Harvard Business Review contributors Patrick Spenner and Anna Bird discuss how marketers still rely too much on instinct over consumer driven customer-intelligence in “Marketers Flunk the Big Data Test.”
The big-data explosion is driving a shift away from gut-based decision making. Marketing in particular is feeling the pressure to embrace new data-driven customer intelligence capabilities. No wonder a strong appetite for data is one of the most sought-after qualities in new marketers. And yet, a recent CEB study of nearly 800 marketers at Fortune 1000 companies found the vast majority of marketers still rely too much on intuition — while the few who do use data aggressively for the most part do it badly.
Most rely too much on gut
On average, marketers depend on data for just 11% of all customer-related decisions. In fact, when we asked marketers to think about the information they used to make a recent decision, they said that more than half of the information came from their previous experience or their intuition about customers. They put data last on their list — trailing conversations with managers and colleagues, expert advice and one-off customer interactions.
But in today’s volatile business environment, judgment built from past experience is increasingly unreliable. With consumer behaviors in flux, once-valid assumptions (e.g., “older consumers don’t use Facebook or send text messages”) can quickly become outdated.
A majority struggle with statistics
When we tested marketers’ statistical aptitude with five questions ranging from basic to intermediate, almost half (44%) got four or more questions wrong and a mere 6% got all five right. So it didn’t surprise us that just 5% of marketers own a statistics text book.
Some are dangerously distracted by data
While most marketers underuse data, a small fraction (11% in this study) just can’t get enough. These data hounds consult dashboards daily, and base most decisions on data. They have a “plugged in” personality type and thrive on external stimulation — so they love data and all forms of feedback including data on marketing effectiveness, input from managers or peers, and frequent interaction with others. We call these marketers “Connectors” and they’re exactly what most CMOs are looking for. But these types of marketers are actually severe underperformers (they receive much lower performance ratings from their managers than average marketers do). The problem is, they don’t have the statistical aptitude or judgment required to use data effectively. Every time they see a blip on the dashboard, they adjust — and end up changing direction so often that they lose sight of end goals. In management positions, these people can wreak havoc by creating endless fire drills and preventing anyone from sticking with projects long enough to achieve the best results. Worse, many marketing disciplines (especially direct, digital and loyalty marketing) unwittingly encourage these behaviors and end up magnifying the problem. That’s because dashboards often capture response-based metrics such as clicks and open rates that aren’t tied to more important measures such as customer loyalty or lifetime value — and yet, marketers are rewarded for improving the response metrics.
The best focus on goals and filter out noise
Today’s top performing marketers as rated by the managers (a profile we call “Focusers“) have three key qualities: comfort with ambiguity, ability to ask strategic questions based on data, and narrow focus on higher-order goals. Together, these traits help them filter out noise and apply only the insights or data points that truly matter for long-term success. As marketers get better access to raw numbers and big data keeps growing, the importance of this filtering ability will only intensify.
The bad news for marketing leaders is that ability to filter out noise is rare (only about 10% of marketers excel here) and hard to teach. The good news is that a well-guided team environment can protect noise chasers from themselves — by providing blinkers that keep “bright shiny objects” out of view. To drive effective data use, the best marketing leaders reiterate critical business goals constantly (to keep them front-of-mind despite distractions), teach marketers to put data front and center in their decision making, and sensitize marketers to common data interpretation mistakes.This enables even the most distractible data lovers to overachieve.
For more information on the five marketer profiles and the characteristics of today’s high-performing marketing teams, download the HBR report here.