Spending on marketing analytics—quantitative data about customer behavior and marketplace activities—is expected to leap from 4.6 percent to almost 22 percent of marketing budgets in the next three years, representing a 376 percent increase. At the same time, marketers say barely a third of available data are used to drive decision making in their companies.
These are among the latest findings from The CMO Survey. Conducted biannually since August 2008, and sponsored by the American Marketing Association, Deloitte, and Duke University’s Fuqua School of Business, The CMO Survey is the longest-running survey dedicated to understanding the field of marketing. The latest edition received responses from 388 top marketing executives.
When asked to rate the percent of projects in which available and/or requested marketing analytics are used before making a company decision, marketing leaders have consistently reported levels ranging from a high of 37 percent in 2012 to the current level of 31.6 percent. These levels are higher for business-to-consumer companies: 38.5 percent for business-to-consumer service companies, and 33.2 percent for business-to-consumer product companies.
Marketers cited a number of factors that prevent them from using analytics as shown in Figure 2. Almost one third reported that the biggest factor is the lack of processes or tools to measure success through analytics. This suggests that companies have not thought through how analytics will enter the decision making process or how analytics will help marketers understand the effectiveness of their actions. The second largest barrier is that firms lack people who can span the world of marketing analytics and marketing practice. This divide between rigor and relevance requires boundary spanners that are either analytical managers or analysts with managerial insight. Either way, there must be human capital that can connect the dots between marketing practice and analytics. A prior CMO Survey found that only 3.4 percent of senior marketers believe they have the right talent to play this role.
On the upside, data is, for the most part, arriving when needed and is not too complex. Likewise, insight and relevancy do not appear to be the primary drivers of low analytics use levels.
How are analytics driving marketing decision making when they are used? Data reported in last year’s February 2016 CMO Survey reports that the largest use lies in leveraging analytics to generate customer insight (46.4 percent of companies), followed by customer acquisition (43.6 percent), customer retention (38.1 percent), digital marketing (36.7 percent), segmentation (31.8 percent), marketing mix decisions (31.5 percent), and branding (30.8 percent). Areas that need attention include using analytics in managing pricing, channel partners, and the salesforce—all of which would boost business-to-business company use of analytics.
Concrete recommendations for improving the use of marketing analytics are outlined in a previous Forbes blog that I wrote with Fuqua School of Business students, Sylvia Yang and Shiwani Kumar. We interviewed executives from a range of companies and found ten steps that companies can take to improve their usage levels. One additional recommendation I offer here is that companies should evaluate whether their marketing analytics are of a sufficiently high quality level. In the most recent CMO Survey, only 35 percent of marketing leaders report they formally evaluate the value of their marketing analytics. Regular review of the analytics used and not used may spur important conversations about the role that marketing analytics could play in driving firm decision making, which, in turn, should lead to stronger processes for doing so.
Christine Moorman is the T. Austin Finch Professor, Sr. of Business Administration at The Fuqua School of Business, Duke University. Professor Moorman’s research focuses on understanding the nature and effects of information utilization and learning activities by consumers, managers, organizations, and financial markets. She has examined these issues in contexts ranging from innovation, marketing research relationships, networks and interfirm alliances, and the impact of public policy and regulation. Professor Moorman is the author of “Strategy from the Outside In: Profiting from Customer Value” with George S. Day, which was awarded the 2011 Berry Book prize for the best book in the field of marketing. Professor Moorman is the founding and current Director of The CMO Survey. The Marketing Journal will provide periodical updates from Professor Moorman as future surveys are administered.