Your business plans have their own hierarchy of needs — levels that define your ability to predict success. Inspired by Maslow’s Hierarchy of Needs, you can start to identify opportunities, strengths and weaknesses by examining your own marketing plan as a pyramid.
In this third episode of our three-part podcast series, we detail the fifth and final level — prediction, and how you can leverage the insights established within the previous layers to predict your marketing activity.
Level 5: Prediction
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.
Level 5: Prediction
Today is our final episode, episode five, in our series of the hierarchy of needs for marketing and media insights. So we’re excited to get to this ultimate layer, the fifth, highest layer on that hierarchy of needs. By way of a really quick recap, I’ll start from the bottom and work my way up the pyramid. The base layer that we talked about in our first episode is labeled delivery of activity, which really speaks to the marketing activity that we’re putting into the world to support the business. This would include very basic media reporting, number of impressions, engagements, those types of things that you’re getting that are supporting the business.
One layer up from that, layer two, is labeled efficiency and optimization. So that goes an extra step within understanding the quality of the media that you’re running and the marketing support that you have, and also provides insights on how to improve the media support your have, to better support the business.
The third layer starts to pivot away from a little bit of just what you’re doing from a marketing standpoint, from a media standpoint, but also getting the other factors. We labeled this internal factors. It starts to expand beyond just promotion of your business and gets into some of the other elements of the marketing mix, things like your actual product, the quality of your product, your pricing strategy, your distribution strategy or accessibility of your product. So those internal factors and analysis around that becomes the third layer.
And then similar to that, as we get to that fourth layer, the fourth layer is labeled external factors. These are factors that are beyond our control, that we cannot manage as a company, but certainly have impact. This would include things like weather or economic conditions or competitive activity or cultural events, things that are very real, have a very clear impact on our business, but are not things that we can plan for, not things that we can control, but things we need to be aware of as we try to understand the quality of our marketing activities and gain insights on what we’re doing.
So all of those layers lead up to this fifth layer, which is the ultimate top of the pyramid layer, and this is what all roads are really leading to. This is the holy grail, and this layer is labeled prediction. And what this really speaks to is, how do you leverage all these insights you’ve been pulling to understand and pull them together in a way that helps you predict the future? Said another way, what can I expect from my marketing activity? When I put X into the world, what should I expect back in return in terms of sales? And this is really the holy grail of marketing insights.
Yeah, it’s really hard to get to prediction without all this stuff underneath. And I think a lot of us would love to be able to do this whole prediction thing and estimating what’s gonna happen under different circumstances quickly. But unfortunately, getting here is not quick, getting here the right way is definitely not quick. It can take quite a while. But when you think about prediction, there’s kind of two big buckets that I think of when we talk about prediction. It’s demand planning, so it’s forecasting what I think is gonna happen from a demand perspective with my customers. That can manifest itself in a lot of different ways, which I’ll talk about more. And the other one is scenario evaluation. What if? The whole “what if” analysis. If I do X, what do I think is gonna happen?
You can answer that question without these four other layers underneath, but it’s never gonna be as strong as if you’ve got a good data structure underneath that that’s informing all of the assumptions that you have to build into that scenario. So on the demand planning side, or demand forecasting side, the biggest benefit that I’ve seen from a marketing perspective there is, it gives you another watermark to measure yourself against, in addition to year over year comparables, which we’re all probably intimately familiar with. And in addition to the typical finance or budget forecast that every company does every year, which is not so much a prediction of what’s gonna happen, it’s a estimation of how we get to a number that we need to get to for the year.
And measuring yourself against those two things is definitely good, it’s important, especially from a target perspective, to try and hit a goal. But it’s also good to be able to say “Okay, here’s what I think is gonna happen, all else being equal.” And now I need to layer my tactics and strategies on top of that to try and influence that number. And we’ve seen a lot of benefits of kind of taking that approach.
Sure, when you’ve had a client that says that they would like to have 2% sales growth from year one into year two, seems reasonable until you look at forecasting and prediction models that would indicate that, if all things are the same, they’re going to be down 3%. So all of a sudden it shines a very different light on being +2 because now you’re looking at a five-point swing against all the forces that are kind of at play against the business. It’s very valuable to have that context to understand what you’re working against.
And it allows you to ask different questions. Okay, so we’re targeting to be 2% positive this year versus last year. Our prediction would say that’s actually a five-point swing, so what’s different? That’s the question that comes to me, is okay, if you want some different business result to happen, what’s different in the business?
Are we spending more money? Are we executing our marketing strategy differently? Is the product getting enhanced somehow? Are we getting more points of distribution? Those are the-
And based on what we’ve done in the past, do we think that we can get to where we’re trying to get?
Can we make up this five points? Back to that example, can we make up these five points using the same tactics we’ve done in the past?
You’re relying on some of those more base layers of marketing insights that we’ve … media insights that we’ve talked about, to be able to run these scenarios and understand, can I get there or not? You may determine, and we have determined with some clients that we’ve worked with, the current set of tactics will not get us to where we’re trying to get, which then sets up another testing scenario where we’re trying something new, introducing new stimulus into our marketing mix, which takes us right back down to layers one and two and understanding when they run, what do they produce from a sales standpoint, and the whole thing kind of feeds itself as really kind of an integrated insights development strategy where we’re mining for insights across multiple layers here.
Yeah, because the best predictions are driven from what has happened in the past. The way you build context on what can happen is by testing.
By looking backwards.
Right, taking a hypothesis-driven approach, putting something in the market, measuring it, and then taking that insight and extrapolating it out to what is a reasonable assumption across the business. And that’s the whole scenario planning piece that, for a guy like me, is the funnest part. It’s trying to say okay, under X circumstances what do I think is gonna happen? Because you’re trying to predict what would happen in a scenario that has never happened before. And in that case, if you’ve done this the right way, your assumptions in that type of analysis should be really strong, and you should be able to defend them. Because the ultimate goal is to walk into a finance team or a board meeting or an executive team and be able to say okay, here’s all the assumptions that went into this estimation. We can argue the assumptions, but here’s the result that was produced by this little analysis, and here’s what we think is gonna happen.
There’s two ways to walk into that. One, assumptions that you just built on anecdotal information from working in the business for a long time, or assumptions that are built on this data structure, this hierarchy that we’ve built over the past two or three years. And then in my experience, it drastically changes the conversation in those types of meetings.
Yeah, and I’ve been in plenty of conversations when I’m wearing my media planning hat where I’m asked to put together a plan and provide some perspective on, what should we do to support the business in an upcoming time period? And then inevitably they question about, what should I expect the business return is gonna be? And so many times in my career I’ve been in a position to pull something out of my rear.
And give what seems like a very reasonable question, what should I expect in return from a business impact standpoint, very reasonable question. But without this type of reporting or analysis infrastructure in place, you’re very limited in your ability to give any kind of informed answer outside of a swag.
So it’s great to have this type of strategy in place, to be able to just have understanding. Does that mean that you’re always 100% accurate? No.
Very rarely. In fact, it’s probably an accident or a coincidence if you were exactly right.
But it certainly instills a spirit of confidence in understanding that when we do this, we should expect this type of return. If we didn’t, let’s explore more to understand what other factors are at play, and you really never stop learning.
And it’s just being honest. Being honest about the business, that things happen that are really hard to understand. And any business is an interconnected system of all types of different attributes that can impact performance. So yeah, I mean, I agree with all that.
So we’ve played off this, loosely been playing off this hierarchy of needs, Maslow’s hierarchy of needs, and this tip of the pyramid for human need is self-actualization of being the best version of yourself. We equate that in the marketing insights world to being the ability to predict the future. So that’s the fifth layer and the final episode in our series. We certainly hope you’ve enjoyed listening. Thanks for sticking with us through all of this. Thank you.