STIHL Inc. had a problem. A big problem.
With 2013 sales of roughly $3.7 billion, STIHL might be the envy of many. Founded in 1926, the company is the world’s largest manufacturer of chain saws and handheld power equipment.
But it was in immediate danger of dramatically losing market share. Its core customer base of baby boomers was aging quickly and leaving the market, while it had failed to capture as much of the Gen X and Gen Y market.
Rather than turning to gut instincts and hunches, as marketers usually do, STIHL got real, and looked deeply into the numbers. And while the data spotlighted the problems, it also revealed solutions, including moving its target demographic 10 years younger, which created $200 million in market opportunity.
In the process, STIHL discovered its marketing data is its greatest strategic asset – and the company isn’t alone. Dell CMO Karen Quintos recently declared “customer data is the single most important asset that we have.”
In a recent article in the Harvard Business Review, Dominic Barton and David Court of McKinsey predicted the future of business will be won by those who master data.“As more companies learn the core skills of using big data, building superior capabilities will become a decisive competitive asset.”
Big data today enables businesses to know their customers better than ever before. And knowing customers is what marketing is all about. As Peter Drucker said, “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”
But marketers are tasked with persuading leadership of the unprecedented value of marketing data. In a recent survey, 43% of marketers said their C-suite doesn’t see the strategic value of marketing data. This is despite the fact that two of the most successful companies to emerge in the past decade – Facebook and Google – earn billions of profit by selling data.
To not only survive but to thrive, businesses today need to value, invest in, and exploit their marketing data. And now is the time to do so. New technology makes it much easier to gather and analyze this data, and use it to make more profitable decisions.
Here are some benefits of valuing marketing data as a strategic asset:
- Gain a Market Advantage: in business there are leaders and followers. Markets are increasingly won by companies that leverage data. The companies that are first to embrace new technologies – and create a corporate culture that values data as an asset – will have the greatest advantage.
- Discover Actionable Insights: business often speaks of mining data. Expanding on the mining analogy, a mine is only valuable when value is extracted. It’s not enough to have data. You must delve deeply into the data to extract valuable insights, and then turn those insights into actions.
- Move Beyond Gut Decisions: data enables you to move beyond gut decisions, and make better decisions. You can make smarter, more profitable decisions, faster. And while it’s generally impossible to predict outcome with absolute certainty, marketing decisions based on data are much more likely to yield favorable business outcomes.
- Be Better and Faster: because our world is increasingly interconnected, businesses are increasingly likely to come up with the same innovations. The company that brings the innovation to market first, wins. Data enables you to get there faster and win.
By valuing marketing data as a strategic asset, STIHL gained all these advantages – and $200 million in market opportunity.
Here are 5 tips for extracting more strategic value from your marketing data:
1. Create a Data Culture
To truly maximize your value from data, it must be prized across the enterprise. Foster a culture that values data. Superior decision-making originates from a strong appetite for data. All departments must view data as essential for solving problems and identifying opportunities.
2. What Do You Want to Know?
Many companies look at data, and hope to stumble upon insights. It’s much more valuable to begin with a question. What customer information – if you knew it – would give you a competitive advantage? If your business could ask any one question, what would it be? Then look at the data, and build models that answer your most important questions to predict and optimize business outcomes.
3. Welcome the Data Deluge
The rise of mobile devices and the socialization of information have generated more data than ever before. Some companies complain they’re drowning in data. But since data is an asset with value, it’s logical to acquire as much as possible. Be ready to collect, store, and analyze the data, and welcome the deluge.
4. Have Tools and Processes
It’s essential that you develop capabilities to mine your data. As the amount and variety of data continues to grow, you must be ready to process it. This means having the processes, technologies, and tools in place. The emphasis should be on being able to discover the most valuable insights.
5. Look at All the Data
Another mistake companies make is looking at a small slice of the data, and believing it represents the whole. Making business decisions based on a small sampling can lead to disastrous results. New technologies make it possible to gather all the data, with dashboards enabling big picture views.
Big data is the land of opportunity, offering businesses the chance to enjoy the types of performance gains last seen in the 1990s. A recent study by Adobe revealed that the most data-driven marketers enjoy a conversion rate nearly 10 times higher than the least data-driven marketers. The top 20% had a conversion rate of 9% or more, compared with 0.9% at the bottom 14%.
Marketing data is your most important asset. It allows you to make better and faster decisions, and get to market faster, than your competitors. Gather as much data as you can and treasure it. Look deeply, then take action to create unprecedented business value.
“Because we’re able to leverage years of customer data, we now can focus our planning and marketing investments to achieve the best ROI,” said Ken Waldron, STIHL’s national marketing manager.
Jeff Winsper is the founder and president of BlackInk ROI. He has been dedicated to the advertising and marketing community for over twenty years. With a breadth of strategic marketing and business expertise, Jeff has helped a variety of companies throughout their life cycle, ranging from start-ups to the Fortune 500. Jeff sits on a number of advisory boards, and is also the Founder and Principal of Winsper.
(Image Credit: Mathias Isenberg)