Checkmate: why marketers can’t rely on intuition over data
Companies can’t run effective online marketing campaigns via intuition any longer. In fact, they really shouldn’t even run via a rules engine any longer. But hold that thought for a minute.
Slate Magazine recently ran a great article naming Fabiano Caruana’s run at the 2014 Sinquefield Cup one of the most amazing feats in chess history. Like 99.99% of the U.S., I also missed this event, but the end result was that Caruana, the youngest grandmaster in U.S. history and the No. 3 chess player on the planet, dominated the event. Like the Miami Dolphins’ undefeated season in 1972 or Tiger Wood’s “Tiger Slam” in 2000 (and 2001), the level of play was unlike any the sport had ever seen. A commentator exclaimed that it was like a computer was playing for Caruana.
Chess has been played for over 5,000 years, and the original incantation still works. The layout of the board makes it almost impossible for any two games to be identical. By some accounts, there are more permutations of chess than there are atoms in the universe.
Because the numbers are so large, computers have a distinct advantage over humans. When Gary Kasporov lost to Deep Blue, it was the ushering in of big data to the masses. The IBM machine was able to process potential moves at blindingly fast speeds and anticipate end games better than Kasporov – and ended up winning. Some perspective: today, my iPad has the processing power on par with the mainframes from 20 years ago.
I’m sure that you’re a bright person (you’re reading this, after all), but my guess is that you’re not a grandmaster and I’m pretty sure you’re not an IBM supercomputer. So why, with all of the permutations in your marketing life, are you still creating campaigns based on intuition or a basic rules engine? Think of a square on a chessboard as one of your customers, except you have 100,000, 500,000, or 1 million customers. You say that you want to personalize your communications, but do you really have the ability to calculate the best time of day, the right product out of thousands of SKUs, the best discount or offer, even the right messaging to a million unique customers? The permutations of this are almost infinite.
If you’re just using a batch-and-blast email marketing model – where all of your customers receive the same message – your tactic is akin to the Blitzkrieg checkmate move I’d try when I was younger. This strategy is the batch-and-blast of chess moves: it’s a tried and true tactic that can get you a checkmate in four moves, and it’s easy to learn (for chess, anyway). And while it works great against the most novice players, it is also basic enough to be identifiable after a game or two. Once your opponent realizes what you’re doing, it’s game over. In the same way, once your customer sees through your generic messaging, your emails get delegated to the spam folder and your brand gets swallowed in the noise.
Perhaps you’re doing some basic targeting and messaging. Maybe you’re using a little timing optimization or using product recommendations. This is better. But do you know that you’re still just scratching the surface?
In a chess match, there are 20 opening moves: 16 pawn positions and 4 knight positions. In a lifecycle marketing-focused Welcome Series, which consists of 4 emails, you’ve got offer, product, timing, message in each permutation. Mixing all these up, there are 256 different ways to get the right message to the right person. If you throw in a different series of messages (i.e. a customer receives message 2, 1, 4, then 3 because that is the best order for them), there are over 1,000 different ways to send this Welcome Series.
Now, this is where it gets daunting. Let’s say that you’ve got 4 different offers: free shipping, 5% off, 10% off, and 20% off. Just adding in that variable increases the types of messages exponentially to over 260,000 different messages you could send to your customers. This requires a lot of math and a ton of management to get right. Can anyone even do it?
The short answer is: not without help. If you really want to do personalized campaigns, and it isn’t just lip service you’re giving your CMO, you need a big data strategy. You can either build this in-house or you need a partner. Perhaps this tone is self-serving (this is my blog post), but don’t take my word for it. In their paper Use Predictive Analytics to Retain More Customers, Gartner Group calls the approach to a personalized customer experience as the most complex, but also the most valuable approach you can take. The paper goes on to report that a branch of AAA reported a 42% year-over-year increase in sales to new and retained customers in the first year, with millions of dollars in incremental sales as a result of campaigns optimized with predictive analytics.
This is mission critical. Your competitors are doing this today. If you don’t have a predictive marketing strategy, you’re out of business. But hey – at least you’ll have a lot of time to get good at chess.
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