The Four Steps to Help a CIO Think like a CMO
Right now, the conversation in the marketing community is about leveraging Big Data for big insights, and part of this involves working more closely with the CIO. Likewise, information leaders are being urged to become more involved in the customer experience by collaborating with the CMO. Putting these imperatives into action requires a meeting of the minds between a company’s CIO and CMO.
As CMO of Nielsen, I’m in the unique position to have exposure to the best of both worlds—marketing and information management—on a daily basis, and I also have the chance to work with some of the world’s greatest brands.
In this context, the framework below couples marketing basics with Big Data insights:
Four Steps to Information-Driven Marketing Performance (The IDEA framework)
1. Identify: Organize around consumers; build proprietary understanding about your most profitable consumer—then activate the entire organization.
2. Design: Improve how companies innovate; integrated from white space to launch support.
3. Engage: Engage consumers through effective and efficient marketing.
4. Activate: Activate plans through superior sales execution.
Identify: My favorite path to identifying and unlocking demand is the concept of the “super consumer.” This approach is a variation on the Pareto principle, which suggests that one-fifth of a product’s buyers are responsible for four-fifths of sales. A similar effect applies to super consumers. For example, using Nielsen supermarket scanner data, we analyzed the top 124 consumer packaged goods categories and found that on average, super consumers represent 10 percent of a category’s customers but account for 30-70 percent of sales and an even higher share of profits. Many companies believe these consumers are already maxed out. But we’ve found that not to be the case. In fact, focusing on super consumers can yield substantial growth.
A great example of this is Velveeta who recently executed a super consumer strategy beautifully. They identified 10 percent of consumers who accounted for 50 percent of profits, a population of about 2.4 million, and decided to focus on them. The insights from speaking with groups of these shoppers changed product placement (from the shelf to the refrigerator), inspired new product innovation (shredded cheese for casseroles), recipe exchanges, and community activation. The results were over $100 million in incremental sales. And a completely reinvigorated brand as witnessed by the 2014 Super Bowl ‘cheesepocolypse’—an ultimate example of brand demand.
“IDEA framework is a great starting point for a high impact partnership between the CIO and CMO”
Design: Another area where information and marketing come together is product design. Research shows that despite all of the time, talent and resources applied to innovation, no more than one in 200 genuinely new consumer packaged goods products in the U.S. achieves “breakthrough success”—defined as generating over $50 million in sales in its first year and sustaining 90 percent of that level in year two. So how do you improve your odds?
Always start with the analytics you Identify. Specifically, you need to find opportunities in the unmet needs category. Exhibit 1 below shows an example of a pharmaceutical company exploring white space in the pain relief area that has identified a potential unmet need for “extreme pain relief.” To find out whether the white space is actually an opportunity for a breakthrough innovation, a “driver response curve” analysis is added as a compliment to the white space/unmet needs evaluation. The extreme-pain curve asks and answers the question: “For every increment of pain relief, does the attractiveness of the brand increase or decrease?”
The curve is created based on thousands of consumer observations about the pain relief brands in the marketplace. As we see, pain relief performance does not drive overall consumer attraction to any of the currently-available pain relief brands, which all cluster near the beginning of the curve.
Looking to the right, however, we see the curve suddenly beginning to climb: it seems that if consumers regarded a brand as credibly relieving “extreme pain” at a significantly higher level, it would be very attractive. Once these analytics are in place, you are on the way to an improved starting point for a successful product launch.
Engage: Advertising spend remains one of the biggest and most strategic resource allocation decisions that any company has to make. The basic equation for advertising effectiveness is simple: the more of your ideal audience you can reach, and the more intensely your advertising resonates with them, the stronger your brand or sales lift—the reaction. Essentially, reach x resonance = reaction. Perhaps no greater opportunity exists to create rapid impact for your company than focusing on advertising effectiveness.
A great example of how to optimize ad spend comes from a large U.S.-based automotive firm seeking to improve compact car sales. As always, we started with Identify analytics. We found that in the U.S. market about 50 percent of all auto buyers were receptive to our client’s brand of compact cars, but our client had only a 10 percent share with them. Second, we pinpointed the specific actions the car maker needed to take to increase sales with these consumers: focusing their media spend against the 50 percent of consumers receptive to compact cars, evolving the positioning to better appeal to that 50 percent, adjusting channels to rely less on mass and more on targeted and social advertising, and optimizing ads and channel mix in real time.
The result: disproportionate growth in the compact car segment (30 percent versus the previous 10 percent) and reduced acquisition costs by 25 percent.
Activate: Importantly, Activate strategy is not about simply allocating more money to retailers to promote sales. Rather, it’s about gaining a better understanding of a retailer’s customers. This leads to developing products and marketing activities that meet those consumers’ unique needs; assigning dedicated people to work with a retailer’s specific buying structure and planning processes; integrating with their loyalty programs; and collaborating to create a truly demand-driven supply chain that connects seamlessly to the retailer’s operations.
Starting with the analytics you Identify and pulling those insights through the IDEA framework is a great starting point for a high impact partnership between the CIO and CMO.