EXCERPT FROM

It’s Not the Size

of the Data

It’s How You Use It

Smarter Marketing with

Analytics and Dashboards

Koen Pauwels

A M E R I C A N M A N A G E M E N T A S S O C I AT I O N
N EW YO R K • ATL A N TA • B RUSSE L S • C H I CAG O • M E X I CO C I TY
SA N F RA N C I SCO • S H A N G H A I • TO KYO • TO RO N TO • WAS H I N GTO N , D. C .

American Management Association • www.amanet.org

 Advance Praise for
It’s Not the Size of the Data—
It’s How You Use It
“A fascinating combination of rigorous research and methodology with
practical insights and implications. Both practitioners and academics
can benefit from reading it.”
—Don Lehmann, George E. Warren Professor of Business,
Columbia University; coauthor of Analysis for Marketing
Planning, Managing Customers as Investments,
Product Management, and others

“Big data in marketing is about looking for rationality to emotional

behavior. This book teaches how to do that.”
—Stan van den Broek,
Shopper Insights Manager, SCA Hygiene Products

“Pauwels uses numerous examples to present scientific knowledge in an

impressively simple and understandable way. An extremely informative
book that will inspire many managers to make immediate changes in
handling their data.”
—David Geistert, Department of Business Administration—
Market-Oriented Media, University of Hamburg

“Way more than just metrics and dashboards—this will be a great

resource for marketers and business professionals.”
—Laura Patterson, author of
Marketing Metrics in Action and Measure What Matters,
and cofounder of VisionEdge Marketing, Inc.

American Management Association • www.amanet.org

 Contents
(full table of contents)

Foreword by Laura Patterson xiii

Acknowledgments xvii

Introduction: Decisions That Data and Analytics

Can Inform xix

PART I: WHAT MARKETING ANALYTICS DASHBOARDS

CAN DO FOR YOU

Chapter 1: Marketing Analytics Dashboards:

What, Why, Who, and How 3
CASE STUDY The Right Chair #1: Marketing Analytics
Gives SMEs a Competitive Advantage 5
What Is a Marketing Analytics Dashboard? 7
CASE STUDY Cars: From Begging HQ to Talking Trade-Offs 10
Why Marketing Analytics Dashboards? 14
Who Uses Marketing Analytics Dashboards? 15
How Can a Marketing Analytics Dashboard Help You? 16
Wrap-Up and Manager’s Memo 18

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Chapter 2: Compare the Marketing Analytics Dashboard

to Your Current Scoring System 21
Reporting Versus Analytics in Dashboards 22
Marketing Analytics Dashboards and Balanced Scorecards 23
CASE STUDY City Performance: From Charlotte’s Balanced
Scorecard to Atlanta’s Dashboard 27
Decision Support Tools and Marketing Mix Models 29
Dashboard Building Blocks: Metrics and Key Performance Indicators 31
Wrap-Up and Manager’s Memo 33

PART II: PLAN YOUR MARKETING ANALYTICS

DASHBOARD

Chapter 3: Start with the Vision 39

Business Strategy Drives the Dashboard 40
CASE STUDY Unisys Makes Goal Alignment a Key Priority 40
How Goal Alignment Increases Performance 42
Top-Down or Bottom-Up Design? 44
Communicating Upward: Harnessing Top Management Support 47
CASE STUDY Dashboards Empower Middle Management:
Discover Financial Services 48
Wrap-Up and Manager’s Memo 49

Chapter 4: Assemble Your Team 51

Cross-Functional Development Teams 52
CASE STUDY Not All Fun and EB Games 53
Team Management Is Ongoing 54
Sustained Assistance from Top Management 57
Wrap-Up and Manager’s Memo 58
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Chapter 5: Gain IT Support on Big and Not-So-Big Data 60

IT Is from Jupiter, and Business Is from Mercury 61
CASE STUDY Inside and Outside Data at a Multichannel
Retailer 63
Moving IT Closer to Business 63
Moving Business Closer to IT 66
Wrap-Up and Manager’s Memo 67

Chapter 6: Build Your Database 69

Planning the Right Database 69
Building Your Database In-House 71
CASE STUDY The Right Chair #2: The Longest Journey
Starts with the First Database Step 74
Outsourcing Your Database 76
Testing and Managing Your Database 77
Wrap-Up and Manager’s Memo 80

PART III: DESIGN YOUR MARKETING ANALYTICS

DASHBOARD

Chapter 7: Generate Potential Key

Performance indicators 83
What Could Make or Break Your Business? 83
How to Structure Interviews to Generate KPIs and Structure
KPIs into Groups 85
CASE STUDY IT Firm Generates and Organizes 150+ Metrics 87
Shortcuts? Start with the Competition or with Company
Objectives 88
Clarify for All What Each KPI Means 92

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CASE STUDY The Right Call #1: What Is a Qualified Lead? 93

Wrap-Up and Manager’s Memo 94

Chapter 8: Eliminate to Select Key Leading

Performance Indicators 97
Why Not Ask Customers What’s Important? 99
CASE STUDY First Tennessee Bank Tests Its Metrics 103
Which Indicators Lead Peformance? Granger Casuality in Action 104
CASE STUDY From 99 Metrics to 17 LPIs 106
Which Indicators Are Key? Vector Autoregressive Modeling 108
How KLPIs Improve Insights in Different Industries 112
Wrap-Up and Manager’s Memo 121

Chapter 9: Include Emerging Channels: KLPIs for

Online and Social Media 123
What Is Truly Different Online? 124
Customer-Initiated Contact Metrics 126
Capturing Conversation Topic Dynamics in Social Media 129
CASE STUDY Fashion Retailer Analyzes the Effects
of Social Media 134
Wrap-Up and Manager’s Memo 138

Chapter 10: Emerging Markets Frontier: Metrics

Across Countries 141
The Need for Standardized, Global Metrics 142
Consumer Protection Lowers Marketing Responsiveness of
Consumer Awareness 145
Individualism Increases Marketing Responsiveness of Brand
Consideration and Liking 146
Income Increases the Sales Conversion of Brand Liking 147
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CASE STUDY How Advertising Effects Differ in an Emerging

and a Mature Market 149
Wrap-Up and Manager’s Memo 150

Chapter 11: Design the Layout and Dashboard

Prototype 153
Dashboard Structure: Seven Must-Haves 153
Data Display on the Dashboard 158
Data Visualization 160
CASE STUDY Data Visualization at Procter & Gamble 163
Wrap-Up and Manager’s Memo 165

PART IV: LIVE YOUR MARKETING ANALYTICS

DASHBOARD

Chapter 12: Launch and Renewal of the Marketing

Analytics Dashboard 169
Dashboard Implementation Roadmap 169
Execution Challenges 174
CASE STUDY The Right Call #2: Implementation Challenges 174
Key Implementation Success Factors 177
Renewing the Marketing Analystics Dashboard 180
Wrap-Up and Manager’s Memo 181

Chapter 13: Change Your Decision Making: From

Interpretation to Action 183
Adapt the Dashboard Output 185
Decide on Rules for Setting Marketing Budget and
Allocation 189

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CASE STUDY Online Marketing Effects: Shifting

Euros Away from Last-Click Misattribution 190
Addressing Implementation Challenges 199
Wrap-Up and Manager’s Memo 201

Chapter 14: Nurture the Culture and Practice of

Accountability 203
Organizational Culture Is Crucial to Dashboard Success 203
Motivating Employees to Use the Dashboard 205
The Practice of Accountability 207
How to Support Accountability Throughout the Organization 208
Wrap-Up and Manager’s Memo 211

Conclusion: Call to Action 213

Notes 217

Index 225

About the Author 231

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 Foreword

REGIS MCKENNA is attributed with saying that marketing represents the

ongoing effort to keep products and services in touch with evolving
conditions. As the pace of change has accelerated, so have the degree of
choices and point of control—choice of product, choice of brand,
choice of channels, and choice of touch points. The customer, as they
say, is firmly in the driver’s seat. As a result, marketers and marketing
have evolved from selling products and building relationships to
creating compelling customer experiences. This in turn has led to a
proliferation of content, and a focus on segmentation, customization,
personalization, and engagement.
This multichannel, customer-driven dynamic environment pres-
ents increasing challenges. There are more claims on your customers,
your company, and your attention, time, and energy. Every day more
opportunities present themselves to marketing, such as new online
communities, new channels of communication, and new markets and
customer segments. So how do you decide where to make your invest-
ments? It’s often a tough choice—one that can be made easier if you
have the right insights from the right information, organized in the
right way. That’s why the principles in this book are applicable to every
marketer everywhere.
I first met Dr. Koen Pauwels in 2007 when we were both attending
a marketing conference. It wasn’t long before we recognized that we
were kindred spirits in our dedication to enabling organizations to use
data, analytics, process, and metrics to improve marketing alignment
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FOREWORD

and accountability. Since then, we have continued to help each other’s

efforts and those of marketers who want to operate centers of excel-
lence.
I believe every marketing professional is committed to generating
value. But let’s face it; every marketing investment is under intense
scrutiny. The need for a good rationale to invest the resources you have
available was never more of a prerequisite than it is today. One of the
quotes in this book I encourage we all commit to memory is “Gut deci-
sions, which were once seen as inspired (if they succeeded), are now
viewed as rash. To command authority, you need the numbers to back
you up.” That’s why I encourage you to move this book to the top of
your pile.
The basic idea behind this book seems rather obvious. By using
data, analytics, modeling, data visualization, and dashboards, mar-
keters can make better strategic and tactical decisions and investments.
If only it were that simple. Koen Pauwels is clear right out of the gate—
it may not be simple but it is essential. The Advertising Research
Foundation’s fortieth annual conference in 2001 was among the first to
boldly address the topic of marketing measurement and accountability.
And it’s likely to remain a top-of-mind topic—a topic that has remained
among the headlines ever since marketers started scrambling to crack
the code, some more successfully than others. But all of us are exposed.
What we can measure, the data we can collect, has exploded as quickly
as the channels and technologies we have at our fingertips.
What Koen Pauwels has brought into focus is that, at a time when
we have more marketing data and technology than ever before, we
must undertake an immense effort to transition from activity-based to
outcome-based marketing. This transformation involves embracing the
science, and thus the difficult and what may at first glance seem like the
dry side of marketing.
How can marketing prove and improve its value? That’s the ques-
tion that has driven VisionEdge Marketing since its inception. We
know from our work in hundreds of engagements that marketers who

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 FOREWORD

create alignment, leverage data and analytics, identify and select the
right metrics, and employ an effective dashboard are more successful,
more confident, and more credible. This is the beauty in science side of
marketing.
Through this book Koen Pauwels makes his extensive experience
within the reach of us all. He outlines steps, shares case studies, and
provides end-of-chapter guidelines that make it possible for marketers
to create and utilize dashboards as a way to both monitor progress and
facilitate decisions. He designed this book to help marketers use data
and metrics to better understand the effect and impact of marketing
investments.
For any marketer who wants to generate value, enable his or her
company to compete successfully, and prove its value, read on. If you
want to avoid swimming aimlessly in a sea of data and metrics, then
this book is for you. If you want to better understand how to select met-
rics and present data, then start by turning the page.

Laura Patterson
author of Marketing Metrics in Action:
Creating a Performance-Driven
Marketing Organization and Measure
What Matters: Reconnecting Marketing
to Business Goals and cofounder of
VisionEdge Marketing, Inc.

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 I N T R O D U C T I O N

Decisions That Data and

Analytics Can Inform
Gut decisions, which were once seen as inspired (if they succeeded),
are now viewed as rash. To command authority, you need the
numbers to back you up. —ANINDYA GHOSE, 2013

I know that I ought to be looking at big data, but I am not quite

sure why, how, and what decisions I would be making differently
as a result. —ANONYMOUS DESPERATE MANAGER, 2013

MARKETING IS AT A CROSSROADS. Managers are frustrated by the gap

between the promise and the practice of effect measurement, between
big data and online/offline integration. Caught between financial
accountability and creative flexibility, most chief marketing officers
don’t last long in their companies. Their bosses have woken up to the
fact their companies make million-dollar decisions based on less data
and analytics than they devote to thousand-dollar operational changes.
Customer and market data management, product innovation and
launch, international budget allocation, online search optimization,
and the integration of social and traditional media are just some of the
profitable growth drivers that greatly benefit from analytical insights
and data-driven action.

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INTRODUCTION

Such data-driven action typically involves the following four ques-

tions1:

1. What happened?
2. Why did it happen?
3. What will happen if?
4. What should happen?

Better, faster, and more transparent answers to these questions help

establish marketing accountability.
Yet marketing accountability—let alone the accurate calculation of
return on marketing investment (ROMI)—remains an elusive goal for
most companies, which are struggling to integrate big and small data
and marketing analytics into their marketing decisions and operations.
In their March 2013 article, McKinsey experts share that “in our expe-
rience, the missing step for most companies is spending the time
required to create a simple plan for how data, analytics, frontline tools,
and people come together to create business value. The power of a plan
is that it provides a common language allowing senior executives, tech-
nology professionals, data scientists, and managers to discuss where the
greatest returns will come from and, more important, to select the two
or three places to get started.”2
The benefits of “getting started” and “marketing smarter” are huge
in both academic studies and business cases. Even a small improvement
in using marketing analytic dashboards brings companies on average 8
percent higher return on assets compared to their peers.3 This benefit
increases to 21 percent for firms in highly competitive industries.
Organizations of any size and in any industry have seen sustainable
competitive advantage from using marketing analytic dashboards.
However, only 16 percent of large international companies use market-
ing analytics.4 In my experience, this percentage is even lower for small
and medium-sized firms across America, Europe, and Asia. I see simi-
lar issues across multinationals and companies with a few dozen
employees and in industries ranging from business-to-consumer, gov-

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 INTRODUCTION

ernment, and business-to-business. The next three short stories illus-

trate the issues that have inspired this book.
In early 2012, I found myself at the U.S. headquarters of a fast-mov-
ing consumer goods multinational. I had been called in to moderate the
discussion between the chief financial officer (CFO) and the chief mar-
keting officer (CMO) on marketing effectiveness. The CFO insisted on
measuring all main activities either by ROMI or by return on market-
ing objective (ROMO). The list of activities included market research,
marketing data management, offline marketing communications,
online marketing communications, promotions, and direct marketing.
Across all activities, the CFO was unhappy and had three concerns:
objectives were not clearly defined, the timing of expected returns was
not specified, and the marketing department showed resistance to
measurement. I helped the CMO to:

> Clarify marketing objectives and align them with the

business strategy.
? Overcome marketing’s resistance to measurement.
? Obtain excellent and relevant data.
? Develop the analytics that showed not just the size but also
the timing of the profit returns to marketing investment in
all categories.

The second illustrative tale took place in an executive meeting at a

European-based business-to-business manufacturer. Country man-
agers were accustomed to obtaining a certain percentage of their rev-
enues to spend on marketing. Faced with new competitive threats, all
decision makers felt that this rule was far from optimal and needed to
change—but how? Some countries asked for more money for joint pro-
motions with their customers—to then sell more of their product to
end consumers. Others considered this simply giving away money to
the customers, and instead advocated a direct-to-consumer campaign
to create awareness and preference for their product. Still a third group
believed the firm should target policy makers directly with sustainable

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INTRODUCTION

business credentials, pointing to huge successes of having a prime min-

ister come talk at the company’s trade shows. Unfortunately, the lack of
before/after measurement of sales lift left country managers unwilling
the change their positions. In this case, I worked in three steps. First,
I ensured that each campaign had a stated, measurable objective that
was defined in place and time and had a before/after measurement as
backup. Second, after collecting data across years and countries, I cate-
gorized all campaigns by objective and ran analytical modeling to
quantify the link between each objective and profits, accounting for
country differences. Third, I recommended an improved allocation in
the direction of the findings.
The third story I want to share involves an Asian manufacturer of
consumer durables who had only sixty employees and nobody in
charge of data maintenance, let alone of the analytics to make them
actionable. Managers were overwhelmed by the hundreds of online
metrics regarding their paid, earned, and owned media, and had little
insight in the exact costs or returns of their offline marketing, which
makes up 85 percent of their budget. When sales quotas loomed, they
would often “shoot from the hip”—doubling spending on marketing
actions that were untargeted and probably inefficient. A nagging feel-
ing was telling them they might be increasing sales, but at the expense
of profits. Moreover, several customers told them they put in an offline
order based on online marketing touch points. Should online be cred-
ited for offline sales? The offline marketing manager definitely did not
think so! I worked with both the offline and the online marketing man-
ager to discuss how both channels contributed to sales. Based on this
framework, the company put in place the right metrics and collected
the data over time. A marketing analytics dashboard allowed both
managers to play around with spending scenarios and observe the
projected size and timing of profits, not just sales. They agreed on dra-
matic budget shifts and saw their company’s profit—and their reputa-
tions—greatly increase!
Across these cases, we see the same three issues:

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 INTRODUCTION

1. Unclear vision on how objectives relate to company

performance.
2. Uncertainty on the size and timing of expected returns
to marketing investment.
3. Resistance to measurement.

Sound familiar? Wouldn’t it be great to have a comprehensive set of

steps that can help you improve marketing decisions at your company?
How about a book that is steeped in both scientific research and prac-
tical applications to guide you along?
This book is all about marketing analytics dashboards, what they
are, how you can develop, use, and renovate them—and how they help
you make better decisions. This book guides you along a full journey of
data, analytics, dashboard insights, and the action they inspire. In spe-
cific chapters, you will learn the dashboard lingo, how to start the dash-
board initiative, how to build it, design it, and implement it, and how to
renovate the dashboard to maintain its relevance to decision makers in
your organization. This book doesn’t shy away from the tough parts,
both technically and practically, and it gives special attention to hot
topics such as leveraging online data and emerging markets. You will
learn about what worked to overcome obstacles, how specific compa-
nies did it, and what the evidence shows for your situation.
Welcome to the brave new world of marketing analytics dash-
boards.

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 P A R T O N E

What Marketing
Analytics Dashboards
Can Do for You

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 C H A P T E R 1

Marketing Analytics
Dashboards: What, Why,
Who, and How
Data is prolific but usually poorly digested, often irrelevant and some
issues entirely lack the illumination of measurement.
—JOHN D.C. LITTLE,1 1970

LITTLE’S QUOTE RINGS AS TRUE TODAY as it did more than forty years ago,
reflecting the tension between the abundance of marketing data at our
disposal and the lack of actionable insights that derive from it. The
advent of the Internet and recent availability of “big data” have only
increased the need to distill relevant information from a wealth of data.
Don’t get me wrong: I love big data, but, as with other things in life, it’s
not about size, but what you do with it. Managers I’ve worked with
across industries and countries know that more data does not mean
more insights for action. While many feel overwhelmed by big data,
others feel they don’t have enough of the right data to connect each
marketing action to profit outcome. For example, a bricks-and-clicks
client contrasted the wealth of information provided by Google
Analytics with its inability to match direct mail lists with sales or to
attribute a purchase to a specific marketing action (see the case study
“The Right Chair #1” later in this chapter). They wanted a marketing
analytics dashboard that connected online and offline marketing, met-
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WHAT MARKETING ANALYTICS DASHBOARDS CAN DO FOR YOU

rics, and profits, and allowed the decision makers to run easy what-if
scenarios. Feeling comfortable with comparing different plans, they ran
a field experiment proving a fourteen-fold increase in profit—as prom-
ised by the analytics behind the dashboard.
Wouldn’t it be great if you could drive your company like a car or a
plane? Thousands of bits and pieces of potentially important informa-
tion feed into the few metrics that show up on your vehicle dashboard.
You don’t need to know everything that is under the hood to drive the
vehicle!
In the last decade, the implementation of data analytics and dash-
boards has generated and saved millions of dollars at hundreds of firms,
some of which I was fortunate to work with.2 Firms are using dash-
boards to track marketing effectiveness and guide decision making in
industries as disparate as business communication (Avaya), online
services (Google), financial services (Ameritrade, Morgan Stanley),
systems integration (Unisys), technology and electronics (SAP,
Lenovo), fast-moving consumer goods (Heineken), and manufacturing
(Timken).
SAP and Vanguard provide excellent video case studies on the ben-
efits of dashboards—and the currently unfulfilled opportunities they
present. Their dashboards measure outcomes important to each busi-
ness, intermediate funnel metrics, their marketing campaigns, and
other activities that drive them. The SAP video3 shows how an individ-
ual decision maker uses the dashboard, while the Harvard video case
on Vanguard4 shows how the dashboard is used in group decision mak-
ing, in this case an executive meeting. As a result, marketing has moved
from an expense to an investment with measurable returns.
Still, most current dashboards fail to leverage data analytics to pro-
vide the needed insights for action. Vanguard CMO Sean Hagerty
acknowledges: “What is missing is the connection between the individ-
ual activities and those outcomes. The next question is: how do you link
the long-term measures to the short-term measures? So do awareness
and image attributes translate to sales? And I don’t know how to answer
the question. That I think is the Holy Grail. We have not really solved
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 MARKETING ANALYTICS DASHBOARDS: WHAT, WHY, WHO, AND HOW

that.”5 Indeed, many managers continue to be disappointed with their

ability to connect marketing actions to key performance indicators and
ultimately to the financial outcomes (sales, profits, stock market capi-
talization) that matter to the company and pay the bonuses of C-level
executives. The current frustration or fatigue rests with “reporting
dashboards.” Reporting dashboards simply track metrics without show-
ing which matters most to performance, and they don’t permit the user
to shift marketing budgets around and compare the predicted outcome
in what-if analyses. Enter “marketing analytics,” which provides the
backbone of the visually attractive dashboard face.
Marketing analytics translates rich data into actionable insights and
what-if analyses to test different scenarios. The case study below illus-
trates that analytics can yield a huge competitive advantage even for
small and medium-sized enterprises (SMEs).

CASE STUDY

THE RIGHT CHAIR #1

Marketing Analytics Gives SMEs a Competitive Advantage

Analytical marketing is not very common in small and medium-size enterprises

in the business-to-business sector. As such, if we had a model or decision
support system to enable us to decide how to allocate resources across
communication activities and channels, we will have a huge advantage
compared to our competitors. —LEON SUIJKERBUIJK, CEO OF INOFEC BV

Inofec BV is a family-run European office furniture supplier that oper-

ates in the Netherlands and Belgium. Founded in 1986 by the current
CEO’s father, the company has grown into a medium-sized firm with
about eighty employees. The company shows average annual growth
of about 20 percent. Their more than 8,000 customers are profes-
sional end users and can choose from an array of over 7,000 SKUs.
Inofec’s main goal is to offer goods of high value at low prices.
Their mantra: Treat everyone as you want to be treated yourself. Their
competitive advantage is adding a high level of service to their prod-
ucts (e.g., advice, assembly, and customized solutions) and having

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WHAT MARKETING ANALYTICS DASHBOARDS CAN DO FOR YOU

their own distribution network. Their service is to deliver the products

to their customers, assemble the furniture, and only leave if the furni-
ture is ready to use and the customer 100 percent satisfied.
Furthermore, they spend a considerable marketing budget even dur-
ing the recession, unlike their competitors, whose reaction to the
recession has been focused on slashing costs drastically—including
layoffs and reorganization. In the words of Leon: “Our competitors
have an internal focus: management by fear regarding preservation of
jobs is key.”
Within a challenging business-to-business environment, Leon
realized that more insights could be gained from analyzing Inofec’s
own financial and marketing data. He sees the recession not as
a threat, but rather as an opportunity to invest in order to reap the
benefits down the road. Leon is convinced that quantifying how cus-
tomers move through the purchase funnel (i.e., information, evalua-
tion, purchase)—and how marketing helps in this process—may lead to
a sustainable competitive advantage. Prior to a dashboard implemen-
tation, the effectiveness of marketing communications activities was
monitored by observing subsequent sales changes—without consid-
ering long-term effects, cross-effects between channels, or control-
ling for other factors influencing sales. Allocation decisions were
mainly based on gut feel or “that’s how we did it the last time.” Against
this background, Leon was looking for another perspective and was
willing to adopt a marketing science approach.
The main marketing challenge facing Inofec is quantifying the
impact of marketing communications activities on purchase funnel
stages (online and offline), and ultimately its impact on profits. With
this knowledge, then, they can reallocate the marketing communica-
tions budget accordingly. To this end, a dashboard tool was devel-
oped to answer the following specific questions:

? Do Inofec’s marketing communications activities only “feed the

funnel” or do they also have an effect on later stages of the pur-
chase funnel?
? What is the (net) profit effect of their marketing communication
activities? Especially, what is the effect of “customer-initiated con-
tacts” versus “firm-initiated contacts”?

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 MARKETING ANALYTICS DASHBOARDS: WHAT, WHY, WHO, AND HOW

? When does the effect of marketing communications “hit in” and

how long does it last?
? How can Inofec improve its profits by reallocating its marketing
budgets?

Answering questions like these can lead to an improved under-

standing of the role of marketing communications activities and plan-
ning of appropriate strategic actions. Throughout this book, you will
learn about how Inofec overcame obstacles along the journey, includ-
ing database creation, dashboard implementation, and the design of a
field experiment that demonstrated a fourteen-fold profit increase over
the status quo.

WHAT IS A MARKETING ANALYTICS DASHBOARD?

Just like your car’s dashboard, a marketing analytics dashboard brings
the firm’s key market-based metrics into a single display. It provides a
concise set of interconnected performance drivers to be viewed in com-
mon throughout the organization.
Inofec’s dashboard is shown in Figure 1–1. It is but one example of
what a dashboard might look like. Hundreds of alternative designs are
available at dashboardspy.com, and Chapter 11 helps you to choose
among them to fit your needs best.
Let’s break down the key elements of the dashboard definition:

? Concise set: A dashboard’s purpose is to help users focus their

attention on a few metrics. However, different users often focus
on different metrics (typically the ones they can influence
and/or that they are evaluated against), and some people are
comfortable with more metrics than others, much like an air-
plane pilot navigates a bigger dashboard than a car driver does.
Dashboards solve this issue by allowing users to customize the
display to the user’s preferences and to “drill down” to different
page views with more detailed metrics.
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WHAT MARKETING ANALYTICS DASHBOARDS CAN DO FOR YOU

Figure 1–1, Marketing Dashboard Prototype

? Interconnected: A simple scorecard of metrics does not make

a marketing analytics dashboard: The dashboard should help
users understand how the business works and how their
(proposed) actions can change the (predicted) performance!
To this end, a dashboard needs an underlying (back-office)
model that connects the metrics. In the Inofec dashboard
shown in Figure 1–1, the user changes the marketing inputs
and watches the projected profits (based on the analytics)
change in real time. The next case study, “Cars: From Begging
HQ to Talking Trade-Offs,” illustrates the importance of the
analytics dashboard for a major car company. Just like car
drivers, dashboard users need to know what happens when
they hit the brakes or shift gears, but they don’t need to know
exactly how the engine operates under the hood. Still, the
existence of the engine is crucial.
? Key performance drivers: The presented metrics have been
shown to be important, leading indicators of performance,
either by experience and/or by scientific testing in the
underlying model. We have seen many cases in which
managers got obsessed with metrics that did not drive
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 MARKETING ANALYTICS DASHBOARDS: WHAT, WHY, WHO, AND HOW

results. A good dashboard refocuses its users on the metrics

that truly matter.
? To be viewed: Dashboards visualize information through
devices such as gauges, charts, and tables, often color-coded
for easy summarization.
? In common throughout the organization: A dashboard
makes it easy to share information and to get all stakeholders
on the same page (often literally). There’s still plenty of room
for discussion on how to interpret the facts and what to do
next, but at least it is clear what the facts are. Many companies
also share dashboard views with partners such as suppliers,
agencies, and customers, which helps to align the supply chain
around common goals.

Integration Is King
Integration is key to each of the elements above, and is the clear but
tough-to-achieve answer in today’s challenging times. Organizations
need integration on at least three levels:

1. Data. Understanding the firm’s market and its position within

the market requires information and data from diverse sources
at different levels of aggregation and covering different time
periods. The dashboard provides a common organizing frame-
work.
2. Processes. The dashboard helps management relate inputs,
such as marketing expenditures, to measures of market
performance, such as market share and sales and ultimately of
financial performance, such as profits, cash flows, and share-
holder value, thus building a bridge between internal and
external reporting.
3. Viewpoints. Whether assessing the market, performance, or
planning, a dashboard allows different executives, in different
departments and locations, to share the same, equally measured
input (i.e., to view the firm’s market situation in the same light).
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WHAT MARKETING ANALYTICS DASHBOARDS CAN DO FOR YOU

Why Integration Is Lacking in So Many Organizations

At one extreme, different systems and departments often use their own
metrics, based on their own data, processes, and viewpoints. How can
marketing and finance agree if they don’t speak the same language? At
the other extreme, some companies wrongly believe in one “silver bul-
let” metric that captures all that is important.6 A single metric may have
worked, for example, for an encyclopedia salesman, selling a single
durable product on commission while facing little local competition.
For organizations, however, the evidence is clear: The silver bullet met-
ric is an illusion. Organizations have both short-term and long-term
interests; they need to consider both qualitative and quantitative infor-
mation and must be able to differentiate the performance impact of
their own actions from the influences of the environment.
In sum, a marketing analytics dashboard:

? Offers integration of diverse business activities, some of

them qualitative, with performance outcomes.
? Measures both the short-term results of marketing and the
long-term health of the marketing asset.
? Isolates the effects of marketing actions from the other
influences on corporate performance.

CASE STUDY

CARS
From Begging HQ to Talking Trade-Offs

At a major car company in the United States, managers were dread-

ing their meeting with foreign headquarters (HQ). The typical meeting
included setting higher (stretch) targets for sales and profits in the
coming years, while lowering marketing budgets. The boiling point
was HQ’s decision to slow down the typical development cycle by a
year. “How can we reach higher sales with less advertising and older
cars” was the U.S. branch’s objection. However, management protest
was waved away by HQ: “Everyone has to work harder and smarter.

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 MARKETING ANALYTICS DASHBOARDS: WHAT, WHY, WHO, AND HOW

Why can’t you reach your targets?” Unfortunately, U.S. management

had strong gut feelings, but no way to demonstrate how much older
models and lower ad budgets would weigh on profits!
Management and I set out on a dashboard project to investigate,
quantify, and visualize profit performance drivers at the annual level, to
aid in the yearly budget negotiations with HQ. Several meetings with
management and a study of available sources on the industry and
competitors revealed dozens of potential key performance indicators
(KPIs). We selected from among these KPIs the metrics that led prof-
it and explained most of its change over time, and used them to build
our econometric model (see Chapter 8). To keep the project’s output
at the strategic level, we summed up tactical executions and plat-
forms (paid search, Twitter, Facebook, etc.) to the marketing instru-
ment level (in the category “online marketing communications”). The
final model explained annual profit by:
1. Average model age.
2. Offline marketing communications.
3. Online marketing communications.
4. Regular price.
5. Financial consumer incentives.
6. Nonfinancial consumer incentives (free add-ons).
7. Financial incentives by the two closest competitors.
8. External factors such as seasonality and economic climate.

The model showed excellent fit and we validated it in two ways.

First, management discussed the findings within the company to
ensure “face validity.” Second, we set apart the last year of data as a
“hold-out sample” and showed the predictive validity of our model
beyond the data used to estimate it. Once these validations created
buy-in, we used the model estimates to create two simple Excel tools:
the scrollbar (or slide bar, as we call it) shown in Figure 1–2 and the
heat map shown in Figure 1–3. (To more fully appreciate the heat
map, you will want to see it in color; you can find it on my website:
notthesizeofthedata.com.)
Managers enjoyed the ability to try out different scenarios, both
by moving the scrollbars and observing the predicted profit outcome

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WHAT MARKETING ANALYTICS DASHBOARDS CAN DO FOR YOU

Figure 1–2, Slide Bars for Manipulating Marketing Variables

and by focusing on changing two marketing inputs at a time to

observe the best profit that the model could achieve in the heat map.
Key to dashboard acceptance and use was the (correct!) feeling that
the model did not replace the decision maker by providing a single
“optimal” or “right” answer, but that it helped the decision maker by
running what-if analyses (e.g., “If the average model age increases by
one year, how much do our incentives have to increase to achieve the
same profit level?” and “What happens if we increase the communi-
cation budget instead?”).
The dashboard tools also allowed the more involved user to
“unhide” the Excel columns that show the model estimates and to
question or change them. Indeed, headquarters did not simply “roll
over” when presented with evidence that profits would drop by 20
percent on the combination of older car models and lower ad budg-
ets (while the target profit was 10 percent higher). Instead, they
demanded the detailed econometric evidence including the predic-
tive performance in the hold-out sample. This changed the discussion
from a general “you just have to work harder and smarter” to the spe-
cific trade-offs managers face and how to join forces to overcome
them. One interesting outcome: The low average profit effect of an
often-used activity challenged common wisdom and encouraged
managers to give creative employees more latitude to think further
outside the box in that area. In the end, a new marketing plan was
adopted with substantially higher spending on some items, lower
spending on others—and smarter use of the same budget for the
remainder. Profit exceeded even the stretch target the next year.

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 Figure 1–3, Heat Map of the Interaction of Two Marketing Variables on Profits

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WHAT MARKETING ANALYTICS DASHBOARDS CAN DO FOR YOU

WHY MARKETING ANALYTICS DASHBOARDS?

Marketing analytics dashboards respond to the increasing complexity
and diversity of marketing data faced by senior management in the
information age—of which the Cars case study is just one example. In
our experience across industries and firms, managers mention at least
four factors driving the need for dashboards: poor data organization,
managerial bias, increasing pressure on marketing, and the need for
cross-departmental integration.

Poor Organization
Data overload is obvious in the fragmentation of media, multichannel
management, and the proliferation of product lines and services.
Information technology makes it possible for firms to collect and ana-
lyze data on customer activities across touch points and channels.
Unisys, for example, gathers hundreds of metrics generated by
brand tracking, CRM programs, tradeshows, media reports, satisfaction
studies, and blogs. Service- and contract-based markets always give
firms individual-level data, but online tracking of browsing use now
does so for virtually any company. This proliferation requires greater
data organization as indicated in the successful examples of the
“information-based strategy” at Capital One or “information-based
customer management” at Barclays Bank.7

Managerial Bias
Human processing capacities remain limited, and research has demon-
strated the presence and danger of managerial biases arising from
shortcuts in information processing and decision making.8 For exam-
ple, managers anchor their new decisions based on old decisions and
do not adjust enough based on incoming information. The result is that
brands and regions that got large marketing budgets in the past will
continue to get large budgets, even if the money is now more useful
elsewhere.
Firms that see analytic capabilities as a key element of their strate-

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 MARKETING ANALYTICS DASHBOARDS: WHAT, WHY, WHO, AND HOW

gy outperform their peers since they know what products their cus-
tomers want, what prices those customers will pay, how many items
each will buy, and what triggers will make people buy more.

Increasing Pressure on Marketing

CEOs, CFOs, and CMOs demand more accountability from the mar-
keting department. Marketing is challenged both to drive growth and
to keep costs under control, with the immediate focus on either objec-
tive swinging with the business cycle. Broad surveys of marketing and
nonmarketing professionals consistently reveal increased expectations
regarding marketing accountability as well as its effect on the market-
ing department’s influence within a company.9
The goals of the typical marketing department have been revealed
as disconnected from companies’ leadership agendas. As a result,
CMOs are advised to agree on a “marketing contract” with the CEO
that specifies exactly which metrics marketing is supposed to improve.
In this regard, a dashboard helps ensure everyone is “on the same page”
to detect and discuss marketing successes and failures.

The Need for Cross-Departmental Integration

The ability of marketing to reach across functions to accomplish com-
pany goals is an increasingly important determinant of its success.
Many firms have integrated marketing, innovation, and strategic
growth leadership into a single corporate function.10 Companies facing
disruptive cross-national mergers and global expansion especially need
integration. This brings together marketing departments with different
values, performance metrics, and reporting practices. Standardized
tools and processes for efficiency are key to driving growth in such
organizations.

WHO USES MARKETING ANALYTICS DASHBOARDS?

The benefits of marketing analytics dashboards are relevant to compa-
nies of any size and in any kind of industry. This book provides dozens
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WHAT MARKETING ANALYTICS DASHBOARDS CAN DO FOR YOU

of case studies in companies ranging from sixty employees to hundreds

of thousands and in industries ranging from fast-moving consumer
goods to online travel. In the broader area of dashboards (not neces-
sarily connected to analytics), the footnotes for this chapter list over
200 companies, including:

? Business communication (Avaya, Cisco)

? Consumer credit (Capital One)
? Education (Montgomery County Public Schools of Rockville,
Maryland)
? Fast-moving consumer goods (Heineken)
? Gaming (Harrah’s)
? Government (Connecticut Economic Dashboard, Atlanta
Dashboard)
? Hospitality (Hilton)
? Investment banking (Morgan Stanley)
? Mutual funds (Vanguard)
? Online services (Google)
? Systems integration (Unisys)
? Technology (SAP)
? Transportation (Virginia)
? TV broadcasting (British Sky)

As to who within these companies uses dashboards, users come

from all management levels. We have seen dashboards used by CEOs,
CMOs, CFOs, and COOs; by brand managers, marketing specialists,
production managers, and R&D managers; by the sales force, you
name it.

HOW CAN A MARKETING ANALYTICS DASHBOARD

HELP YOU?
A marketing analytics dashboard can help you in several ways. In
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 MARKETING ANALYTICS DASHBOARDS: WHAT, WHY, WHO, AND HOW

particular, they help you provide better and faster answers to typical
management questions:

1. What happened? Dashboards enable consistent measurements

and regular monitoring.
2. Why did it happen? Analytics dashboards relate management
action to key performance indicators and hard performance.
3. What will happen if? Analytics dashboards enable what-if
analysis to predict the perfomance outcomes of alternative
scenarios and plans.
4. What should happen? Analytics dashboards allow you to
optimize or at least improve decisions and communicate
this process more transparently.

Several well-known companies have experienced these benefits.

A dashboard enforces consistency in measures and measurement
procedures across departments and business units. For example, Avaya
operates in over fifty countries and diverse markets, with varying mar-
keting tactics. Before the dashboard project, the company had no com-
monality of systems around the globe (limiting data gathering), differ-
ent definitions of what constitutes a “qualified lead” (a key performance
metric in the hand-off from marketing to sales for business-to-business
companies), and a lack of regional interest in gathering metrics.11
A dashboard helps to monitor performance. Monitoring in turn
may be both evaluative (who or what performed well?) and develop-
mental (what have we learned?). Google provides a good example:
Dashboard metrics are early indicators of performance, and if a dip
occurs in, for example, the “trust and privacy” metric, the company
takes corrective action.12
A dashboard may be used to plan (what should our goals and
strategies be for the future given where we are now?). For example,
Ameritrade started with corporate scorecards from the strategic plan-
ning department to develop a dashboard that plugs in to the planning
cycle and is tied to quarterly compensation.13
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WHAT MARKETING ANALYTICS DASHBOARDS CAN DO FOR YOU

A dashboard may be used to communicate to important stakehold-

ers. In particular, it communicates not only what the performance is,
but also communicates what an organization values as performance by
the choice of metrics on the dashboard. Vanguard has had great success
in communicating dashboard metrics to its corporate board, and also
in translating their business focus on customer loyalty, feedback, and
word-of-mouth into their measurement on the dashboard.14
A dashboard offers a great starting point for tough discussions, such
as at the annual budgeting cycle, when the going gets tough (recessions,
product recalls), and/or when management sets stretch targets without
providing the necessary resources. The case study “Cars: From Begging
HQ to Talking Trade-Offs” above offers a wonderful example in the
car industry, where marketing analytics quantified the relation between
marketing actions and profits. The dashboard allows easy what-if
analyses to discuss trade-offs with foreign headquarters. It also enables
more effective communication with marketing partners, especially as
companies move to performance-based compensation of agency work.
The case study “Not All Fun and EB Games” in Chapter 4 is an excel-
lent illustration of this benefit.

WRAP-UP AND MANAGER’S MEMO

Marketing analytics dashboards play a vital ongoing role in marketing
and business decisions for leading companies. As these best practices
show, dashboards can help managers boost both accountability and
creativity for better marketing performance. In the words of CMOs
at Target, Fidelity, MasterCard, and H&R Block, “Science enriches the
art in marketing, and art accelerates the science.” If the art means “ask-
ing the right questions to create winning strategies,” science is “using
data and analytics to answer questions, inform decisions and optimize
marketing efforts.”15 This is our goal and invitation for you in this
book. We close with a checklist of questions to diagnose your organi-
zation on the need for a marketing analytics dashboard—do share it
with your boss!

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 MARKETING ANALYTICS DASHBOARDS: WHAT, WHY, WHO, AND HOW

M A N AG E R’ S M E M O

DO YOU NEED A MARKETING ANALYTICS

DASHBOARD?

Is your organization or team suffering from any of the following?

1 Trust issues between marketing and finance executives?
1 Lack of real-time employee insight in how they are progressing
to achieve firm goals?
1 Confusion about the effectiveness of new media (what is your
social media ROI)?
1 Lack of comparable metrics across media (online vs. offline) or
countries?
1 Too many “key performance indicators” without proof of their
sales impact?
1 “You are too young / too old to understand” (authority instead
of fact-based arguments)?
1 Resource competition between online and offline marketing
without clear attribution?

Can you or your marketing department answer these tough ques-

tions on accountability?
1 If we need to cut 20 percent from our marketing budget, what
would we cut?
1 If we need to obtain 10 percent more revenues next year, where
would they come from?
1 What is affecting our current and future performance, and by
how much?
1 When does our marketing action affect performance, and how
long does it last?
1 Which marketing action gets us the highest return on invest-
ment and where?

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WHAT MARKETING ANALYTICS DASHBOARDS CAN DO FOR YOU

1 Can we increase baseline performance with a one-shot or with a

sustained campaign?
1 How can we improve the efficiency of effective media and the
effectiveness of efficient media?

Do you want to be able to do the following?

1 Have the facts at everyone’s fingertips so meetings focus on
productive plans to action?
1 Justify your budgets and proposed changes in the winning
financial language?
1 Scale up creative and sales-driving campaigns quickly?
1 Deploy marketing analytics to turn data into better decisions in
your firm?
1 Leverage local learning worldwide with globally agreed-upon
metrics?
1 Predict customer and competitive reactions to proposed
marketing plans?
1 Reward managers who help move prospects down online and
offline funnels?

If you have answered “yes” to any of the above questions, this book
is for you!

20

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Library of Congress Cataloging-in-Publication Data

Pauwels, Koen
It’s not the size of the data—it’s how you use it : smarter marketing with analytics and dashboards
/ Koen Pauwels.
pages cm
Includes bibliographical references and index.
ISBN-13: 978-0-8144-3395-9
ISBN-10: 0-8144-3395-2
1. Marketing research. 2. Marketing research—Data processing. 3. Dashboards (Management
information systems). I. Title.
HF5415.2.P39 2014
658.8’302855437—dc23

2013031903

© 2014 Koen Pauwels.

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