Need an analytic-marketing role model? You can't get much better than Harrah's Entertainment. The casino and hotel operator tracks 80% of its revenue through a customer-affiliation card and can track much of that back to a "marketing intervention," says Senior VP-Relationship Marketing David Norton.
|Illustration: Matthew Bandsuch|
|The qualified staff members CMOs need are scarce, and companies are scrambling for new ways to find and develop people.
It wasn't always that way. When Mr. Norton joined the company eight years ago, two months after CEO Gary Loveman arrived, marketing was hardly numbers-oriented. Even boot camps to teach such topics as regression and forecasting did nothing. When the company moved headquarters from Memphis to Las Vegas in 2000, many from marketing didn't follow. "In some cases that wasn't necessarily a bad thing," Mr. Norton says. More bluntly, Mr. Loveman has said in the past that many didn't have the necessary mental "horsepower" and others wanted to remain uncontrolled "feudal lords."
But even for Harrah's, after close to a decade of acclaim as a leader in the techniques of analytic marketing, it's still hard to find qualified employees. Mr. Norton estimates that out of the candidates who make it through initial screening and advance to interviews, fewer than 20%-and sometimes under 10%-qualify for offers. Why? Ask any CMO trying to use analytic techniques: The qualified staff members they need are scarce and companies are scrambling for new ways to find and develop people.
The problem shouldn't be surprising. Except for that industry red-headed stepchild direct response, marketing and analytics have been as generally close as the Montagues and the Capulets. While supply chain, finance, HR, logistics, quality assurance, product design, risk management and even the mailroom were all learning the power of numbers, marketers continued to work on gut feel and "knowing" what worked. "Literally marketing is probably three decades behind in the quantitative approach behind every other department in the firm," says Jeffrey Merrihue, CEO of London-based Accenture Marketing Sciences. "While a lot of the senior folks might have been analytic, they wouldn't have grown up in an environment of structure, discipline and process with the type of marketing analytics you find today."
Of course, some CMOs have led their organizations into embracing the practice, including John Costello, former exec VP-CMO of Home Depot; John Elkins, head of global brand and marketing at Visa International; and Cathy Lyons, CMO-exec VP at Hewlett-Packard, Mr. Merrihue says. But an overwhelming number of organizations simply have not taken analytic views of marketing-even when you might expect differently. For example, until recently, Wal-Mart's unquestioned analytic savoir faire in all things logistical didn't extend to marketing. "If you asked 18 months ago, they would have been in the bottom decile," Mr. Merrihue says.
The arrival from Frito-Lay of now-Senior VP-Marketing Stephen Quinn helped change that. "Frito is a leader," Mr. Merrihue says. "Wal-Mart hired a half-dozen of Frito's best, and guess what? Wal-Mart has leapt out as a leader."
In High Demand
Hiring people who can help transform a marketing organization is a great idea-if you can find them. Yes, more companies are interested in marketing analytics. Yes, business schools are focusing more attention on the topic. But no, there hasn't been enough time to build an industry work force that can meet even current demands, let alone expanding use of the techniques.
The problem is that analytic marketing is not just crunching numbers but understanding what to look for and putting that information into a strategic context. "If it were as simple as 'here's what's good and here's what's bad,' the recruiting would be easier," says Peter Burgeson, director of marketing at 1-800-Got-Junk of Vancouver, Canada. Book learning alone isn't what Mr. Burgeson's company needs. "What we need is experience. You need to have seen campaigns that worked and campaigns that didn't work." That way the analysis has a context: return on investment. Unfortunately, he finds that people coming directly out of M.B.A. programs largely miss learning that ROI analysis. Experience is better. "The trick is to read that gray area and decide, given [all the analytic and business information at hand], did this end up being worthwhile?"
Oh, what a loaded question. According to the book "What Sticks: Why Most Advertising Fails and How to Guarantee Yours Succeeds" (see front-page article by Jack Neff, Advertising Age, Aug. 8), most companies have no idea how effective their marketing campaigns are. Co-author and Interactive Advertising Bureau CEO Greg Stuart says that when most businesses try to evaluate media mixes, they walk into a "wasteland," focusing on cost of each impression. "There can be zero relationship between how often a consumer is exposed [according to] a media-measurement company ... [and] the actual effectiveness of the campaign," he says. "You must figure out how to get beyond the silly media measures that you're using and get to what is effectiveness."
The good news is that there are people in the world who can analyze and optimize a mix of media. The bad news, experts say? The total number in the world qualified and able to do so is in the hundreds-at the most. Not only are analytics new to general marketing, but some of the most alluring uses are also the most difficult to achieve, marrying statistical analysis, econometrics, strategic planning and a heavy dose of technology. Nothing less than real expertise will do. Attempted without proper understanding, the practice becomes "monkeys with razor blades," as Mr. Merrihue puts it.
"The one even more [painful fact] to swallow is that there are only 5,000 'business mathematicians' for all industries," says Pedro Laboy, chief operating officer of Austin, Texas-based marketing consultancy Tocquigny. "They're in higher demand than Harvard M.B.A.s." Even trying to develop a larger pool of analytic superheroes is difficult because the talent is spread thin and needed in all the other parts of a company.
Companies determined to succeed in analytic marketing and without a Wal-Mart's money to tempt entire departments have to start by getting a single expert in-house. Yet even less esoteric talent can be difficult to find. It took Tocquigny almost a year to hire its director of analytics, and just to find a marketing person with the right skill set to do analytics can take nine months.
Brad Fogel had been in the advertising business for 25 years and was familiar with database analysis. But when he became CMO of 24 Hour Fitness in December 2004, he was entering an industry with 40% customer churn. The company needed to retain more clients, and he needed real expertise. So Mr. Fogel worked with the company's chief information officer to better understand the needed skills, then last year brought in someone from Bain & Co. ("our savior," he says) and Kansas City, Mo.-based marketing consultancy Barkley Evergreen & Partners.
Trying to get by with hiring midlevel people isn't enough: The employees need to report to someone who can check their work, and relatively few CMOs fill that bill. According to Barkley Evergreen VP Chris Dickey, only one-tenth of the CMOs he sees really "get" analytics. In his experience, another 70% think they understand it when they actually grasp a few pieces at most. "The younger CMOs of newer businesses are much more open about a new approach and using data," he says. "Those who have been in the business for 30 years, they're used to their tools and aren't as open."
Adding those midlevel "positions" will eventually be necessary, but probably not with one person able to do all that's required. "You run into people who are data jockeys," says Ray Rosenbaum, a principal at Dallas marketing firm Razor, "but no one shows you how the data's being used. Then you run into another group of people who are good at interpreting data but who don't know how to get the data." Then someone has to tie the insights into corporate strategy to focus on what management deems important. Chances are that one person, particularly midlevel, can't bring all those skills to bear. The solution? Hire several people who can work well together and cross-train them so that each starts to understand the views of the others. "That blows up your salary models in a lot of cases, but not necessarily if you hire more strategic on your senior side, moderate level on your marketing side and someone with just some experience on the data side," Mr. Rosenbaum says.
So where do you find them? "I wish I had an easy answer, because I wouldn't have to struggle," says Tony Weisman, CMO of Draft, Chicago. "They're not coming from other agencies because we're just passing around the same people who don't know [the subject]," he says. Instead, they're looking to people coming from online strategists, consultancies and customer-loyalty companies. Other companies are looking for people with the necessary skills, whether from the same industry or not. In other words, no one's figured out a good way to target the potential marketers.
"I don't know that we've figured it out, so we're trying to throw the net broad," Harrah's Mr. Norton says. Some come from consultancies, others from such schools as Carnegie Mellon and Duke. The process is inefficient and is likely to remain so for now, but Mr. Norton isn't planning to give up, because that would be rolling a pair of dice where the house wouldn't win.
About the author: Erik Sherman is a writer, photographer, and playwright in western Massachusetts. His bylined articles have appeared in such publications as The New York Times Magazine, Newsweek, Fortune, Inc. and the Financial Times.