Jim Sterne interview transcript

The following transcription is taken from an interview with Foviance’s Director of Analytical Consulting, Neil Mason and Jim Sterne of Target Marketing.

Speaker key

NM : Neil Mason
JS : Jim Sterne

NM: Well Jim, great to see you again.

JS: Thank you.

NM: Jim, thinking about where we are now, you’ve been in consulting and marketing and specifically web analytics for, what, 15 years?

JS: Well, 15 years in web marketing, and ten years for web analytics.

NM: Yes, so you’ve been there pretty much since the beginning of both of those disciplines, I think, so what do you see as some of the major shifts that have occurred over that time, and particularly bring us up to where we are now in terms of the way the industry is developing?

JS: Well, the big shift happened early, which was going from nothing to reporting; so okay, we’ve got some reports, and they tell us we’ve got so many people coming so often, looking at so many pages, which was fascinating, and very valuable to prove that, yes, the web is a viable way of reaching people, and that people are interested enough to reach in and grab the information they want. Then people discovered that they could use this to make their websites better, so they went from just reporting to benchmarking. And from that to optimisation, if we make a change, was it a good change, was it a valuable change. Then, oh, we’re now able to tell whether or not our marketing is working, so I’m going to have a statement about our products and services on our website and see how people respond to that. Next week we’ll change it to something slightly different to see if people respond better to that. Find the best positioning, the best description, perhaps the best pricing policy, and use that, roll that out to the rest of our market. So, we’ve gone from reporting to benchmarking to optimising to market optimisation, and now we’re just starting to see companies using web data to run the company. So, packaged goods companies, automobile manufacturers, using web data to determine what territories we should be shipping which products into, should we open up another retail store, should we add new products to our line, should we add new features to our products. These are business decisions. People are recognising that the web is a tool that they can use to inform those decisions; and that’s the big shift recently.

NM: So organisations are now actually using online intelligence to make offline business decisions?

JS: Exactly, yes.

NM: And is that something that you’re seeing on both sides of the Atlantic, or is it, obviously you’re more familiar with the US, but is that due to scale issues; why do you think that shift is beginning to happen right now?

JS: I think it’s a natural progression; it’s the evolution; in the beginning it’s the marketing person saying to the IT guy, what’s happening on the website; and IT saying, well, what do want to know; and marketing saying, well, what do you have; and IT saying, well, what do you need. Finally there’s enough understanding between them that marketing is saying, gee, this data could be used for this, this, this and this; and so it’s a natural progression. Now, the difference between what’s happening in the States and what’s happening in the UK and what’s happening in Europe; it’s a natural adoption curve. Companies in the US are very happy to jump in and try things, we are the explorers; we are not as risk averse, and so yes, we’ll jump in while the UK and Europe are happy to sit back and say, go right ahead, let us know how it goes, and if it works out, great, we’ll follow. That’s partly a cultural issue. The next part is scale. Now, I like to quote Bruce Stirling who said that the future is already here, it’s just not evenly distributed. So, there are companies in the US that are doing amazing things. There are companies in the UK doing amazing things. There are companies in Germany doing amazing things. There are more of them in the US than there are in the UK, than there are in Germany and then the rest of Europe, but there are still very switched on companies all over the world who are doing really interesting things – it’s just not evenly distributed.

NM: And what do you think is the difference between those companies that effectively are in the future? Are there certain characteristics in these companies? What is it about them that is leading them to be more innovative and more adoptive?

JS: I’d have to put my finger on all of the elements that belong to change management. Supportive senior management, a grassroots understanding of the value at the coalface, the ability to move an organisation forward; because we’re moving from this idea of measuring how many people and how many pages, all the way to understanding what the customer experience is. What is the customer perception of the company? And this is a philosophical change. It’s the switch from, I know how to make shoes and I’m going to make the best shoes in the world, and you’re the customer, you’re going to buy them, because I know shoes. Well, actually now we need the customer to tell us what kind of shoes they want to buy. Whether they want to buy the best shoes in the world or not is a little bit immaterial. What matter is, what do they want to buy, and am I prepared to build it. So we have to have all kinds of ways of listening to that customer, of what do they want, how do they feel, what do are they responding to. And that is a philosophical switch, that is a corporate culture issue, and the companies that get customer centricity are the ones that are able to take advantage of these tools.

NM: And are you seeing that shift; there are the obvious examples I think, if you look at any marketplace; in the UK it would be, Tesco is often cited as being a company which has effectively built its success around a customer centric strategy; are you seeing more organisations doing more of those kind of things on both sides of the Atlantic?

JS: I am, and the companies that are doing it first are the ones who have always been data intelligent, have always had data; so Tesco is a natural; I’ve got my Tesco membership card; they know everything I buy at every visit and how often I come and how much I spend. Well, it’s a huge amount of data that they have done an excellent job of monetising. So, they understand that if they can use that data on behalf of the customer, instead of about the customer; in other words, they’re using that data to help me buy more things I want to buy, rather than sell me things they want to sell me, they will be more successful. So, experience draws that out. So, companies that have more data, financial organisations; I realise that nowadays financial organisations are not happily swimming along, but they have data. They know who their customers are, they know how much money they’ve got; they know when there is an anomaly in the use of financial instruments that they can take action on. So, they understand that web data is just another data stream. Tesco understand that web data is just another data stream. So, if I look at what you’re doing on the website, along with what you’re putting in the trolley, I can make some projections and I can take some actions on a marketing perspective, and I can absolutely measure the results. So the companies that have a lot of data, and are adding the web data to the compilation of what they know about customers, end up being the winners.

NM: But as we know, web data is notoriously messy, horrible, and lots of it, so there are massive challenges there, aren’t there, in taming that particular beast?

JS: Well, there are challenges; all data is messy and horrible, we’ve been dealing with accounting data for 50 years, so we’ve finally figured out a way to identify what is an invoice and how do you manage it, and okay, good. Well, web data; a couple of things: One, is relatively speaking, it’s new. There are many different technologies to measure it. They are advancing all the time. And then there are new ways of communicating online. Who knew a year ago that tracking your twitter data would be important? Well, now it is. Now it’s important to go out and listen to the blogger’s sphere and find out what people are saying about you on their FaceBook page. We’ve got to join that up with how they’re responding to surveys, how do they actually behave on your website, what is their facial expression as they use your web page. It’s interesting to watch what they have done in looking at log files, but watching them actually use it and talking to them directly about how they feel about how easy or difficult your web page is – all of that has to be joined together. It’s messy, it’s a bit frightening; it is hugely valuable and an amazing competitive advantage when it can all be brought together.

NM: So, in terms of the barriers to organisations for becoming more customer centric, there obviously is the data management issue; what other issues are there, do you think, that organisations need to overcome really, in order to move to being far more customer centric?

JS: Well, philosophy is number one. If I’m the shoe manufacturer that knows how to make shoes, then that’s all I’m going to do. So, I have to comprehend from the top that customer centricity is important. Then I’ve got to get a handle on the data, which is a silo nightmare for so many reasons and in so many ways. Then there’s this funny middle management problem of change management. Senior managers get it, executive level, the board level – yes, they understand. The people doing the job at the coalface – they understand it. The people in the middle who are compensated based on head count, are disinclined to use this data to analyse their success, because it might impact their income poorly. They need to be re-educated. Their compensation package needs to be changed, so there’s another set of issues. It is a problem of the entrepreneurial spirit which says, I’m smart enough to do any of this, so I’m going to do it and I’m going to make decisions; instead, it’s having the confidence to turn some of those decisions over to your customers. They own your brand, it is their perception of you that matters, and you can’t just go out anymore and tell them what to think; they’re telling each other what they think. So you’ve got to be able to listen to that. You’ve got to be able to accept the customer as a member of the team. So, change management in philosophy, change management sometimes in corporate structure, certainly the day that is a tough beast to tame, making sure that it is collected in one place, that it is not just; there is a term I’m looking for and maybe you have it; there is a data normalisation, so I’ve got John Smith, John Q Smith, Mr John Smith, and I’ve got to make all of those – that’s just one guy, fine; normalisation. But when I’ve got contact centre data, and sales force automation data, and web data, and purchase data, I have to put those all into one warehouse, if you want to call it that, and connect them. And there’s a word for that and I don’t know what it is, but there’s got to be a way to mesh them together, so that all that data are meaningful together. So that when a call goes into the call centre, or an activity, a behaviour happens on the website, or something happens at the till in the store, it triggers other marketing, and that’s where this is all heading; the automation of marketing for the benefit of the customer.

NM: Yes, but it was also interesting to hear; what you were also saying was that organisations, as well as managing and taming their data, need to develop better listening skills.

JS: Absolutely, and it’s a huge challenge. It is something that we all like to talk about, it’s something that we know to be valuable and true, but actually, taking the time to survey your customers, to listen to the blogger’s sphere, to bring in for a focus group, and pay attention to it and use it, rather than just say, well, they’re just saying that – I don’t agree with them. You have to understand that no, actually, they are paying the bills, and they’re right. And that’s a challenge – that’s a human challenge.

NM: Yes, and obviously we can’t do any interview or have any conversation without talking about where business is in terms of our global economic recession. You and I are probably mature enough to have been through recessions before, but this one is different because the fact is, there is no safe haven – all markets are suffering a degree of turmoil. So, how do you see organisations are reacting to that when it comes to these areas of customer experience, management, and I’m looking their online businesses specifically?

JS: The first reaction is to get out the hatchet and cut away large parts; what can we stop spending money on; oh, all this marketing stuff, that’s just a hole in the company into which we’re pouring money. Well, no, actually, it’s not. The old saying is, when times are tough, it pays to advertise, and when times are really bad, you have to advertise. This is the chance to go out and continue to make noise while your competitors are dying off. Well, that hatchet, that cleaver is a real dangerous tool. Instead, I see the winning companies, the best practices companies, getting out the scalpel and carefully looking at, we need to cut ten percent of our advertising. So, instead of cutting everything by ten percent, they’re very carefully looking at which ten percent we should cut. A great story that came out of the last eMetrics conference was from Symantec; the CMO there said, we’re going to do two things: First, every promotion that we’re doing, whether it’s advertising or it’s an in-store programme or a contest, anything; everything that we’re measuring, the things that are not giving us at least an even return, we’re going to cut those. Everything; and this was the big one, and this one was a huge political risk; everything that we’re not measuring, we’re going to cut. We don’t know if it’s working.

NM: So, if you can’t measure it, then it just doesn’t…

JS: If it’s not being measured today, it’s no longer allowed on the table; which was a big step forward. And then that round, they kept the budget the same, and as a result, they were spending the same amount of money, then they got a 25% lift in profitability because they stopped spending money on things that weren’t helping, or that they didn’t know whether it was helping. So that kind of thing, of taking the scalpel and saying, you know what, I’m doing bad around here, and I’m doing some search marketing, I’m spending money on that here, and I’m looking and finding that it brings me traffic but not conversion; let’s stop that and let’s monitor it on a weekly basis. That’s different; that’s getting out the scalpel and saying, you know what, there is ten percent we can cut that we shouldn’t have spent in the first place. So, the best practices are looking at this as an opportunity to fine-tune. I have to do more with less; that’s just the nature of the beast. I’m sorry, it’s the fact. So, how do I do it wisely? I have fewer people, so I’ve got to get the tools that can help me. I’m seeing more companies reaching out; Coca-Cola made another eMetrics presentation, said, we’re going to stop hiring analysts because the technology changes so fast that we can hire a consultant to come in on a project basis, and teach them how to sell coloured sugar water, but teaching our marketing people how to run an analytics tool and do the business analysis on it is a huge investment, and when we’ve got them trained up, they get hired away by somebody else. So, we’re only going to hire consultants from now on. That kind of adjustment is what’s happening because of the economic problem.

NM: So, when the going gets tough, the smart get measuring, and they bring their planning cycles down to be a lot more tactical, and they have flexible skill bases that allow them to keep pace with technology.

JS: And it also has this, coming back to basics. Let’s make sure we’re getting the basics right. It’s a standard curve; you do what you can to make sure everything is in place, and then once everything is in place, you can start experimenting a little, and then a little more and a little more. Well, when the economy is bad, you roll back on those experiments to where, look, we’ve got to get the basics, we’ve got to make sure we’re covering the basics well, and in fact, let’s tune the basics up a little bit better. Are we driving traffic to our site? Are they finding what they want? Do they like the experience? Are they telling their friends about it? Are they responding positively? Does it have an overall brand lift? And if so, that will translate into sales, and we get to keep our jobs.

NM: Great. Jim, it’s always a pleasure to talk with you.

JS: Likewise.

NM: And no doubt we’ll be seeing each other again at the eMetrics conference in London coming up in May.

JS: I look forward to it.

NM: Good, thank you very much.

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