Podcast

The CMO’s frustration with analytics and how to solve it

A CMO is under pressure to make informed decisions that affect a company’s short- and long-term goals and initiatives. Oftentimes, data and analytics are a great resource. But, it takes time to develop data models for certain decisions, and confidence in the data itself.

An experienced analytics team recognizes that it takes time to build knowledge. It takes time to gather the pertinent information and insight to inform decisions. Predictive analytics can provide you with the confidence necessary to present ideas, make changes and produce results, but it’s a marathon, not a sprint.

In this episode, we discuss how a CMO can use predictive analytics as a powerful tool alongside more traditional data and analytics reporting.

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Welcome to Callahan’s Uncovering Aha! podcast. We talk about a range of topics for marketing decision-makers, with a special focus on how to uncover insights in data to drive brand strategy and inspire creativity. Featuring Jan-Eric Anderson and Zack Pike.

Jan-Eric:
Hey. This is Jan Eric Anderson, head of strategy at Callahan.

Zack:
And I’m Zack Pike, head of data at Callahan.

Jan-Eric:
Thanks for joining us on the podcast today. Our topic is inspired by an article you recently read. Zack, what did you read?

Zack:
Yeah, so I honestly can’t remember where I saw the article, but the title of it was around CMOs’ frustration with analytics and the whole point of it was talking about, it was based on a study that was done as part of a big survey, but it was talking about the, all of this growth in budget is being put towards data and analytics, right? Any study you read, it’s like, well, analytics is getting more budget next year and more and more and it’s a hard thing and it has been for a while, but it did a good job of explaining the frustration associated with that. So even though we’re spending more money, it’s like frustration is growing as well and the key factor that they spoke about in the article was that, it’s not the day to day decisions that are causing this frustration, it’s that CMOs are expecting to use data and analytics for these huge company changing decisions and it’s not panning out.

Jan-Eric:
[crosstalk 00:01:32] it’s the magic bullet.

Zack:
Yup, exactly.

Jan-Eric:
It’s not panning out.

Zack:
Exactly. It’s these big, massive decisions where, I’m a CMO, I may be new in the role I’m coming and I didn’t make some changes, I want to use data to do that, and data just isn’t giving me the confidence I need to either sell it in or feel good myself doing it.

Jan-Eric:
[crosstalk 00:01:51] And data analytics, is the role of data analytics to make decisions?

Zack:
No, it’s to inform decisions.

Jan-Eric:
Sure.

Zack:
Right?

Jan-Eric:
Right.

Zack:
It’s to, we’ve talked about this before. It’s to bring confidence to the people who have to make those decisions and live with it. It’s, yes, there are some decisions you can drive and changes that the data is very clear. It’s like if you don’t do this, you’re just leaving money on the table or you’re missing out on something. But the biggest and most impactful, typically it’s not clear cut, you’re giving them, hey, I’m reasonably confident that this is the right path to go down and here are some ways that we can test that and all the stuff we’ve talked about in the past. But yeah, it’s about confidence mostly.

Jan-Eric:
And you know, you and I have talked so much. We’ve come into situations with clients where there’s almost an expectation from the client that there’s a yes or a no answer to so many questions [crosstalk 00:02:48], where it’s very black and white. It’s, binary, there’s a binary decision to be made and the reality is, the important questions, the big questions, the complex questions are never binary and so, there in lies maybe a little bit of a disconnect from what CMOs are expecting. Analytics can come in and say it’s A or it’s B and a lot of times it’s some combination of C, D, E and F and that can create some frustration I guess, where it’s misaligned on expectations in the first place.

Zack:
Yeah, I mean the example that comes to mind for me is relevant, it’s been in the news recently, is McDonald’s discussing if they should improve the quality of their ingredients by moving to more of a natural, naturally sourced product and that is a very large binary decision for a gigantic company that could have either amazing benefits or could totally smash the business. Those are the types of decisions that I think CMOs are trying to get their head wrapped around with data and I can, I’m only, I’m building some assumptions here, but I would go to guess there’s not a model built anywhere inside McDonald’s that gives them a clear cut answer. They know it’s going to be a long term objective. It’s going to have to happen over a very long period of time but in that scenario you’re increasing costs to increase quality and you’re not sure if your customer base is going to purchase that.

Jan-Eric:
Yeah, so a lot of factors coming into play there and mixing together. So, for someone who’s in an analytics role, is there pressure to have to try to answer these tough questions for the CMO?

Zack:
Yeah. I think, especially depending on your position. So I think there’s varying levels. If you are a part of an analytics company and analytics is your product and you’re contracted with brands and other companies to outsource their work, that’s a different level of pressure than I think if you’re inside the organization and depending on where you are in there. So, in prior lives, at prior companies, I’ve been tied to the finance group and so when you’re inside the finance organization working with the marketing organization, the pressure on you to prove that the marketing decision is the right one is almost nonexistent, right? In fact, you sometimes have the to prove the opposite because it means more budget for other things.

Zack:
But if you’re on the side of an analytics agency or a marketing agency, an analytics person inside of a marketing agency, the pressure is flipped. It’s, I need to prove that marketing is doing something. This is the pressure, that doesn’t mean this is how analytics people act, but this is the pressure being put on them. I need to prove that something’s happening as a result of these marketing dollars or the dollars go away, which means my budget goes away, which means I’ve got to go find a different client and do different work. So I think that that dynamic can lead to over promising of the results that are going to be produced from any type of analytics initiative that’s out there, which could get to the bill of goods that these CMOs are sold around these huge decisions is-

Jan-Eric:
We’ll make this decision for you, guarantee that there’s actual insight and pressure to inform these decisions or make these decisions as much as possible. I guess it starts to blur the lines. I mean, it’s human nature. We all want to deliver. We all want to look smart and, in front of our bosses or in the organization and be able to answer the tough questions [crosstalk 00:06:42] wants to contribute and add value. There’s no question about that. That’s the human nature piece of it. I guess though that human nature might sway our ability to distinguish the difference between what we think and what we know. What’s assumed and what’s fact. And little sound bites or little insights all of a sudden can grow to become a life of their own and in that sense, you start to really shape the understanding of analytics in a skewed way, that’s maybe inaccurate. It starts to create maybe the wrong reputation for analytics, which is, always has the answer when in actuality doesn’t and never should’ve been positioned as such.

Zack:
Yeah, I think there’s two pieces to that. One that is really easy to kind of permeate through an organization when that analytics person isn’t in the room because lots of times when the final decision is made, they’re not. Right? Your analyst who churned through all that data sometimes isn’t in that board room helping make sure that, understanding of that insight is crystal clear. It makes sense, especially for the CMO because you think about the average tenure of a CMO, it’s one of the shortest tenures in the C-suite. If you come into an organization as a CMO, you have to deliver, right? And sometimes the cards are stacked against you because marketing can only do so much on a product or a business.

Zack:
If you’ve got problems inside the business, no amount of marketing is ever going to fix it. There are situations where that is true, so you have to deliver. It’s like a sales position. If you come in and don’t deliver, bad things are going to happen, and so I think that is a factor there in CMOs getting all of this pressure to deliver on the marketing plan, make changes to messaging and tactics and everything, and then produce ROI on the back end. That ROI has to happen inside of two years [crosstalk 00:08:51] one, two years.

Jan-Eric:
So there’s a convergence of forces there. CMO in place needs to produce instant results. Comes in with the mindset of making changes. CMOs typically don’t come into a new role and say, let’s keep doing everything the same. So CMOs are going to come in and do their own thing. Part of that could be instituting a new way of doing analytics. That is putting them, there’s pressure to deliver results and make decisions based on analytics. All of this in a compressed timeline because of course the CMO is under immense pressure to deliver results. So this is all kind of a convergence of forces. And I guess maybe the ultimate metaphor that you get back into is that, when thinking about analytics and the value of analytics, a CMO is better to be in a mindset of a marathon runner than that of a sprinter.

Zack:
Which I think is the key to the frustration. That’s actually the issue, is, so what we just talked about does not line up with what needs to happen. A CMO’s pressure, the pressure on this person to build results quickly does not line up with a good analytic strategy that’s designed to influence a gigantic business altering decision effectively. Right? You can do short term stuff and kind of increase confidence a little bit, but to really drive the level of confidence most people want and are sold when they purchase these analytic services. It takes time and sometimes it takes a long time. Right? So if you think of, like, so, I mean this won’t be news to anybody, but there’s all types of talk of the reduction in value of marketing channels like TV, right? Who knows if it’s true and it’s dependent on the industry and all kinds of factors.

Zack:
But there is a sentiment that you should be moving money out of TV and into digital. Well, for a company that has been executing in TV for decades, that is a very tall order, right? That is not something you can just switch in a year or even a number of years. And to make a decision like that, if someone is really on board with actually making that decision and they want to build confidence in the data to do that, they need to take a multiyear approach to building that level of confidence. And typically what that means is, testing in the beginning and growing those tests size and the impact of those tests over time. And with most marketing cycles and business cycles, you can’t just do it all in one year. You have to get stronger and stronger every year.

Zack:
It may take three or four years to get to where if I’m 80% TV and 20% digital, to be a 40% TV and 60% digital, it may take three years to get enough confidence to make, to finally make that decision, which now you’re past the average tenure of a CMO, people are wondering where in the heck results are-

Jan-Eric:
And the process starts over again. And we never get out of the cycle in essence. Yeah.

Zack:
Right. So it’s, from an analytics perspective, it’s just as frustrating because unexperienced analytics person is going to tell you they need time to help you make this decision. And to our earlier point, I think that’s an issue with the over promising, is a less experienced analytics company or a person is going to try and force that decision as quickly as possible. Because they know that that’s what people want. I think with experience comes wisdom and you can be honest with the CMO and say, Hey, yes, I can get you there, but it’s going to take a lot of teamwork and a lot of time before you feel confident about it.

Jan-Eric:
So to recap this, in essence. The frustration we think stems from a couple things. One, it’s the, it’s kind of the expectation that complex decisions are binary and can be answered rather than informed by analytics.That, that’s an expectation from the CMO, that then fans the flames among analytics teams to feel pressured to try to over promise and over deliver or maybe over represent what analytics insights they actually have when we start to blur the lines between assumptions and facts, what we know and what we think. And really then calls for a big step back and a challenge to CMOs, which is to adopt the mindset of a marathon runner rather than a sprinter. And recognize that it takes time to build knowledge. It takes time to gather the pertinent information and insight to inform decisions that are made rather than expecting to turn this thing on.

Zack:
Yup. That’s perfect.

Jan-Eric:
And you know, I would wrap this up, maybe in a and with another analogy of what this is like. Now, we are in the new year’s resolution time of the year and this is when diets come up and people will make new year’s resolutions around dieting. And expect immediate results.

Zack:
Right. Yeah.

Jan-Eric:
And if you haven’t lost 10 pounds by the end of January, you’re likely to give up on it or quit the diet, fire the analytics team and move onto something else. But the reality is, the most successful plans for diet are looked at in the, for dieting are looked at in the longterm and are instituting healthier decision making, healthier habits, not being obsessed with what’s on the scales but about making better decisions to lead a healthier lifestyle. And I think that is a perfect, timely parallel back to the proper way for CMOs to think about analytics. It’s less about short term loss of 10 pounds and more so about understanding how to make better decisions around eating habits and how you live your life and it’s a different appreciation on the data.

Zack:
Yup. I think the best CMOs in the world or best CEOs in the world would say the same thing. If you follow Jack Welchs of the world, none of them are focused on week over week, year over year comps, they’re annual, they’re tenure outlooks, I mean that should tell you something there as well.

Jan-Eric:
Well, Zack, thanks for joining me today. As always, it always is a pleasure.

Zack:
Yes.