Introduction

Why I Wrote This Book?

I wrote this book to address two challenges facing today’s marketers and analytics practitioners.

The first challenge is that the return on investment (ROI) of marketing analytics is low. Although analytics is widely acclaimed as the new science of winning, and the application of analytics is becoming commonly accepted in marketing, analytics has not lived up to the promise. A 2015 Forbes Insights Report indicates that only 22 percent of marketers have data-driven initiatives achieving significant results. That is startling, considering the importance and prevalence of analytics in marketing success. To add insult to injury, many executives say that they don’t trust their own analytics team. According to a survey of more than 2,000 data and analytics decision makers in 10 countries by KPMG and Forrester Consulting, only 38 percent of respondents have a high level of confidence in their customer insights, and only one-third trust the analytics generated from their business operations.¹

The second challenge is that the outlook for multichannel retailers seems to get bleaker and bleaker. According to Business Insider “the staggering rate of store closures that have rocked the retail industry over the past couple of years is expected to continue in 2019” and “more than 7,000 stores are closing in 2019 as the retail apocalypse drags on.”²

Although online sales increase every year, the reality is that for most multichannel retailers, online sales only account for less than 25 percent of their total sales revenue. The fate of multichannel retailers still largely depends on the growth of their offline sales, which means traditional marketing channels such as customer segmentation, TV ads, direct mail, print catalog, e-mail, and loyalty programs still play a critical role in today’s omnichannel marketing environment. However, because these channels are mature and hard to improve, attention and resources have shifted from offline to online and mobile where marketers see greater growth opportunities.

In light of these challenges, I decided to write this book with two objectives in mind:

1. I wanted to join forces with many other analytics experts to demonstrate that analytics can greatly improve the effectiveness of marketing if done correctly. And the best way to achieve this objective is to show both marketers and analysts how to make breakthroughs in some of the mature marketing initiatives such as customer segmentation, direct mail, print catalog, e-mail, loyalty programs, and measurement, thus, regaining marketers’ confidence and trust in analytics.
2. I wanted to improve the analytics IQ of marketers. To compete with marketing analytics, companies need to bring the left-side and the right-side brains together. The convergence of marketing and analytics once nice to have is now becoming a new trend and business critical. “Analytics Marketers,” individuals who both understand the analytics and speak the language of business, are critical to improving the competitive advantages of a company. This book aims to develop and transform more people into “Analytics Marketers”—making marketers analytically smarter and analytics practitioners more business savvy.

Who Should Read This Book?

This book is primarily geared to marketers who are seeking answers to these two major challenges:

First, the mounting pressure to gain deeper insights into their customers and improve the effectiveness of marketing programs, especially in the four traditional marketing channels: direct mail, catalog, e-mail, and loyalty programs.

Although more attention and resources have shifted to online and mobile, for most multichannel retailers, traditional marketing programs still account for more than 70 percent of the marketing budget. However, in the last decade, ROIs of these programs have plateaued or even declined year-over-year. While some of the existing known methodologies still working, overall, they are becoming less effective. Marketers must explore new ways to improve the performance of these programs. This book satisfies their needs by focusing on using innovations in analytics to boost the ROIs of these traditional marketing programs.

Second, the need to find low-cost analytics solutions for small- to medium-sized companies. Small- to medium-sized companies approach marketing the same way as their larger competitors do with one disadvantage: They have a much more modest marketing budget and a smaller analytics team. This book proves to them that analytics is not an expensive cost center. Instead, it is an equalizer that democratizes the competitive advantages between the large and the small. The book shows how small- to medium-sized companies can leverage analytics with just a fraction of the marketing budget of large companies to achieve at least equal if not better results than their larger competitors.

This book is also relevant to analytical professionals who have two unmet needs:

1. The need to improve the effectiveness of marketing analytics. Because analytics performance has not yet lived up to the promise, analytics professionals must seek and learn new ways to enhance their analytics capabilities. Excellent analytics capability requires many years of real-world practice and business acumen, which often are what many statisticians and analysts are lacking. This book introduces multiple innovative analytical solutions to solving marketers’ problems in the context of business. These solutions were developed based on the author’s two decades of practices and consulting experiences in both marketing and analytics. Analytical methodologies and techniques introduced in this book are empirical, practical, and pragmatic. Business analysts can borrow these ideas and apply them to solve their problems immediately. This book will refine analytical skills for both new and experienced analytics practitioners and help them to compete more effectively in the workplace.
2. The need to sharpen their business acumen and effectively and efficiently communicate with businesspeople. Executives hold the impression that analytics experts are speaking a language of their own, not the language of business. The book not only offers analytics experts practical analytical solutions but also equips them with fundamental business knowledge that is crucial for them to develop the right analytical strategies and better communicate actionable insights gleaned from data to their business partners.

As the demand for analytics continues to increase year-over-year, more colleges and universities are offering business analytics programs to their students. This book provides college students a peek into how analytics works in the real business world, giving them a feel of what marketers are struggling with, and how marketing analytics can help resolve their problems. This book can be used as an excellent complement to their academic textbooks and will significantly shorten their learning curve after they become a junior analyst.

What’s Special About This Book?

It is a handy and pragmatic book. The practicality of this book manifests in three ways:

1. The book focuses on solving marketers’ real-world problems. This book does not tell you glorious stories of analytics, but rather, it offers very detailed solutions to addressing marketers’ pain points at a very granular level. For instance, how to better identify hidden opportunities and threats through market segmentation; how to increase ROIs of direct mail, catalog, e-mail, and loyalty programs; how to measure marketing with the right metrics; and so on.
2. The analytical solutions introduced in this book are very applicable to most business-to-consumer (B2C) businesses. This book presents many original and new solutions to address some of the most challenging business problems, especially those current methodologies have little effect on. Since these techniques and approaches are very applicable, most B2C companies can quickly tweak and apply the methods and techniques to solve their business problems.
3. Analytical methods and techniques contained in this book are financially feasible. They are very cost-effective and doable; using them will not cost marketers extra marketing budget. All methodologies shared in this book can be done by using free analytical tools such as R or low-cost tools such as Base SAS along with Microsoft Excel, enabling small- to medium-sized companies to achieve at least equal if not better results than their larger competitors with just a fraction of the marketing budget of large companies.

I hope that readers find that this book serves not only as a compass but also a detailed roadmap toward the success of marketing analytics.

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