Moneyball Marketing: Becoming An Analytics-Driven Business
With the baseball post-season in full swing, and as businesses start planning for next year, it seems as good a time as any to talk about Moneyball and how it can apply to business. For those who haven’t read the book or seen the movie, Moneyball is a story about how a Major League Baseball team, the Oakland A’s, applied data, analytics and statistics to gain a competitive advantage to win games. It’s not hard to draw the parallels between baseball and business: in baseball it’s about winning championships where in business it’s about winning customers.
Like in baseball, being an insights-driven organization doesn’t only pay off in wins, it pays off in dollars – and in a big way. According to a recent Forrester report, businesses that are insights-driven, who use data and analytics as a fundamental strategy for their business, are forecasted to steal $1.2 trillion a year by 2020 from businesses that are not insights-driven.
Businesses like Netflix, Amazon and Tesla understand this and are using data-driven insights to differentiate themselves and provide new value to their customers. In an increasingly hyper-competitive world, it is becoming critical for businesses to be a step ahead of their competition to win customers. Here’s how Moneyball Marketers are winning:
Moneyball marketers use data as their competitive advantage
The Oakland A’s use Sabermetrics – the application of analytical methods to baseball statistics – to profile players and glean new insights into what actually constitutes a valuable player, and what specific attributes contribute to wins. Similarly, Moneyball Marketers leverage their big data to develop deep, holistic profiles on their customers to gain an intimate understanding of what drives customer value. More specifically, these marketers gain a significant competitive advantage by leveraging their data to:
- Glean new insights on customers and products:
Moneyball Marketers continuously mine data for hidden insights, using machine learning algorithms to gain new perspectives such as: what product combinations lead to future purchases; what behaviors lead to greater lifetime value; which behaviors lead to churn or defection; and what experiences lead to customer loyalty. These insights pave the way for clear strategies targeted to individual customer needs.
- Personalize the customer experience:
The creation of holistic customer profiles allow Moneyball Marketers to understand each individual customer’s experience and journey. Personalizing content, offers and products to the customer according to their unique journey creates relevant and meaningful experiences that make the customer feel like they’re understood and appreciated, leading to high brand engagement and lifetime loyalty.
- Define new key metrics:
Much like how the Oakland A’s discovered new metrics to evaluate players, Moneyball Marketers create new key metrics such as measuring customer engagement, calculating their Customer Experience Quotient, or gauging a customer’s likelihood to refer. They then actively manage these metrics, using analytics to predict performance, and aligning their business operations and processes to optimize it.
Moneyball marketers do more with less
With one of the lowest payrolls in Major League Baseball, the Oakland A’s used analytics to make the most of what they had in order to compete with much larger payrolls boasted by the likes of the New York Yankees and Boston Red Sox. In today’s fast-moving digital world, where customers are demanding more from brands, Moneyball Marketers are continuously finding ways to optimize their budgets while increasing the efficiency and effectiveness of their marketing – at scale. They achieve this through:
- Algorithmic marketing:
Similar in concept to the recommendation engines that power Amazon and Netflix, Moneyball Marketers leverage predictive analytics and machine learning to mine customer interactions in real-time and to automate the delivery of meaningful experiences at scale.
- Integration of marketing technologies:
According to a report by Informatica, 52% of marketing leaders cite the complexity of integrating technologies as the most challenging obstacle to marketing technology success. Moneyball Marketers understand that in order to do more with less, they have to get the most out of their marketing technologies and achieving seamless integration across transactional databases, operational systems, digital platforms, campaign management tools, content management systems, analytics software and 3rd party systems.
- Marketing automation:
Marketers are under increasing pressure to move as fast as their customers and brands are challenged to keep up. Moneyball Marketers spend the time and commitment to ensuring their systems are optimally configured and integrated to automate the ability to respond to customers in real-time, and deliver relevant content in a meaningful channel at the right time for an enhanced customer experience.
Moneyball marketers stick with it
The early days of the Oakland A’s Moneyball experiment did not start off well. They started the season with a losing record and faced wide criticism from baseball purists. Many questioned the strategy but they stuck with it. That year, the Oakland A’s not only went on to win the American League West title but they also set a new record for the longest winning streak at 20 games. Similarly, Moneyball Marketers, and the organizations they operate in, completely buy into the strategy and embed positive feedback loops such as the ones listed below to ensure that iterative improvements take place, which lead to long-term success. Moneyball Marketers do the following:
- Build insights-driven, closed-loop processes that drive all decision making:
Moneyball Marketers implement continuous improvement measures across all their decision making processes to ensure that the most effective decisions are being made. The insights and learnings derived are then used to input into the next planning cycle to further enhance the decision making, thus creating a closed-loop virtuous cycle of improvement.
- Continuous optimization across the customer journey:
Moneyball Marketers leverage the power of customer insights through research, data and analytics to map out all the critical touchpoints and identify the “moments of truth” and “pain points” for each customer. Based on that journey they illustrate the trade-offs, influences, and drivers of each customer across their unique journey to ensure communication consistency and to optimize a closed-loop process from strategy through to execution.
- Create an insights-driven organization and culture:
The Oakland A’s General Manager was the key influencer that secured organizational buy-in from his ownership and managers to his scouts and his players. It was this difficult but critical cultural shift that allowed for his success. Successful insights-driven businesses similarly implement this philosophy from the top down, from the CEO right down to the analyst. It is embedded in every facet of the business and its culture, and demonstrated in the level of commitment, accountability and resources allocated to analytically-driven initiatives, creating the ability to grow revenues, reduce costs, mitigate risk and compete more effectively.
What this means for marketers
The marketing landscape is changing rapidly, with the customer experience becoming the new product. Customers are looking for brands to deliver seamless and personalized experiences that show they truly understand them, can anticipate their needs, and be at the right place at the right time to create a meaningful moment. Insights-driven businesses are winning at this game, building lifetime loyalty among their customer base and creating significant barriers for their competition in the process. The key takeaway for brands striving to be Moneyball Marketers is to live and breathe an insights-driven, customer-first strategy throughout the organization and to not employ it half way. In order to be successful, you need to go at it with the same vigor and passion you use to compete with your rivals. You may swing and miss along the way, but if there’s one statistical certainty in baseball it’s this: you miss 100% of hits you don’t swing for.
By Louis Cho, Managing Director of Marketing Sciences at Delbridge Solutions
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