As the vice-president of research for IDC Retail Insights, Jon Duke is accustomed to weighing in on retailer-driven research into all aspects of marketing. Joining ITWC president Fawn Annan for a May 2021 installment of CMO Talks, a podcast series on marketing challenges, he turned his attention to the importance of intelligent marketing analytics.

Duke explained that there are a number of reasons today’s marketing investments are typically less well analyzed than other investments of similar size. One of the main problems, he said, is that retailers are investing millions of dollars in marketing and giving up millions of dollars in promotional activity. The goal is to drive incremental results, but it’s difficult to do that without the right tools.

Misaligned incentives

In response to a question from Annan about the current state of intelligent marketing analytics in the retailers he has surveyed, Duke attributed something he calls “management by assumption” to the absence of in-depth analysis and execution.

“What we’re finding is that 30 to 40% of retailers’ marketing budgets are devoted to money-losing activities – to promotions and investments that ultimately doesn’t drive incremental benefit,” he said. “If sales are growing at a healthy clip, the investment appears justified and management’s priorities turn elsewhere, but under the covers there is significant, inefficient spending and money that could be better appropriated to money winning activities.”

Bucket list

Referencing a recent IDC PlanScape study, Duke discussed the ways that retailers can step into what he describes as the three significant buckets of analytics: planning, execution, and measurement. “For me, a really interesting place to start would be the analytics for marketing performance,” he said. “This means investing in intelligent tools to help analyze what was successful across the full range of the store.”

Although predictive planning sounds like a forward-looking tool, Duke sees its strength in helping retailers understand what has worked in the past and and what combination of attributes is most likely to produce winning promotions. “It’s really important from a planning perspective to use predictive tools that can help drive analytically derived answers, because that moves you from just pulling from your standard bag of tricks and gives you a data-driven reason why a promotion should be 30% off instead of 25% off.”

Marketing as a team sport

Addressing a comment from Annan about the need for closer collaboration of departments, Duke observed that the marketing function and the merchandising function have historically partnered together, but haven’t been fully integrated, which he sees as the goal. “The other role that isn’t always considered a strategic partner, but really should be, is the CFO,” he said. “I think it’s critical that we develop tools that give Finance better insight and a better understanding of what’s happening and why.”

Three pieces of advice

According to Duke, there are three problem areas in retail promotions: the speed at which retail is moving, the lack of analytical resources, and misaligned incentives. His advice is to identify wasted dollars in order to make a case for investing in intelligent marketing analytics, move to predictive planning to prevent repeating mistakes, and focus on automation.

“Retail marketing is going through a transformation, just like every other aspect of retail today, and organizations across all departments are becoming more analytical and more customer-oriented,” he said. “Retailers without that insight, and without a clear understanding of the total impact of the true return on their marketing dollars are going to be left behind.”

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