June 2011

Reach the Marketing Balance: Art and Science

art science marketing

When an expert on marketing metrics says analytics alone aren't enough, you take notice. Wharton@Work recently asked Dave Reibstein, co-author of Marketing Metrics: The Definitive Guide to Marketing Performance, to explain why marketing needs a combination of right and left brain involvement.

Wharton@Work: You literally wrote the book on marketing metrics, and you're academic director of Wharton Marketing Metrics: Linking Marketing to Financial Consequences. But you said recently that numbers aren't enough. Can you explain?

Dave Reibstein: Today there is more and more data that allows us to provide some guidance and direction, and knowing how to collect and measure it is crucial. We can't overestimate its value, but at the same time we need to make sure we're not being blinded by it. Fact-based marketing, which we'll be doing a lot more of, has to involve creativity. Intuition is just as important as information. In fact, most of the real breakthroughs occur when somebody is being really creative in how they come up with ideas and then test them out.

W@W: So the testing piece provides the data?

DR: Yes. Once those creative ideas are put into the market, you need the ability to measure customer reaction in a relatively expeditious way. It's a process of test and learn. This approach started with direct mail: you might have a database of a million people that you mail a catalogue or a letter to. You send out ten different versions to groups of 500 people and see what kind of reactions you get. This test shows what will work best for the other 995,000 people in the database. You're now seeing this kind of testing on the Internet because you're able to do it individually — and faster and cheaper — as well. [W@W note: A similar practice of "Adaptive Experimentation" is described in this month's Nano Tool.]

Amazon, for example, is constantly running experiments. When two people do searches, the responses may be different. They're testing different approaches to see what works better. The learning part involves metrics; you're measuring the results and learning how to improve the next round of testing. But without the creativity in designing the test, you only have half of the equation.

After a clothing retailer makes a sale — let's say it is a blue sweater — the question is then what to offer you next. Should it be a blue skirt or a blue shirt to go with that sweater? We can create tests with all the people who bought blue sweaters and quickly learn what they would most likely to respond to.

W@W:Isn't the next round of testing based on metrics, then?

DR: It's a combination. Knowing what people will respond to doesn't tell you how to get that information out there. Analytics look back; they measure what already happened. But breakthroughs involve intuition, they aren't born out of a historical perspective. You won't get the next idea by looking only at what already happened. Deciding what to test — what idea to try — involves creativity because there's an almost unlimited number of possibilities. Look at your data creatively: what categories could you go into, what should you offer, and how should you put it out there? It is an informed creativity.

W@W: Who's doing this well?

DR: LL Bean and other direct marketers. They offer different variations of their catalogues and have years of data about what works and what doesn't. LL Bean sells clothing and equipment for outdoor activities, and they know what sells. Then they took that information a step further by adding Outdoor Discovery programs. They now offer tours and outings for activities like snow shoeing and fly fishing.

Costco is another retailer that has evolved their offerings. They know their members and continue to provide new products and services to appeal to them. The possibilities are endless, so there has to be someone at Costco who is asking, "What do we do next?" The decisions about what to offer, and how to offer it, involve creativity. Fine art, designer wedding dresses, and grid-tied solar energy kits are some recent Costco additions.

W@W: Is the kind of creativity you're talking about easier for some organizations than others? What kinds of impediments make it difficult?

DR: Culture can be a problem. I was working with Whirlpool about a decade ago, and we talked about their offerings, asking "what's the next refrigerator or washing machine going to look like?" I suggested one appliance that both washed and dried clothes. You don't wash and dry your dishes in two separate machines, so why do that with clothes?

The idea didn't make sense to them. They had two separate groups, one in charge of washers and the other in charge of dryers. There was no one in between, no one to think about possibilities beyond the way things have always been done. It turns out there was a need for creativity there. A number of European companies are making them now, as well as LG in Korea.

W@W: How can companies get better at combining right and left brain thinking?

DR: They need to think about how the consumer is using the product or service and about how they can somehow enhance that experience. We assign people to work within particular domains and therefore it's difficult to get people to be able to think outside of them. You need to go beyond what's already there, and what's already happened. Metrics tell you what worked in the past — intuition can guide you to the future. The new product groups need to be working with diverse team members to bring in heterogeneous perspectives. Also including kids or teenagers and other various input always helps for idea generation.