A marketing tragedy: The wrong data and mindless discounting

A marketing tragedy: The wrong data and mindless discounting

Summary: How can businesses fully and continuously engage their customers? CRM pioneer Jeff Tanner's new book delivers a strategy for realizing big profits from Big Data.

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TOPICS: Big Data
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Note: While recuperating from vocal cord surgery, I'm on restricted voice use. That of course doesn't actually apply to writer's "voice" but in this case I'm not writing that much either — and resting a lot. 

But the business world never rests, nor do the active minds of my colleagues in the world of customer-facing thinking. One of the best thinkers and significant writers I know is Dr. John Tanner, a.k.a. Jeff Tanner, a professor of Marketing at Baylor University and a pioneer in CRM for more than a decade. He is not only the co-author of the all-time best-selling textbook on sales, but also was the first person to provide an MBA with a CRM specialty as a degree choice. He is also a wonderful friend who I am proud to know. 

Recently, Jeff came out with a new book, Analytics and Dynamic Customer Strategy: Big Profits from Big Data (Wiley, 2014) which provides a framework for a customer-facing strategy with big data — the first of its kind to my knowledge. I asked him to provide a small peak at what this strategy would look like since we are in a world where that particular take on strategy not only matters, but is becoming crucial to understand how to fully and continuously engage customers. He kindly did so.

So, my friends, read on. Jeff, the floor is now yours.


Like an earthquake, did you feel the shift as it happened? Or did it sneak up on you? The balance of power in the marketplace shifted. The consumer of today has taken control – and if you need evidence, just Google the phrase “empowered consumer” and you’ll get over 9.5 million hits! Yes, today’s consumer has been empowered by the internet. And yes, marketers have been worried about it for some time; so pundits, consultants, and even professors are teaching and sharing the growing body of knowledge about what to do in the age of consumer empowerment.

Social media has empowered customers to reach a broader audience with a complaint – empowered. Mobile web has empowered customers to gain information – empowered. Customers can buy anywhere, anytime – empowered.

Essentially, that’s it. That’s the argument

But if you look closely, the only real shift in power is the increased information available to the consumer. The consumer always held the power of the decision – what changed is the ability to make an informed decision.

You can create the data you need to know: where to spend marketing dollars, and what offer will generate sales without mindless discounting.

If knowledge is power, then we’ve failed to recognize how Big Data has empowered marketers. The balance of power is restored, at least somewhat, by the value of Big Data for those that can take advantage of it. Just as the empowerment of consumers is really about having more information, so is the empowerment made possible by Big Data.

The shame, the utter crying shame, is that we marketers are limiting ourselves by two tragic practices.

The first is simply taking data as it comes. I can get sentiment analysis? Ok. I’ll plug that into my model. I can get sequential web browsing data? Ok, plug that in, too.

Why is this use of data tragic? Because all too often, our ability to know, to really know, is limited by the quality of data that just comes to us. Are we using what we need or what we can get easily and cheaply?

What we really want to know is what causes what. And to do that, we have to make our own data. We have to take the decision(s) we’re trying to make and create the right data that allows us to determine what causes the outcomes we desire.

Mindless discounting

The second tragic practice is what I call mindless discounting. What’s frustrating is that I keep hearing people make the same mistake as one speaker at a recent conference. He was going on about a case involving a mass transit system in Canada that’s probably really cool but his example is just not that smart. You can ride the train or trolley or whatever, log in to their loyalty system on your phone, and get a Starbucks coupon pushed to your device for use at a store at your stop. Or the next stop.

Who cares? If Starbucks wants to give a big discount, what makes that better than just putting a sign in the window saying a dollar off a latte? “Well, it’s not targeted.” Targeted doesn’t mean relevant, nor does it mean profitable.

Yeah, I know, “Starbucks can track it.” So what? Starbucks doesn’t get access to the phone – that data is owned by the transit company. The data is from their loyalty system, not Starbucks’.  So again, Starbucks really can’t track it to the user unless they do something in the store – and I go back to the sign in the window. And I don’t get what the value of that data is to the transit company unless they’re selling the access to Starbucks, who should save their money and just put a big sign in the window giving away lattes.

What I do need – or at least, what companies need – is something a lot better than that. What offer can I make that gives you enough value to make it worth your while and still allows me a profit?

Special Feature

Going Deep on Big Data

Going Deep on Big Data

Big data is transitioning from one of the most hyped and anticipated tech trends of recent years into one of the biggest challenges that IT is now trying to wrestle and harness. We examine the technologies and best practices for taking advantage of big data and provide a look at organizations that are putting it to good use.

Or, tell me where to spend my marketing dollars so I can reach you. Tell me that, Mr. Big Data.

Well, actually, I can. Through the discipline of Dynamic Customer Strategy, you can create the data you need to know, to truly and really know, where to spend marketing dollars, and what offer will generate sales without mindless discounting.

One brief example: You’re Cabela’s (Nebraska-based direct marketer and retailer) and you’re wondering why some buyers fill up a cart and then empty it, multiple times. You’ve got a theory that the problem is a value problem. Hmmm, low value, increase it with a discount, right?

Wrong.

Instead, increase the value by promoting products that sell at premium, not discounted, prices.

Guess what – the conversion rate was a little lower but the overall revenue was up and at a 400 basis point improvement in margin. And all because Cabela’s made the offer the consumer wanted, not pushed a mindless discount.

To say that marketers are fighting back is, well, failing to recognize what the new balance means. Big Data doesn’t mean that marketers gain the upper hand. Rather, the new balance of power is just that, a balance. By creating the right data, balance is restored and everyone is empowered.

Topic: Big Data

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10 comments
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  • get it right

    Mr Greenberg, if you are going to be a writer then get it correct; "a small peak " is a small hill or possibly a small mountain. Did you want a preview of Mr Tanner's book? If so, then that would be "a small peek".
    bd1235
    • Will Fix

      Thanks for pointing out the typo. I'll take care of it. However, please stop with the your rather condescending tone. I appreciate that you caught the error, but don't appreciate your rather snippy approach to dealing with it. Next time, point it out, be a gentleman and leave it at that.
      pgreenbe
      • I agree with "bd1235"

        As a "Writer" you need to get your spelling right. Spelling is, after all, the most basic tool of the "Writer". AND if you had checked your spelling properly when you wrote your piece, you wouldn't be getting "Snippy" comments.
        jnowski
      • Where's his check?

        Mr. Greenberg, Next time I would stop after you say you'll take care of it...and move on.
        He didn't charge you for catching that typo... or for the condescending tone.

        I would reserve the request for your editor, who should have caught that typo.
        geekmee@...
        • Writers are a picky lot...

          ...Welcome to The NFL.
          geekmee@...
  • Schmoozers lose

    I'm sure that somewhere, someone has written an article about how the Internet has reduced the value of both schmoozing and schmoozers. There are many businesses (banking is one, insurance is another) where it has historically been expensive (in time or money) to gather the information necessary to make a wise purchasing decision. In such businesses, schmoozers (like "relationship bankers" and insurance agents) become important, because buyers often found it easier to just go with the schmoozer they knew than round up a dozen quotes and pick the best.

    Not anymore. Now the CFO can have ten banks bidding on his line-of-credit business with a click or two. I can get twenty quotes on car insurance in Geico's "fifteen minutes."

    The whole schmoozing trade was based on having access to information that was otherwise hard to acquire. There isn't much of that sort of information anymore.
    Robert Hahn
  • And this is PRECISELY What Marketers Don't Understand...

    ...about relating to their customer.

    Mr Greenberg's entire comment about Cabela's is pure MarketerSpeak buzzwords; NOTHING that real human beings can relate to.

    HOW EXACTLY did they INCREASE value by PROMOTING that premium product? By beating him/her over the head with hard-sell target advertising? By offering a questionnaire? By randomly offering some % off some premium product until they found out which one people actually bought when a discount was offered?

    What was their actual conversion rate? What was the baseline upon which that 400 basis point improvement in margin was based?

    Everything he said... EVERYTHING... was a useless pile of MarketerSpeak buzzwords; targeted advertising meant to sell his vision to... MARKETERS. In other words, PURE WEAPONS GRADE BALONIUM.

    Is it any wonder that people think Marketers simply are not HUMAN?

    A parasite who makes his living advising parasites, being placed upon a pedestal because he bothered to dip his big toe in the endless ocean of information that is the Internet.

    Jeebus.

    Some of us actually work for a living.

    We get sick of seeing Used-Car-Salesmen (no matter what you call it, no matter how nice a suit he wears, that's what he is; even though what he sells is nothing more than recycled strategy for other Used-Car-Salesmen) being glorified while the rest of us scratch out a living on the crumbs left behind while he and his parasite clientele suck the Economy dry for a larger percentage.

    Thank you Mr Greenberg; for putting a face on the idiocy that Modern Business has become. The fact that you can be a best-selling author is proof of exactly what is wrong with the Free-Enterprise System.

    Now please go away. I have a real life with real concerns; mostly revolving around the need to EARN a living rather than being a parasite on the back of a colony of parasites on the back of the Economy.


    mnem
    Talk about the tail wagging the dog; more like a flea on the tail thinking he should wag the dog.
    mnemennth
    • CORRECTION:

      In my annoyance, I confused the Author of the article with the Author of the book. Please forgive the oversight and be aware that I refer to Jeff Tanner, the person who spoke this mound of gibberish, not Mr Greenberg; I am only annoyed at him for bringing this other person to my attention.

      I would prefer to have edited my original comment; but alas, this is the only means of error-correction available in this format.


      We now return you to your regularly scheduled insanity.
      mnemennth
    • Thank you for that neologism!

      If you coined it, I'm sorry I do not know the name to credit for it. If you passed it along, I admire your good taste for seeing its value. I know of many areas of life in which this term applies (politics and the spiritual self-help industry, for example), so thank you for the phrase PURE WEAPONS GRADE BALONIUM. The advancement of human thought is indebted to you.
      jallan32
      • I wish I could take credit...

        ...but I did, in fact, learn that one from my dear departed mother. She taught me to spin the wool into something useful, rather than allow shucksters and hucksters to pull it over my eyes.

        She remained hip long after it was considered cool to sell out; for her wisdom, I am eternally grateful.


        mnem
        I am Diogenes in the land of of the blind.
        mnemennth