In the past year, we have seen an explosion in interest around marketing and customer analytics. We find customer analytics playing an increasingly central role in marketing departments, and in a recent survey of our direct marketing panel we found customer analytics distinguish today's leaders from the laggards. Leaders more frequently and rigorously test new segmentation approaches and contact strategies, and invest aggressively to increase campaign response and ROI.
What's driving this increased focus? Analytics has become more accessible to the less-tech-savvy marketer, and marketers can demonstrate how analytical insights improve response rates, grow customer loyalty and reduce marketing inefficiencies. Plus, focusing on customer insight not only improves the ROI generated by the marketing department, it also enhances marketing's value to other departments, including product development, merchandising and corporate strategy.
Virtually every marketer we speak with is growing their analytics team. But these aren't the easiest roles to fill—it really is a candidate's market right now, especially for that rare breed of analyst that has both analytical and business expertise. As a result, we see a lot of companies looking outside their organization for support, turning to their database provider, agency, independent consultants, specialist analytics service providers or knowledge process outsourcing firms.
Outsourcing customer analytics can bring its own challenges, however. Here are six factors marketers should consider when outsourcing their marketing analytics:
1) Industry expertise. Each industry has its distinct challenges, language and flavor of data types. Marketers risk having to educate a vendor on the nuances of their market unless the vendor has prior industry experience.
2) Skills and resources. Analytic techniques include basic predictive modeling and segmentation as well as advanced techniques such as Bayesian methodology, neural networks and econometric models. Agencies that heavily favor one approach may not have the breadth of skills needed to solve an individual marketer's needs.
3) Process. Without strong project and scope management, analytic engagements get delayed, wander off track or wind up costing more than originally planned. Buyers should probe into such areas as project management, requirements gathering and delivery models.
4) Cultural fit. Bringing together an in-house and an outsourced team requires a successful mesh of cultures, with clearly defined roles and responsibilities. Without the right fit, expect to see clashes over recommended approaches, responsibilities and plenty of finger-pointing.
5) Intellectual property. If a marketer plans to take analytics in-house, or should a relationship with an outsourced provider end, understanding intellectual property ownership in advance is crucial. Not all service providers assign their customers the rights to models, variables or underlying methodologies.
6) Data security. It is a marketer's responsibility to ensure that the data it gathers are neither lost nor subject to unauthorized access. Marketers should research how firms ship, store and receive data, and how well they mask and store it.
Evaluating these factors and being explicit about long-term needs should help ensure a fruitful relationship with an outsourced provider. Marketers need to clarify whether they need one-time model development or a full-time, ongoing, outsourced relationship, as well as the strategic input that is, or is not, required.
Dave Frankland is senior analyst, Forrester Research (www.forrester.com).