Think Micro not Macro - decisions, that is

I saw this post on Diamond Analytics' blog - Micro to Macro - where they discussed this post. There's a key quote:

For analytics to become the lifeblood of the (marketing) accountability process, the focus needs to shift from a micro- (investment level) to macro- (enterprise-wide) perspective.

I take a different perspective. I think that if you are going to embed analytics deeply into your marketing then you need to use analytics to improve your micro decisions. So what are micro decisions? Well they are probably the most common kind of hidden decision in an organization. These are hidden because although organizations realize they make a decision, they do not realize how many they make. For instance, if you decide to send a marketing letter to a subset of your customers you might think you have made a couple of decisions – what to put in the letter and who receives it – and so you have. In addition, however, you have made a decision for each customer to either receive or not receive the letter. Therefore, if you have 10,000 customers you just made 10,000 more decisions. If your website has a thousand visitors each day and you have decided on a promotion to display then you have made a thousand additional decisions just today – to display that promotion to each individual visitor. When you add a new option to your Interactive Voice Response (IVR) system, you have decided that everyone who hears that menu must hear that option. When you decide on the price for a product, you have decided to offer that product at that price to each potential customer who asks. Should you, in fact, consider the price separately for each customer?

Another way to spot micro decisions is to review your strategic decisions. If you have clearly articulated, in the description of the strategic decision, all the operational consequences then you will likely have described a number of operational or micro decisions then will need to be changed. If you have not described operational consequences carefully, then you probably have hidden decisions. For instance, a strategic decision to improve customer retention through marketing offers needs a plan for making sure that every interaction with a customer that might impact their decision to stay or go has been re-considered in that light. Trying to think through all the ways you hope the organization will change in response to a strategic initiative can bring to light many hidden micro decisions that support that strategic one.

To make analytics your lifeblood, you need to make sure you identify these micro decisions, get them right and analytically improve them.

Technorati Tags: analytics, customer experience, customer service, customer treatment, Marketing, predictive analytics, decisioning

Comments

[Ron Shevlin]

James -- I started w/ Pat LaPointe's comment that "Analytics are increasingly the lifeblood of a CMO’s accountability process".

I took issue with the word "are". I believe it "could be", but isn't today.

But when you say "To make analytics your lifeblood, you need to make sure you identify these micro decisions, get them right and analytically improve them" you leave out a key part of Pat's original sentence: "CMO's accountability process."

I wouldn't disagree w/ you at all that to embed analytics into marketing decisions that it needs to be done at the micro-level.

But "accountability" is often as much about politics and perception as it is pure measurement. And, in many of today's firms, the analytics group within marketing is focused on the micro at the expense of the macro. And when they can't address the macro questions, then marketing's credibility is called into question.

In looking back at what I wrote, I probably should have said "broaden the focus" from micro to macro, vs. "change the focus."

If analytics can address the macro, then sr. mgmt will have more confidence in it. And with more confidence, there's a better chance to get more funding to improve its ability to address the micro.

[Amaresh]

James,

To Ron's point - there is no challenging that marketing/operations need to be analytically focused at the micro level decision making. However, the challenge that marketing organizations face is demonstrating the ROI of the investments - which is a pre-requisite in most cases to justify the spend on incremental improvements at the micro level. However, lack of proper information architecture which makes it possible to get the 'right' data and skilled analytical folks who have a broader business perspective are the two major challenges that organizations face to think about analytics at a 'macro' level. This is where, the concept of developing an 'Information Advantage' becomes important.

[Rolando Hernandez]

James,
Great post. Why not use EDM for both?

The smart company would use Analytics and Decisioning to automate BOTH micro and macro decisions.

Here are some examples of what I call a million little decisions and million dollar decisions:

http://www.bizrules.info/blog/2007/02/micro-decisions-million-little.html

http://www.bizrules.info/blog/2007/02/macro-decisions-million-dollar-decision.html