From Mad men to the Math factory

Ajay Kelkar        Last Updated: December 25, 2015  | 16:27 IST

Ajay Kelkar, Co-founder & COO, Hansa Cequity
Year 2016 will be the year of the Marketing math factory. Companies who win will adopt marketing math and build common sense on top of it. One of the biggest changes the algorithmic approach brings for both businesses and consumers is a rich new level of interactivity. Algorithms and math will allow marketers to make meaning out of this data and make it actionable. The Mad advertising men will soon be running a Math factory.

The customer experience for many legacy companies is often second hand or third hand. Legacy companies go through distributors and, therefore, have only a second-hand insight about consumers. While the new-age businesses have real-time interaction on their mobile apps or websites available to them for defining their customer strategy. Ram Charan calls these new-age companies Math houses. Their knowledge about customers is so rich that Uber had to deal with questions around privacy after some recent press over its "God view".

The other thing, which the new-age companies do very well, is the notion of 'profitable data sharing'. They do not hesitate to share data across partners to ensure their customers get a kickass solution. They share data through APIs. There are over 14,441 APIs offered by firms today, according to programmableweb.com.

As a term, 'API' has been around for a while, but the modern, Web-connection version gathered steam in the early 2000s thanks to Amazon's Store API. This allowed any Web property to have an Amazon presence on its site.

Facebook and Twitter soon followed suit with their own open API strategies. So, the new-age companies use partnerships through APIs very effectively. Uber uses Google Maps, Twilio (SMS notifications), SendGrid (e-mails), and Braintree (payments) to make the magic happen.

Airbnb, too, uses SendGrid, Twilio, and Braintree. Uber allows itself to be embedded into the Open Table and United Airlines apps. The OpenTable app has a 'Ride With Uber' feature, making it easy to book an Uber ride with a single click within the OpenTable app.

You don't see legacy companies doing this - HUL sharing APIs with Philips or Saffola sharing APIs with FitBit? Or, HDFC Bank sharing APIs with the Future Group?

The algorithmic and API-based business will be the business of the future and it will change marketing as we know it.

Gartner has predicted that by 2020, algorithms will participate in 5 per cent of all economic transactions. The real wild card is the Internet of Things (IoT). Over the next decade, as the IoT becomes a reality, almost everything powered by electricity will become Web-connected with a digital exhaust. It is estimated that there will be up to 50 billion connected devices in the world by 2020 (about 10 billion exist today).

And yet, despite this invasion of algorithms in the marketing world, about 61 per cent of consumers are less likely to make future purchases following less-than-satisfactory personalised experiences, according to a study conducted by Forrester Consulting. About 91 per cent marketers are prioritising personalisation but only 16 per cent have the ability to capture customer intent and deliver real-time, behaviour-based marketing across channels.

Pointing to this disconnect and the need for brands to contextualise each customer engagement, the study highlights that while 66 per cent of marketers rate their efforts at personalisation as 'very good' or 'excellent', just 31 per cent of consumers report companies are consistently delivering personalised, cross-channel experiences.

Because consumers are sharing so much personal data with brands, they expect value in return - in the form of personalisation and rewards. And they want to see it translate into a superior customer experience for themselves. While most marketers seek to improve personalised customer experiences from this customer data, their strategies are falling short in this regard.

To move to a new era, marketers must set up math factories. Marketers need to visualise a math factory like a manufacturing plant with operators and assembly lines, with automated production lines. Raw materials enter the demand factory as unqualified leads and are moved along the assembly lines through lead scoring systems, which segregate them into proper segments. Then the conveyer belts - your machine learning-based personalisation engine triggers - intelligently retrieve each of the segmented leads and push it to the next phase of production. Finally, reaching the 'refinery' area - the 'segment of one' nurture system, the remarketing engines, and dynamic content platforms refine them to finished products: 'Customers'.

The author is Co-founder and COO, Hansa Cequity

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