, skeptics and believers, thus instilling fear and silencing anyone who would provide him with the truth respecting the negative impact of Johnson’s unwise decisions.
After Johnson was fired from J. C. Penney, Bloomberg Business Week wrote “Six months after Johnson vanished, J.C. Penney has almost perfected the illusion that he was never there at all. All that’s missing is about $1 billion.”
Okay, now you know how not to lose a billion dollars. Now let’s look at evidence-based marketing.
An Evidence-Based Marketing Success Story
Brownells, a niche mail order enterprise in business more than seventy years with over 50,000 specialty items, challenged itself to do the following: increase conversions, help customers to find what they are looking for among the 50,000 items, even when they don’t know exactly what they are seeking, and recommend products for upsell and cross-sell opportunities.
To meet these goals, Brownells adopted and implemented Adobe Analytics and Adobe Target solutions with rigorous SEO capabilities. Deploying functionalities such as A/B/N and multivariate testing, rules-based targeting, and site search/merchandising Clayton Whipple, eCommerce Director noted : “Adobe Marketing Cloud is so intuitive to work with that marketers can, for the most part, set up tests, interpret results, and make changes on their own. Here are the impressive results:
- An overall lift in revenues by 10%
- Increased revenue per visitor by 17% through relevant recommendations
- Improved revenue per visitor by 7.8% through optimized price placement
- Increased visibility into online visitor behaviors and preferences
- Gained control over data collection and recommendations
- Supported broader marketing strategies and objectives
The evidence is clear: Evidence-based marketing, underpinned by SEO, works. Your comments and insights on this timely topic would be most appreciated.