How Macy's Views Data Analytics
I recently participated in an American Marketing Association (AMA) webinar in which we discussed how injecting analytics into the marketing process improves profitability. With marketing budgets under so much scrutiny today, you’d be amazed at how many of the companies I work with still allow marketers to rely solely on instinct and intuition.
One problem is a distrust surrounding analytics — not to mention fear that it will force marketers to change or devalue their expertise. So marketers hide behind the claim that they can’t quantify creativity, insisting that we should leave them to run their budgets and programs as they see fit.
I think these folks are missing a monumental opportunity. The application of analytics is by no means the death knell for intuition and creative expression. Quite the reverse, actually. Analytically-derived customer insight can dramatically enrich the art of marketing. Deeper insights into the real sources of customer value, the broader impact of marketing costs and the future behavior of customers translates into more effective concepts. Isn’t it better to know that your creative efforts are zeroing in on the right audience rather than being tossed into the air to see where, or if, they hit the mark?
On the webinar panel was Paul Coleman, director of marketing statistics at Macy’s. Coleman believes in marrying creative vision with technical expertise — i..e., the qualitative with the quantitative.
“Frank Lloyd Wright’s houses were beautiful,” Coleman said, “but they often had leaky roofs. He might have had better success if he had partnered more with his roofing contractor. The most creative ideas can create problems if they're short on technical execution.”
So, when do you press forward on gut feelings? When should you turn to advanced analytics? The mistake may be to view them as separate, competing strategies. It isn’t a case of a marketing team brainstorm session vs. rigid mathematical models. Both have their merits and limitations when used in isolation. Together, they enhance and validate each other. More importantly, a unified approach delivers better results. That’s what marketers want.
An intuitive approach is easy for most people to understand and communicate, as the language is simple and the logic is generally self-evident, if flawed. It's quick and easy to change course if something isn’t working as expected. But which way should you reorient the ship? You could correct the course so many times that you lose track of how you got there.
“Complications arise due to knowledge gaps and serial battlefield repairs," Coleman said. "You patch, change again, patch the patches, and end up not really knowing what you did. After a while, there’s no plan.”
In contrast, an analytic approach provides a consistent and reproducible structure for the decision-making process. Not the creative content, but the process. Everything has a place and makes sense, even if the behind-the-scenes logic is so complex that it requires blind faith in a model. Build your elegant vessel on facts and it will have a greater chance of reaching its destination, again and again.
Coleman concedes that it requires some sophistication for users to understand and trust a model. “I can’t tell you how often people ask, ‘What’s inside your models? I believe in them, but I want to try something else.’ My answer is that whether you believe in the models or not, the models believe in you. If your data went properly through all the steps in the modeling procedure, you’re going to get the results.”
For Macy’s, the valued proof of analytics is borne out by the return on investment. Even a small increase in response rates per campaign can make a significant impact on the bottom line. “Our use of analytics over the last two years has improved marketing results by millions of dollars,” says Coleman. "And that’s just for direct mail campaigns."
Coleman's advice for marketers seeking to exploit analytics to improve their results: “Quite frankly, the business managers don’t need fashion advice from me, and I’m probably not looking for statistics advice from the fashion director. The real win is to have people doing what they do best.”